DEA’s Reading Digest (Nov. 3)

David Eduardo Arrambide
Nov 4 · 28 min read
Cool image of an Alaskan Malamute in the snow, courtesy of Unsplash: https://unsplash.com/photos/zc4MEZMdXhc

A. Interesting ideas

  • Prioritizing 0 to 1 problems, such as establishing positive unit economics and a culture valuing operational excellence, before going from 1 to N. Getting the operation working at small scale, in one geo, with the right teamwork and culture, before expanding into lots of markets (see The gross margin problem: Lessons for tech-enabled startups).
  • Taking the time to build a relationship w/ Series A investors (see The irrationality of early-stage fundraising).
  • Re culture, asking ourselves: What are the three to five things that will really distinguish us in our behavior? (see What Ben Horowitz learned about creating corporate culture).
  • Always remaining optimistic, yet paranoid. It doesn’t matter how well the business is doing, there is always a way to get better (see What are the five skills you need to be a great CEO?).
  • Investing in new plastic packaging, improving farmer cooperation and facilitating access to inputs (e.g. seeds, varieties), training on agricultural best practices, shortening supply chains and promoting direct marketing (cutting middlemen), developing cold chain infrastructure (facilities, trucks) (see Enabling trade: From farm to fork).
  • Not relying only on organic growth. We must combine bottom-up growth and top-down sales to capture bigger markets and more value (see Introducing the Enterprise Newsletter).
  • Developing a Messenger-like chat interface for communication between suppliers and restaurants and a Postmates-like ordering list that makes ordering as easy as tapping away on one’s commonly purchased ingredients (see Choco raises $33.5M to bring restaurants and suppliers a modern ingredient ordering platform).
  • Developing a Calii debit account and debit card for producers (and consumers/businesses) (see Uber Money is Uber’s new team focused on financial products and services).
  • Connecting producers with local suppliers of goods and gear (see WeFarm rakes in $13M to grow its marketplace and network for independent farmers).

B. Stories, strategies & expert opinions

*The gross margin problem: Lessons for tech-enabled startups

  • The truth is that software startups never had to worry about gross margins until software started eating the world. Gross margins only became a concern once software blended with physical-world products and services to create new tech-enabled business models.
  • Historically, pure software businesses had perfect gross margins. All the major expense was in creating the first copy; subsequent copies were virtually free.
  • As a result, early-stage software startups never needed to have much proficiency in cost accounting. They didn’t really need to know which expenses were overhead versus COGS. They just needed to know their burn and runway.
  • But when software started eating the world, everything changed. Software was just one component of the service being offered. Software might be the disruptive element but it wasn’t the source of unit economics. These new “tech-enabled” businesses had major COGS (e.g. leases at WeWork; drivers at Uber).
  • Although growth solves many problems at startups, unit economics is not one of them. When you’re losing money on every transaction, you can’t make it up in volume. In fact, the more revenue that a businesses with negative unit economics generates, the more money it loses.
  • Valuations are similarly being reappraised as investors see through top-line growth that was achieved at the expense of negative unit economics.
  1. First, you’re going to need a proficiency in cost attribution from the beginning. You’ll need to know your unit costs at a much more detailed level than a typical SaaS startup (which doesn’t have meaningful COGS).
  2. Second, you’re going to have to pay a lot more attention to pricing. Tech-enabled startups can’t quite do that because product-market fit based on an artificially low price point could be an illusion. This is the old problem of selling dollar bills for 90 cents — you will appear to have a thriving business. Raise the price to $1.10 and you will see that you have no business. Startups that are “temporarily” using VC money to subsidize negative contribution margins must always have anxiety about the true quality of their product-market fit and eventual market size. As an investor, I like these businesses to prove from the outset that unit economics are positive, even if marginally so, and then show how they can improve contribution over time with greater scale and operational efficiency. Note that these businesses are still going to lose a lot of money in the early days. But the question is what kind of money are they losing? Losing money at the corporate level is ok (all startups do); losing money at the unit level is not.
  3. Third, you should prioritize 0 to 1 problems like establishing positive unit economics and a culture valuing operational excellence before going from 1 to N. Get the operation working at small scale, in one geo, with the right teamwork and culture, before expanding into lots of markets. Trying to re-engineer the unit economics or culture of a business that is already operating at massive scale is brutally hard. Competitive pressure often makes founders feel that they must prematurely scale.
  • Growth capital has seemingly tightened overnight. Winter is here. Founders should plan to be contribution margin positive by the time they raise growth capital — or at least be close to it, with a highly credible plan to get the rest of the way.

