Yearly Archives: 2020

News: VW’s prototype robot is designed to offer full-service charging for electric vehicles

• December 28, 2020
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Volkswagen Group has developed a mobile electric vehicle charger that can autonomously navigate parking areas, power up an EV and then make its way back to its outpost without the intervention of humans. The prototype, which VW Group Components created, aims to showcase how the automaker will expand charging infrastructure over the next few years

Volkswagen Group has developed a mobile electric vehicle charger that can autonomously navigate parking areas, power up an EV and then make its way back to its outpost without the intervention of humans.

The prototype, which VW Group Components created, aims to showcase how the automaker will expand charging infrastructure over the next few years to meet the expected demand that will arise as it produces and sells more electric vehicles. VW Group has committed to launching dozens of electric models over the next decade. The group’s Volkswagen brand plans to build and sell 1.5 million electric cars by 2025.

“Setting up an efficient charging infrastructure for the future is a central task that challenges the entire sector,” Volkswagen Group Components CEO Thomas Schmall said in a statement. “We are developing solutions to help avoid costly stand-alone measures. The mobile charging robot and our flexible quick-charging station are just two of these solutions.”

VW Group is developing a portfolio of different DC charging products, including a DC wallbox that charges up to 22 kilowatts. The automaker began piloting its DC wallbox earlier this month at some of its production sites in Germany. VW Group is also planning to launch a flexible — yet still more stationary — quick-charging station will be launched onto the market in early 2021.

The mobile charging robot doesn’t have a release date. The company said now that it has reached prototype status it will be “comprehensively further developed.” There is one caveat for the mobile charger. VW said that car-to-X communication, which allows a vehicle to “talk” to infrastructure, will be one prerequisite for the mobile charger to reach market maturity.

The charging robot prototype can be started via an app launched by the vehicle owner or car-to-x communication. Once the communication begins, the mobile charger turns on — two digital eyes open on the display — and it steers towards a vehicle. The mobile charger opens the charging socket flap as well as connects or disconnect the plug. The mobile charger is also able to move and then connect the vehicle to an energy storage unit. Once the charging is complete, the robot collects the mobile energy storage unit and takes it back to a central charging station.

Schmall said the DC charging products will not just focus on customers’ needs and the technical prerequisites of electric vehicles, but will also consider the economical possibilities of possible partners such as operators of parking bays and underground car parks.

You can watch the video of the mobile charging robot in action below.

News: Global investors flee from Chinese tech stocks after the government crackdown on Ant and Alibaba

• December 28, 2020
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Global investors are running from Chinese tech stocks in the wake of the government’s crackdown on Ant Group and Alibaba, two high-flying businesses founded by Ma Yun (Jack Ma) that were once hailed as paragons of China’s new tech elite. Shares of major technology companies in the country have fallen sharply in recent days, with

Global investors are running from Chinese tech stocks in the wake of the government’s crackdown on Ant Group and Alibaba, two high-flying businesses founded by Ma Yun (Jack Ma) that were once hailed as paragons of China’s new tech elite.

Shares of major technology companies in the country have fallen sharply in recent days, with Bloomberg calculating that Alibaba, Tencent, JD.com and Meituan have lost around $200 billion in value during a handful of trading sessions.

Already reeling from the last-minute halt of the public debut of Ant Group, a major Chinese fintech player with deep ties to Alibaba, the e-commerce giant came under new fire, as China’s markets watchdog opened a probe into its business practices concerning potentially anticompetitive behavior.

Ant Group was itself summoned by the government on December 26th, leading to a plan that will force the company to “rectify” its business practices.

Shares of Alibaba are off around 30% from their recent, record highs set in late October. Tech shares are also off in the country more broadly, with one Chinese-technology-focused ETC falling around 8% from recent highs, including a 1.5% drop today.

The American Depositary Receipts used by traders to invest in Alibaba fell from around $256 per share at the close of Wednesday trading on the New York Stock Exchange to around $222 last Thursday. The company is down another half point today. It was worth more than $319 per share earlier in the quarter.

It’s clear that the rising tensions between China’s tech giants and the country’s ruling Communist Party have investors spooked. But Jack Ma’s relationship with the Chinese government has always been a bit more fraught than that of his peers. Ma Huateng (Pony Ma), the founder of Tencent, and Xu Yong (Eric Yong) and Li Yanhong (Robin Li), the co-founders of Baidu, have kept lower profiles than the Alibaba founder.