*The irrationality of early-stage fundraising

  • Startups and venture capital are overly optimistic environments — everyone who does this for a living is irrationally optimistic, because that’s the only way to survive in a world with such a high failure rate.
  • On any given deal, every professional investor prefers to lose money instead of breaking even.
  • Fundraising obviously changes as you get bigger. During a seed round, lots of investors can put money in, and they do it based purely on emotion. You’ve just got to convince them that “X is a huge problem” and “My team’s the one that’s going to solve it”.
  • But if you then get to product-market fit and you need to raise a Series A, things aren’t that simple.
  • Bigger rounds have more people involved in them. An investor can make a seed decision on their own; but for Series A, a VC also has to convince everyone else at their fund.
  • Series A investors are seen, for better and for worse, as investors for life, the ones who come onto the company board and stay there for years.
  • Series A means you’re getting married, just without the possibility of divorce. Choose wisely.
  1. Don’t play it like Tinder. Fundraising is about matching with the right people, building a relationship. Trust your instincts — if things feel off, don’t waste your time.
  2. Have the right attitude. Give them something they don’t expect. Investors are like the police, they hear people lie all the time, they can spot it immediately.
  3. Don’t lie. Investors are like the police, they hear people lie all the time, they can spot it immediately.
  4. Ask questions. You’re evaluating the investor too, figure out why they want to invest in you. The more intense the questions, the better the relationship you’ll be able to build over time.

*What Ben Horowitz learned about creating corporate culture

  • As a CEO, I felt like I hadn’t ever 100% figured out culture. It’s a very complex topic. Watching people build their companies, I could tell that some people didn’t know what they were doing. Most CEOs don’t. It’s a challenging task to get people to behave the way you want them to without being there to give them instruction.
  • A lot of what culture is about is this higher purpose.
  • Very few CEOs are conscious enough to ask what the experience is like at their company.
  • If a guy who’s born a slave can take a bunch of slaves and turn them into one of the greatest fighting forces in the world, you absolutely can change the fucking culture at your company. That’s a mistake that people often make — that you can’t.
  • One that was very hard for me was, in every single historical example, people made horrible mistakes. Toussaint, a giant hero of mine, made terrible mistakes. It became an important point in the book — nobody gets this entirely right. As human beings, we’re flawed. He wasn’t perfect and his imperfections cost him the ultimate price.
  • The opening quote in the book comes from the Samurai — essentially, you’re going to fail a lot and if you’re not, you’re not useful in this task.
  • So executives should ask: What are the three to five things that will really distinguish us in our behavior?

*What are the five skills you need to be a great CEO?

  • Everything is so much easier when you work with A players. You almost take it for granted that things will get done.
  • Mediocrity becomes the norm when you are working with B and C players. You have to replace everyone when you are in an environment of B and C players.
  • Gifford used to have an absolute paranoia about what was wrong at Maxim. It didn’t matter how well the business was doing, there was always a way to get better.
  • In fact, Maxim underwent some of its biggest improvements when things were going well. Complacency just wasn’t in Gifford’s vocabulary.
  • Working with Gifford was not for the faint of heart. Sometimes the meetings with Gifford were messy.
  • And sometimes the meetings with Gifford became violent yelling matches. More often than not, problems were uncovered and resolved.
  • Gifford built Maxim on a culture of rigor and discipline.
  • Maxim had a rigorous product development process. There were detailed reviews at each step.
  • A project could not go forward without approval. A product had to a have a checklist of items completed, quality had to meet a strict criteria, and all marketing collateral had to be developed and ready to go.
  • Gifford was unbelievably consistent on what he wanted.
  • The focus was on constant and continuous improvement.
  • Gifford built loyalty with his generosity.
  • Gifford understood that consistency, a focus on continual improvement, and generosity were the keys to building a loyal team.