Bloomberg has a good synopsis of the state of the market right now. The companies that are most directly in the crosshairs appear to be Ma Yun’s, but at different times, Tencent has been the focus of Chinese regulators bent on curbing the company’s influence through gaming.

Specifically for Alibaba things have gone from bad to worse, and a boosted share buyback program was not enough to halt the bleeding.

Whether this new round of regulations is a solitary blip on the radar or the signal of an increasing interest in Beijing tying tech companies closer to national interests remains to be seen. As the tit-for-tat tech conflict between the U.S. and China continues, many companies that had seen their growth as apolitical may become caught in the diplomatic crossfire.

Other tech companies are seeing their fortunes rise, boosted by newfound interest from the central government in Beijing.

This is already apparent in the chip industry, where China’s push for self-reliance has brought new riches and capital for new businesses. It’s true for Liu FengFeng, whose company, Tsinghon, was able to raise $5 million for its attempt at building a new semiconductor manufacturer in the country. Intellifusion, a manufacturer of chipsets focused on machine learning applications, was able to raise another $141 million back in April.

Private investors may be less enthused at the prospect of backing Chinese tech upstarts who could face government censure should the regulatory winds shift. Whether other startup markets in the region — India, Japan, among others — will benefit from the Chinese regulatory barrage will be interesting to track in 2021.

News: U.S. government appeals the injunction against its TikTok ban

• December 28, 2020
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The U.S. government is appealing the ruling that blocked the Trump administration’s TikTok ban, according to a new court filing. On December 7, 2020, U.S. District Court Judge Carl Nichols in Washington became the second U.S. judge to block the Commerce Department’s attempt to stop the TikTok app from being downloaded from U.S. app stores,

The U.S. government is appealing the ruling that blocked the Trump administration’s TikTok ban, according to a new court filing. On December 7, 2020, U.S. District Court Judge Carl Nichols in Washington became the second U.S. judge to block the Commerce Department’s attempt to stop the TikTok app from being downloaded from U.S. app stores, citing threats to national security.

The Trump administration had raised concerns over the video-sharing app due to its Chinese ownership by way of parent company ByteDance, and the potential risk of TikTok’s U.S. user data being accessed by the Chinese government. This ultimately resulted in President Trump’s decision to use his executive order power to ban TikTok from the U.S. market.

TikTok, in response, had vowed to fight the order in court while it also entered negotiations with American companies over the potential sell-off of its U.S. operations, in case the order was upheld.

However, prior to the Dec. 7 ruling on the matter, a group of TikTok creators successfully challenged the ban, when U.S. Judge Wendy Beetlestone in Pennsylvania issued an injunction that blocked the restrictions that would have otherwise stopped TikTok from operating in the U.S. The creators said the ban would have caused them to lose their income by way of their brand sponsorships and other opportunities afforded by the platform.

Following that order, Judge Nichols in the separate case led by TikTok ruled that Trump overstepped his authority in trying to ban the app from the U.S., referring to the agency’s action as “arbitrary and capricious.”

The U.S. Commerce Dept. spokesperson said at the time of the ruling it would continue to comply with the injunctions but intended to “vigorously defend the [executive order] and the Secretary’s implementation efforts from legal challenges.”

Today, it has followed through on that statement with its appeal.

Of course, the decision as to whether the U.S. will continue its attempt to ban TikTok will ultimately reside with the incoming Biden administration.

The news of today’s filing was first reported by Reuters.

TikTok declined to comment on the appeal. The U.S. Commerce Dept. has not responded to a request for comment.

US government appeals TikTok injunction by TechCrunch on Scribd

News: Tappity raises $1.3M for its interactive and educational video library for kids

• December 28, 2020
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When kids today want to learn about a new topic they’re interested in, they’ll often turn to YouTube. But the quality of the educational content on the platform can be hit or miss, depending on what specific videos kids happen to come across. Tappity, a digital educational startup now backed by $1.3 million in seed

When kids today want to learn about a new topic they’re interested in, they’ll often turn to YouTube. But the quality of the educational content on the platform can be hit or miss, depending on what specific videos kids happen to come across. Tappity, a digital educational startup now backed by $1.3 million in seed funding, aims to offer an alternative. Its video library offers entertaining and interactive live-action videos kids enjoy, while also ensuring the content itself is aligned with current educational standards.