16 non-obvious fundraising lessons on pitching

  • 1. Don’t say sentences that don’t have numbers in them
  • When you’re pitching, don’t say a sentence without a number in it. Preferably 2 numbers.
  • People who build giant businesses are data-driven people. They 1) know their numbers intimately, and 2) speak in precise numbers, not generalities.

2. Pitching is a full body experience

  • Body language is a big part of communication. Use your body to move around, or you’re not communicating fully.
  • On any given day a VC has 6–12 meetings, which means that by the time you meet, they are likely tired of sitting there listening to people talk at them. Break the monotony. Give them a reason to pay attention.

3. Diagrams communicate 10x more

  • Diagrams communicate 10 times more effectively than just words.

4. Jump to the screen and point

  • When you’re presenting your deck, get up and point to what you’re talking about.

5. Send you company brief ahead of time

  • That way when you get to the meeting, you can actually get to the heart of their concerns and interests in your business. Otherwise you’re going to spend the first 20 minutes going over the basics.

6. Get there 15 mins early

7. Sit in the front of the room

8. Don’t talk about you passion — show it

  • Show that you’re a full-blooded person that’s going to drive the business forward through strength of will.

9. Look the part

10. Bring a pen and take notes

  • Here’s the thing: you can’t look at each individual meeting as do or die and think “I have to get this investor’s money”. Instead, you have to think: “I have to have a successful fundraising over the course of 10 or 20 potential investors.

11. Only bring your best presenters

12. Make a deck specific to each VC

  • This is especially important because when you’re pitching a VC, you have to arm them with the language to convince the other partners in the firm.

13. Spend 1/3 presenting, 2/3 asking questions

  • You’re pitching for 8–10 minutes and the rest of the time asking questions and discussing with the investor.

14. The goal is learning, not closing

  • It’s worth repeating: you’ve got to ask VCs for feedback during the meeting. It’s probably the most important part because you have to assume they’re not going to invest in you.

15. Know when you’re improving or not

  • You might not change your business much due to investor feedback, but while pitching, you should learn a lot about how to communicate your business. Your pitch should continually improve.

16. Understand VC psychology

  • If you put yourself in the VCs shoes and understand the constraints and the context they’re operating in, it’s a lot easier to take things less personally.
  • VCs are being pulled apart in 360 degrees. The number of directions a VC is being pulled in is significant, like running a startup itself is.
  • VCs have to say no all the time, and it wears them down. Because a VC has to say no for 99%+ of the deals they see, their minds are being trained to be negative.
  • Don’t treat VCs like authority figures. Treat them like equals. Stop looking up to them because they have something that you want. The more you can show maturity and confidence, the better the pitch will go.

*Why supermarkets are building ‘dark stores’

  • America’s top supermarkets are facing a new challenge: Grocery aisles in stores aren’t suited to meet the growing demand for online orders.
  • Walmart, Albertsons, Stop & Shop, Meijer, Hy-Vee and others are building automated mini-warehouses inside their stores and opening up “dark stores” — locations that look like supermarkets but are closed to customers — to make deliveries and prepare pickup orders.
  • Some analysts say these models are an advantage over large, centralized warehouses, which are often located further away from customers than stores. That’s why micro-fulfillment centers can save grocers in delivery costs.
  • Mandeville estimates that the cost of delivering groceries from central warehouses is usually around two times higher than using micro-fulfillment in stores. Jefferies cut Kroger’s stock earlier this month in part because the company has invested in centralized facilities through a deal with Ocado, instead of micro-fulfillment.
  • Grocers are also moving the picking process out of stores entirely and testing so-called dark stores. Some dark stores have automation, while others are still manned by employees to do all of the picking of goods purchased online.

*Enabling trade: From farm to fork

  • In developed countries, more than half of the total food loss and waste occurs at the household level, after consumers purchase food (see Box 4 for an example of strategies to tackle consumer food waste). In developing countries, however, only 16% of loss and waste occur at this stage (Figure 2). The remaining losses are a result of inefficiencies in the supply chain, from harvesting through distribution.
  • Three main levers exist to improve the economic efficiency of agricultural value chains (Figure 5):
  1. Reduced price volatility: Supply fluctuates dramatically in agriculture, particularly in developing countries. In years of oversupply, prices drop. As a result, the cost of harvesting and getting food to market can exceed potential revenues. Solutions to reduce volatility include stable policy and reduced export barriers. For example, when Zambian maize experiences a “bumper harvest” of 30% above average, closed borders drive a 50% reduction in prices, whereas open borders result in only a 26% drop.
  2. Increased prices: Aside from volatility, low average prices can also drive food losses. European importers of Kenyan avocados lack visibility on the level of quality they will receive, due to the existence of unofficial exporters. As a result, they apply a price discount to the origin in general. If an improved system of grading were introduced, price segmentation could be created.
  3. Reduced costs: The journey that Indian tomatoes take from farm to fork is extremely fragmented, involving regional and local marketplaces. The high number of touchpoints and middlemen add costs along the way, meaning that margins for each player become slim. As a result, investment has been less available for technologies such as plastic boxes, which reduce transport losses by up to 75%.

Grubhub Q3 Shareholder Letter

  • From the very beginning, our business has been connecting restaurants with diners to help our restaurant partners grow their profits. This has not changed. Our restaurant partners, predominantly independently owned restaurants and small/regional chains, do not have the scale, financial resources, digital marketing acumen or technical expertise to generate demand online as efficiently as Grubhub. Restaurant operators on our network are in effect using Grubhub as their online advertising partner. Our brand and two-sided network have real value they can’t easily replicate. This is a highly lucrative relationship for both parties. Restaurants profit because their incremental sales from Grubhub orders are greater than the incremental cost of food and demand generation fee paid to Grubhub. Grubhub profits because we can generate incremental demand at a total cost that’s significantly lower than the value of those orders to our restaurant partners.

How to convince investors you’re the future, not the past

  • Their immediate problem was that investors, even seed investors, were convinced that the market segment Mei and Bill wanted to enter was littered by failures. And as soon as they described the space, investors rolled their eyes and passed.
  • Like all entrepreneurs with an idea burning bright, Mei and Bill thought they were the first to invent water, air and fire.
  • Ignorance of the past and disdain of the status quo are part of how innovation happens. As companies get larger and individuals get older, most get trapped in dogma and aversion to risk.
  • And therein lies the catch — investors have longer memories of failures than new entrepreneurs. When you’re describing the future, most of them are remembering the past.
  • So Mei and Bill were facing two problems. The first was obvious; they needed to know how investors viewed their space. Second, they needed to know how to make it clear that the world had changed and that they had figured out how to solve the problems that cratered previous entrants.
  1. What companies in their space came before them?
  2. Which investors got burned?
  3. How has the market/technology/customers evolved since then?
  4. Who else is playing in their space or adjacent markets? And how could they make that a strength, not a weakness?

*Introducing the Enterprise Newsletter

  • The open source playbook: From community project to successful business
  • Open source is more valuable than ever before. Most notably software-as-a-service has changed things.
  • With open source, however, competitive advantage isn’t code — it’s community.

The new B2B go-to-market is bottom-up + top-down

  • Enterprise businesses have started to look a lot more like their consumer counterparts, and bottom-up, user-driven adoption is one of the most important trends in B2B today. The best B2B companies, though, aren’t just relying on organic growth; they are combining bottom-up growth and top-down sales to capture bigger markets and more value.

What it means when computers can understand language

  • Natural Language Processing (NLP) is having its ImageNet moment, which means that software is getting surprisingly good at understanding language in the same way that it got good at figuring out what’s in a picture.
  • What does this all mean for businesses? Just storing text-based data or recording calls is no longer enough. Now is the time to “read” that data in search of customer and product insights.