The two-year old startup was co-founded by CEO Chad Swenson, his brother and CTO Tanner Swenson, and CPO Lawrence Tran.

Image Credits: Tappity founders

As Chad explains, the idea for Tappity emerged from his interest in designing interactive learning experiences, which resulted in a senior project eight years ago where he created an interactive experience to help students learn about evolution. Over the years that followed, he began to experiment with different concepts in this area, but never planned for anything of venture scale.

However, Chad says he later realized there could be an opportunity to develop content based around the Next Generation Science Standards (NGSS) — the set of K-12 science content standards that were developed by a consortium of multiple U.S. states — whose adoption across the U.S. is now growing.

“A lot of parents were looking for healthier alternatives to YouTube,” Chad says. “And I really started to believe this is something that could be much bigger.”

He found also that the science-based topics kids are generally interested in are often those that are aligned with what the NGSS aims to teach — like space, dinosaurs, geology and others.

“A big inspiration was just looking at the most popular books on Amazon for kids,” Chad adds, noting that a large number of these books are focused on STEM-related subjects.

Chad met his co-founder Lawrence Tran when consulting for fintech startup Bill.com, and convinced him and his brother Tanner to work on the startup.

Over the course of a couple of years, Tappity has developed tools that make it easier and efficient to produce interactive, educational video content. Today, the library includes over 200 science lessons for kids ages 4 to 10, across thousands of videos.

While the video clips themselves are pre-recorded, they give the kids the feeling of having a one-on-one interaction with the character on the screen. For example, if the teacher is building something and needs a screwdriver, the kids can pass it to her in the app when she asks. But they’ll also have a lot of other fun options they can do instead, like passing her tape or even throwing pizza at her — and she’ll react. The teacher may also engage with kids in other ways, too, like responding to what they drew in the app, among other things.

Image Credits: Tappity

Currently, Tappity’s teacher Haley the Science Gal (Haley McHugh), a childhood entertainment expert with over 10 years of experience, is leading the lessons which span topics like space, life science, earth science and physical science.

In addition to the video lessons, kids are engaged with an in-app points system for completing activities. The app also offers follow-up emails for parents so they can track what kids are learning and further engage them.

Due to the COVID pandemic, and the resulting screen fatigue that comes from virtual schooling, Tappity adapted some lessons to include offline activities — like drawing with paper and pens, for instance. And on Sundays, Tappity offers more involved activities parents and kids can do together — like baking cookies that you turn into Pangea or making a volcano.

Tappity expects to have over 1,000 hours of video content by the end of next year, and over 4,000 hours by the year after, Chad notes.

When the team of three applied to startup accelerator Y Combinator, Tappity was small but profitable, thanks to its in-app subscription tiers that average around $9 per month. Today, the company has over 5,000 paying customers and over 20,000 weekly active users who have collectively completed 30 million lessons to date.

The company has now raised a seed round of $1.3 million from Y Combinator, Mystery Science founder Keith Schacht, Toca Boca founder Björn Jeffery, Brighter Capital (Yun-Fang Juan), former Spotify CTO Andreas Ehn, and others.

In the near-term, Tappity is working to expand its team and bring its lessons — that today are only available on iOS — to the web. Over time, the company’s goal is to create a large library of interactive educational content.

While the COVID pandemic has inspired VCs to invest in more edtech startups, the longevity of some of these businesses in the post-COVID world remains to be seen. Where Tappity is different from many of these remote learning startups or those designed for the classroom, is that its focus is not on selling into the school system.

“Teachers have picked it up organically — we give it away free to schools right now,” Chad explains. “But we’re not dedicating any resources to it because we’re focused on the parents’ and kids’ needs, which are quite a bit different,” he says.

Tappity’s app is available iOS, and includes some free content outside of the subscription.