5 big ideas about AI and work

  • Why AI is the fastest moving trend to hit enterprise. “No trend has grown as fast in terms of real spending, in terms of headcount, focused on whatever measure you want to use.”
  • Why AI will automate tasks, not jobs, and how to find common ground with machines. “When computers move into a workplace, they never take anybody’s entire job. They take away certain tasks. All of us have a certain percentage of our time that is spent on very codifiable rules-based knowledge work that given the right algorithm, could be turned over to a computer.”
  • Why AI is a copilot that can make us more focused and better at what we do. “AI is augmenting your ability to make decisions. Think of it as you are in a race car and there’s someone next to you that knows what’s around the curve and is whispering in your ear, what to be ready for, what’s the best next thing you could do.”
  • Why AI will turn every worker into an analyst. “They need to know right now whether or not to respond to a competitor’s flash sale and what segments of their customers to target to make sure to not lose any customers.”

Biology is eating the world: A manifesto

  • We are at the beginning of a new era, where biology has shifted from empirical science to an engineering discipline.
  • Our ability to engineer biology will fundamentally transform how we diagnose, treat, and manage disease. The first great leap forward took place in the early 1980s with recombinant DNA technology and the first biotech drug, thanks to our newfound ability to insert human genes into bacteria to produce human insulin. Today, modern tools like CRISPR and gene circuitry enable us to to program biology with greater and greater precision and sophistication, from bacteria that is engineered to produce new chemicals and proteins, to cells that are engineered to attack cancer.
  • Because these new medicines are engineered systems and programmable in nature, drug discovery and development will move from a bespoke to an iterative process.
  • Like software upgrades, programmable medicines make it increasingly possible to improve a given medicine in subsequent generations.
  • Going forward, the dominant players in the healthcare market will be technology companies at their core. Software, finally, is eating healthcare.

Some thoughts on AI investing

  • Insight one: successful AI opportunities combine technological aptitude with business acumen
  • Facebook believed that AI initiatives, to be worthwhile, had to go hand-in-hand with business objectives.
  • Business-oriented thinking helped them feel more comfortable about investing over long time horizons. If the AI project made business-sense and checked all other boxes, Facebook was willing to commit. Other companies continue to lose their way in this regard. They focus primarily on technology and assume that use-cases will materialize down the road.

Insight two: An interdisciplinary team is the best kind of team

Insight three: Trust smart people

Insight four: Experience matters, even in fast-changing spaces

  • AI algorithms are in their early stages and we can expect to see research breakthroughs in the coming months and years.
  • As data sets become larger and more accessible and computational power becomes more affordable, AI applications will become more powerful and ubiquitous.

Revenue multiples in B2C consumer tech

  • Social media is settled around ~8x.
  • Travel marketplaces are steady. This sector has traded in a tight range of 2.4x to 3.4x.
  • Traditional marketplace multiples vary widely. Last quarter the median multiple was 6x, but note the range is very wide, from 3.2x (Eventbrite) to 9.4x (Etsy).
  • Subscription. Subscription has been humbled since 2018, and now trades at 4.6x revenue.
  • Gaming. The median revenue multiple of 4.6x is strong.
  • Ecommerce is soft. The sector is the least attractive to investors, with a median revenue multiple of 1.3x.
  • Hardware is consistent. Hardware is steady at 3.3x.

C. Startups & market trends

*Choco raises $33.5M to bring restaurants and suppliers a modern ingredient ordering platform

  • Sourcing ingredients in the restaurant industry is a dirty process that still relies heavily on voicemails and fax orders.
  • Choco’s mobile app has an interface reminiscent of popular consumer apps, with a Messenger-like chat interface for communication between suppliers and restaurants and a Postmates-like ordering list that makes ordering as easy as tapping away on one’s commonly purchased ingredients.
  • The 18-month-old team has 100 employees already and is announcing that they’ve closed a $33.5 million Series A led by Bessemer Venture Partners. By the end of next year the company hopes to grow its business by 15x.
  • Choco is in 15 cities across Europe and the U.S. and says their early customers include everyone from Michelin-starred restaurants to burger chains. The company has now raised $41 million to date.
  • Choco currently isn’t monetizing its users. Khachab tells me the team is developing premium subscription features that will likely focus on monetizing suppliers’ abilities to reach restaurants and communicate with them about new offerings.
  • Estimates say that 30–40% of food produced each year is wasted and that nearly three-quarters of that waste happens in the supply chain before consumers are involved.

*Uber Money is Uber’s new team focused on financial products and services

  • Uber is further exploring the financial services business with the creation of a new team, Uber Money. Uber Money is now responsible for all things pertaining to financial products designed to support drivers
  • Within the driver app, drivers will soon have access to Uber Wallet so they can more easily track their earnings and spending history, as well as manage and move their money.
  • In sum, Uber Money currently oversees Uber’s credit card, debit card, wallet for drivers, Uber Pay, Uber Cash and other financial products Uber may deploy down the road. This year, the team also plans to integrate into the driver app the Uber debit account and debit card for drivers in the US.

*WeFarm rakes in $13M to grow its marketplace and network for independent farmers

  • WeFarm, a marketplace and networking site for small-holder farmers (that is, farms not controlled by large agribusinesses), has raised $13 million in a Series A round of funding.
  • The round, which brings the total raised by the company to a modest $20 million, is being led by True Ventures.
  • WeFarm today has around 1.9 million registered users, and its early moves into providing a marketplace — helping to put farmers in touch with local suppliers of goods and gear such as seed and fertilizers — generated $1 million in sales in its first eight months of operations.
  • “We are building an ecosystem for global small-scale agriculture, on behalf of farmers,” Ewan said, noting that there are roughly 500 million small-scale farms globally, with some 1 billion people working those holdings, which typically extend 1.5–2 hectares and often are focused around staple commercial crops like rice, coffee, cattle or vegetables.
  • The service that WeFarm provides, in turn, is two-fold. The network, which is free to join, first of all serves as a sounding board, where farmers — who might live in a community with other farmers, but might also be quite solitary — can ask each other questions or get advice on agricultural or small-holding matters.
  • That provided a natural progression to WeFarm’s second utility track: a marketplace.
  • Longer term, the aim will be to provide a place where small-holding farmers might be able to exchange goods with each other, or sell on what they are producing.
  • In addition to providing access to goods for sale, WeFarm is helping to manage the e-commerce process behind it.

TrueLayer, the open banking API provider, discloses investment and partnership with Visa

  • TrueLayer, the London startup that’s built a developer API platform for fintechs and other adjacent companies to utilize open banking, has agreed to a strategic and commercial relationship with Visa.
  • TrueLayer has raised $47 million to date.
  • With that said, Simoneschi stresses that he doesn’t see the industry as a “zero sum game” and that there is a huge opportunity for scores of businesses to do well.

*Amazon aces $14.99 Amazon Fresh fee, making grocery delivery free for Prime members to boost use

  • Today, the company announced that it would make Amazon Fresh free to use for Prime members, removing the $14.99/month fee that it was charging for the service up to now.
  • The move is part of a bigger effort that Amazon is making into grocery delivery, which now covers some 2,000 cities when you combine Whole Foods and Amazon Fresh delivery locations.
  • Alongside free delivery, Amazon is giving users one and two-hour delivery options for quicker turnarounds, and it’s making users’ local Whole Foods inventory available online and through the Amazon app.
  • It seems that the footprint for Amazon Fresh is currently quite small — around 20 cities — with the rest of that 2,000 covered by Whole Foods, so the sign-up process could also be one way for Amazon to decide where to roll out Amazon Fresh next.
  • “Grocery delivery is one of the fastest growing businesses at Amazon, and we think this will be one of the most-loved Prime benefits.”
  • Grocery delivery is a tricky business, much more perishable than delivering a book or a piece of clothing or consumer electronics. But if done right, it represents a frequently recurring line of revenue.