News: 2021 will be a calmer year for semiconductors and chips (except for Intel)

• December 28, 2020
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If ever there was a typically quiet tech industry that seemed to drive massive headlines this year, it was semiconductors. From record-setting M&A purchases to prodigious venture capital financing, the decline of major players and huge international trade fights, semiconductor companies found themselves in the crosshairs of inventors, VCs, regulators, politicians and, well, Apple. 2020

If ever there was a typically quiet tech industry that seemed to drive massive headlines this year, it was semiconductors. From record-setting M&A purchases to prodigious venture capital financing, the decline of major players and huge international trade fights, semiconductor companies found themselves in the crosshairs of inventors, VCs, regulators, politicians and, well, Apple.

2020 was a banner year, mostly since it was the culmination of patterns we’ve been watching in the industry for years now. It’s dangerous to predict that there will be “less news” in any tech industry, but these patterns have in many ways worked themselves out, and it seems highly probably that 2021 will be a quieter year for semiconductors than the past year has been.

Here’s a snapshot of four of the largest story lines of 2020, and what may happen next as we enter 2021.

Chip consolidation is in process. The question is whether it will all be approved

The biggest story this year in chips was the rapid consolidation of the industry in just the span of a few months. That consolidation was headlined by Nvidia’s $40 billion purchase offer of Arm, the chip design firm that supplies the blueprint for almost all smartphones and is also starting to encroach on the desktop world with Apple’s launch of its M1 processor.

Nvidia wasn’t unique in throwing around big money to consolidate. AMD spent $35 billion to buy Xilinx, which makes reprogrammable chips known as FPGAs that are increasingly vital in tech stacks like 5G, where technologies change faster than silicon can be replaced. Intel sloughed off its memory unit to SK Hynix for $9 billion as it fights for survival, and Analog Devices bought Maxim for $21 billion in a bid to consolidate the embedded chips market in areas like sensors and power management. Beyond the major headlines of course, there were many smaller acquisitions made across the industry.

The chips industry isn’t unique in its heavy consolidation — plenty of other industries have also taken the M&A route given the relatively lenient antitrust policy in place and the abundant capital from the public markets at their disposal. Yet, there are also unique forces pushing semis to head this direction.

First, the cost of staying competitive in the chip industry have been rising rapidly. For the most high-performance chips, fabs cost tens of billions of dollars to construct and require years of lead time. R&D costs remain high, which is one reason why VC financing of the industry has been limited in the past (although that has changed – read below). It’s just tough to make it in chips if you are small and don’t have the capital to burn to stay competitive.

Perhaps even more importantly though, there has been consolidation on the customer side, and that monopsony is also forcing general consolidation for suppliers. Among the largest buyers of high-performance compute and storage today are the big cloud platforms like AWS, Google Cloud and Microsoft Azure. Apple and a few other manufacturers control most of the market in smartphones, and even in embedded systems, the number of buyers is apparently consolidating. Customer consolidation forces supplier consolidation, fighting markets demand power with market supply power.

Those two trends have been around for years, but they culminated this year with the M&A frenzy we saw. That’s not to say that there is nothing left to buy in the market, but big players like Nvidia and AMD have made their biggest bets and are unlikely to make any more major acquisitions in the meantime.

What to watch for in 2021: The big story next year is which of these massive acquisitions actually receives approval. Antitrust regulators have been remarkably sanguine about consolidation in the sector, but now that consolidation is reaching its logical end, with only a few players — or even just one — existing in their respective markets.

These antitrust concerns are most notable with Nvidia/Arm, which has to receive simultaneous approval from four authorities (United States, Britain, Europe and China). Experts in the industry that I have talked to have been divided on their predictions, with some feeling that the parties can “work out a deal” and others feeling that China in particular is unlikely to approve a deal. We can expect some signs of how this is going in 2021, although approval of the deal might well head into 2022.

AMD/Xilinx has also raised some eyebrows among experts, but hasn’t gotten nearly the press that Nvidia/Arm has. As for Analog Devices and Maxim — which is pretty much classic horizontal consolidation — shareholders approved the merger in October, and the company said in its press release then that the period for the U.S. to intervene on antitrust grounds had expired. It still faces regulatory approvals in other regions and could close by summer 2021.

Given the huge spike in antirust concerns in the United States among both Democrats and Republicans around platform companies like Google and Facebook, the big question is whether those concerns spill over into other technology industries like chips. So far, that hasn’t been the case, but the new Biden administration might have other ideas when it sets up shop in January.

Venture capital activity in chips flourished in 2020. How much more investment can the industry take though?

2020 was another major year for VC dollars in next-generation silicon, after huge investment in 2019 and 2018. I’ve covered a lot of the exciting startups in the space, including Nuvia (which announced $240 million in September for its Series B), SiFive, EdgeQ, and Cerebras, and there are even more companies in the sector, including Graphcore and Mythic that are working on exciting products. Aggregate dollars in the sector are hard to calculate, since most chip companies stay very quiet about their funding for years due to concerns about competition. Nonetheless, even just the rounds that have been announced are staggering in scale.

News: Tesla to make India debut ‘early’ next year

• December 28, 2020
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Tesla will begin its operations in India “early” 2021, a top Indian minister said on Monday, a day after the tech carmaker said it was confident it would enter the world’s second most populated market next year. The American car company will begin operations with sales in early 2021 and then “maybe” look at assembling

Tesla will begin its operations in India “early” 2021, a top Indian minister said on Monday, a day after the tech carmaker said it was confident it would enter the world’s second most populated market next year.

The American car company will begin operations with sales in early 2021 and then “maybe” look at assembling and manufacturing of cars in the country, India’s transport minister Nitin Gadkari told newspaper Indian Express. How early? Definitely not next month, Musk tweeted over the weekend.

Tesla, which broke ground in early 2019 on a $5 billion factory in China — its first outside of the U.S.. — has for years expressed interest in expanding to India. But in a 2018 tweet, Tesla chief executive Elon Musk shared that “some government regulations” in India had emerged as a roadblock.

Like elsewhere in the world, Musk has amassed tens of millions of fans in India. A handful of people paid the token amount of $1,000 to pre-order the Model 3 in 2016. Musk later blamed the local regulations for the delay in bringing the cars to customers in India.

“Maybe I’m misinformed, but I was told that 30% of parts must be locally sourced and the supply doesn’t yet exist in India to support that,” he tweeted in 2017.

India has emerged as one of the world’s largest battlegrounds for American, South Korean, and Chinese firms, that are looking at the South Asian market to expand their user and customer bases. Facebook and Google, both of which identify India as their biggest market by users, wrote multi-billion checks to Indian telecom giant Jio Platforms this year, for instance. Apple has ramped up its local production in the country in recent years to secure a larger smartphone market share — more than 70% of which is currently commanded by Chinese smartphone vendors.

New Delhi, which has claimed to abolish more than a 1,000 “archaic laws” in recent years, has previously acknowledged the pain points expressed by Musk. In the past three years, India has proposed billions of dollars in incentive to car companies to switch to electric alternatives and accelerate innovation and manufacturing of batteries in a bid to reduce its spendings on oil and curb air pollution.

India also proposed to ride-hailing firms Uber and Ola to convert 40% of their fleets in the country to electric by April 2026. It stated that the ride-hailing giants must convert 2.5% of their fleet of cars by 2021, 5% by 2022 and 10% by 2023.

Indian ride-hailing firm Ola, acquired Amsterdam-based Etergo earlier this year, said this month that it plans to invest about $327 million to set up “the world’s largest scooter factory” in the Southern Indian state of Tamil Nadu, which it said will be able to create 10,000 new jobs and have an initial capacity to produce 2 million electric vehicles in a year.

Earlier this year, a proposal drafted by Indian Prime Minister Narendra Modi-backed think tank Niti Aayog said the country could slash its spendings on oil import by as much as $40 billion in the next 10 years if electric vehicles were to be widely adopted.

Gadkari told the Indian newspaper that he is hopeful that India will emerge as the No. 1 manufacturing hub for auto in five years.

News: 2020 was a defining year for cannabis: What comes next?

• December 28, 2020
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Ross Lipson Contributor Ross Lipson is CEO and co-founder at Dutchie, an online cannabis marketplace. Ross possesses more than a decade of experience in advanced and equitable delivery services for a variety of industries, including online food ordering, and has executed two successful business exits. To say that COVID-19 has dominated the past year would

To say that COVID-19 has dominated the past year would be an understatement. We’ve seen the pandemic reorient how we interact with businesses, each other and the world around us. It’s accelerated many trends in business — from e-commerce to digital payments — by several years in a matter of months.