Become scores $12.5M Series A for its business lending marketplace

  • Become, the Israeli startup that operates a business lending marketplace to give SMBs more funding options, has closed $12.5 million in Series A investment.
  • Become’s platform uses technology to give each business a “LendingScore” based on how fundable its algorithms think it is.
  • “The process of applying for a loan is often time consuming and confusing, and big bank approval rating sits at just 27.5%.”
  • The entire process is online from start to finish, with Amirav claiming that funding is made possible in as little as 3 hours.
  • It claims 200,000 business owners registered on its platform, supported by an ecosystem of more than 50 lenders and partners, including PayPal, OnDeck and Kabbage.

Latin America Roundup: Uber acquires Cornershop, SoftBank invests in Buser and Olist

Uber acquires Cornershop, takes off where Walmart left off

  • First Walmart announced a $225 million deal that would be one of the bigger exits of the region, then the acquisition was blocked by Mexican antitrust institution COFECE.
  • Then in mid-October 2019, Uber announced it would take a 51% stake in Cornershop for a reported $450 million, quadrupling the startup’s value in the four months since the COFECE decision.
  • This deal must also be approved by the Chilean and Mexican antitrust boards, which are expected to release their decisions within the next two weeks. In the meantime, Cornershop will continue its expansion into the Colombian market after it added Peru and Canada in 2019.

Brazil’s Buser, Olist, raise funding from SoftBank

  • In early October 2019, the Japanese investor led an undisclosed Series B round for Brazilian collaborative bus chartering startup Buser.
  • Buser helps coordinate groups of people to charter buses at convenient times and lower prices, disrupting the bureaucratic, anti-competitive and inefficient bus system. The company has grown 1,500% over the past nine months and serves more than 3,000 people per day.
  • Brazil’s e-commerce marketplace integrator Olist also received investment from SoftBank for its Series C, coming in around $46 million.
  • Olist connects small businesses to larger product marketplaces to help entrepreneurs sell their products to a larger customer base.
  • Today, Olist has more than 7,000 customers and uses a drop-shipping model to send products directly from stores to clients around the country, allowing them to grow with a capital-light model.

Carrefour Brazil acquires 49% of Ewally

  • Grocery chain Carrefour acquired a large stake in Brazil-based Ewally after it completed Village Capital’s first regional acceleration program.
  • Ewally improves financial inclusion in Brazil through a mobile wallet app that allows unbanked clients to pay bills and make purchases online through the blockchain.

Early stage rounds are getting bigger

  • Startups in Brazil, Colombia and Argentina raised several rounds this month, ranging from $1.5 million to $13 million.
  • Brazilian human resource management platform Xerpa raised $13 million.
  • Sempli, an online lending platform for small businesses in Colombia, raised an $8 million Series A.
  • Brazil’s Quicko, an alternative mobility startup that uses big data, raised $10 million.
  • Also in Brazil, startup Gorilla Invest raised $8.4 million from Ribbit Capital, Monashees and Iporanga. Gorilla aggregates financial assets so that investors can review all their commitments in one place, and currently manages more than $1.2 billion for 40,000 clients.
  • Mexican cryptocurrency exchange Bitso raised an undisclosed round from Argentine startup Ripple to expand into the Southern Cone, especially Argentina and Brazil.

Walmart Grocery now offers curbside alcohol pickup at 2,000 US stores

  • The retailer today announced a new milestone in terms of giving its customers the ability to shop for alcohol online, noting that more than 2,000 Walmart locations across 29 states will now let you pick up wine and beer along with your other grocery purchases.
  • To meet the needs of the online shopper, Walmart Grocery has to offer it all — not just food, but also adult beverages.

Muy raises $15M to grow its new cloud kitchen concept

  • The cloud kitchen craze has reached Latin America. Food tech startup Muy landed a fresh $15 million Series B to expand into Mexico and soon Brazil. The service is currently operative in Colombia.
  • Muy is a “cloud kitchen meets Chipotle,” says one investor. The company describes itself as a virtual kitchen and smart chef system that uses AI to produce food based on forecasts of demand, which can help to reduce food waste.
  • Muy allows users to place personalized orders in one of Muy’s physical restaurants or through a mobile app. Muy’s concept also exists as 20 physical dining locations offering what it says are quick, fresh and personalized dishes. Founder Jose Calderon says Muy is serving more than 200,000 dishes per month.
  • The round was led by Mexico-based investor ALLVP, with previous investor Seaya returning. The $15 million Series B brings MUY’s total funding to $20.5 million.

Prosus Ventures leads $40M investment in Indian Logistics startup ElasticRun

  • 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.
  • A Pune-based startup with an idea to build a logistics network using these kirana stores.
  • Three-and-a-half-year-old ElasticRun said it has raised $40 million in a Series C financing round led by Prosus Ventures (formerly Naspers Ventures).
  • The startup has raised $55.5 million to date.
  • Most of these kirana stores each day go through hours of down time — when the footfall is low and the business is slow. ElasticRun works with hundreds of thousands of these stores across 200 Indian cities to have them deliver goods to other kirana stores and consumers.
  • Supplying goods to these stores are FMCG (fast moving consumer goods) brands that are trying to reach the last mile in the nation. Nearly every top FMCG brand in the country today is a partner of ElasticRun.
  • Because there is a digital log of each transaction, Deshmukh said the startup has a good idea about the financial capacity of these kirana stores. This has enabled it to connect them with relevant financial partners to access working capital.

*Japanese instant-credit provider paidy raises $143 million from investors including PayPal Ventures

  • Paidy, a Japanese financial tech startup that provides instant credit to consumers in Japan, announced today that it has raised a total of $143 million in new financing. This includes a $83 million Series C extension from investors including PayPal Ventures and debt financing of $60 million.
  • Brings the total investment the company has raised so far to $163 million.
  • Launched in 2014, Paidy was created because many Japanese consumers don’t use credit cards for e-commerce purchases, even though the credit card penetration rate there is relatively high. Instead, many prefer to pay cash on delivery or at convenience stores and other pickup locations. While this makes online shopping easier for consumers, it presents several challenges for sellers, because they need to cover the cost of merchandise that hasn’t been paid for yet or deal with uncompleted deliveries.
  • Paidy’s solution is to make it possible for people to pay for merchandise online without needing to create an account first or use their credit cards. If a seller offers Paidy as a payment method, customers can check out by entering their mobile phone numbers and email addresses, which are then authenticated with code sent through SMS or voice. Paidy covers the cost of the items and bills customers monthly. Paidy uses proprietary machine learning models to score the creditworthiness of users, and says its service can help reduce incomplete transactions (or items that buyers ultimately don’t pick up and pay for), increase conversion rates, average order values and repeat purchases.

Trulia founder Pete Flint backs real estate startup Modus

  • Modus, a real estate startup focused on title and escrow services, is today announcing a $12.5 million Series A.
  • Modus previously raised $1.8 million in seed funding.

Freetrade, the UK challenger stockbroker, completes $15M Series A

  • Freetrade, the U.K. challenger stockbroker that offers commission-free investing, has closed $15 million in Series A funding.
  • London-based Freetrade was first out of the gate as a bona fide “challenger broker” after deciding early on to build its own brokerage. This included obtaining a full broker license from the FCA, rather than simply partnering with an established broker.
  • The Freetrade app lets you invest in stocks and ETFs. Trades are “fee-free” if you are happy for your buy or sell trades to execute at the close of business each day. If you want to execute immediately, the startup charges a low £1 per trade. The idea is to put the heat on the larger incumbents that can charge up to £12 per trade, which is off-putting to people wanting to only invest a small amount or regularly refresh a modestly sized portfolio.
  • Noteworthy, André Mohamed, previously CTO and a co-founder of Freetrade, joined Revolut as its new head of Wealth & Trading Product, adding a bit of extra spice to that rivalry.
David Eduardo Arrambide

Written by

Co-Founder at Calii

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