The cannabis industry is no exception. Cannabis was already the country’s fastest-growing industry, but 2020 has taken the space to another level. A record-high percentage of Americans now support cannabis legalization.

By all accounts, cannabis was one of the biggest winners on Election Day, with legalization passing in Arizona, Montana, Missouri, New Jersey and South Dakota. More than one-third of the country — over 111 million people — now live in a state with legal recreational cannabis. By 2021, the legal industry is expected to be worth $24.5 billion.

Never has it been more clear that cannabis is now a staple in mainstream America. As we look toward 2021, this upward trajectory not only opens new doors for the industry, but the economy as a whole, with greater innovation, investment and employment opportunities flowing into the space.

A green economy

More than 57 million Americans have filed for unemployment since March. While the financial and employment opportunities around cannabis are not a silver bullet, they’re certainly not something we should ignore.

Legal cannabis sales reached nearly $20 billion this past year and are expected to top $40 billion annually within the next four years. As the industry continues to grow, companies are hiring to keep pace. The legal cannabis market supports 243,700 full-time-equivalent American jobs, which are set to multiply by 250% between 2018 and 2028. This makes the cannabis industry America’s largest source for new jobs.

Cannabis can also strengthen state economies and generate opportunities for increased tax revenue, particularly as state and local budgets dwindle. For example, with its new legalization measure, Arizona will issue a 16% tax on cannabis sales that will go toward community colleges, police, fire departments and public health programs.

Accelerating cannabis e-commerce

If there’s one point that’s been reinforced this year, it’s that cannabis is a highly demanded and indispensable consumer good.

At the height of widespread shelter-in-place orders this spring, dispensaries were classified as “essential” in many states alongside grocery stores, gas stations and pharmacies. While people couldn’t shop at department stores or go to the movies, they could still purchase from their local dispensary. This government recognition was a major signal to the market that the space has been elevated to the mainstream.

A resounding response from consumers followed with record cannabis sales. Unprecedented demand forced cannabis retailers to revolutionize the ways they do business and how customers purchase products. To minimize direct person-to-person contact that can potentially spread the virus, dispensaries turned quickly to e-commerce and digital payment solutions to keep employees and consumers safe while modernizing their business.

As a result of these changes across industries, online sales will reach $794.5 billion by the end of the year, far surpassing original estimates. Experts estimate that the pandemic accelerated the shift to e-commerce by five years. At Dutchie, we’ve seen this firsthand. Since March, we’ve experienced a 700% surge in online orders and a 32% increase in average order size.

Looking ahead to 2021

These political and business transformations were milestones that we’ve fast-forwarded to at breakneck speed. So, what comes next?

I see technological innovation at the forefront of the legal industry moving forward. Technology will enable dispensaries to streamline operations in a highly regulated space where compliance is essential. In turn, data will increasingly become more important as retailers will need to better understand their data to make more proactive, informed decisions. This will be a focus for dispensaries of all sizes, but in particular larger businesses that are looking for an increasingly high level of sophistication for their online experiences.

To meet this need, we’re finally seeing new enterprise-level solutions on the market that empower dispensaries to fully leverage their data to design their unique online identity so they can remain competitive as more players join the space.

As legalization continues to spread, wider adoption will further legitimize the industry and de-stigmatize cannabis sales and use. We will likely see cannabis companies attracting more top talent from some of the most notable companies across mainstream industries, and more software platforms, businesses and investors that were formerly hesitant to enter the space begin to work with and invest in cannabis-related businesses. Federal legalization of cannabis also has the potential to enhance liquidity and open the floodgates to more investment deals.

Additionally, as we’ve already begun to see, there will be an increasing trend toward consolidation across the space as retailers continue to make big acquisitions and mergers. More multistate operators will consume smaller players and smaller players will combine forces, creating a space that is more cohesive and less fragmented.

The future of cannabis

The cannabis industry is still in its infancy, but its potential is crystal clear.

As more states legalize and the industry grows and matures, we will see the needle move even closer to where we want to be: Where legal cannabis is afforded the same technological and financial resources as other mainstream industries; innovators can more freely come together to develop modern technology solutions to push the space forward; and where consumers and patients can get what they want more conveniently.

News: Equity Monday: No, tech news doesn’t stop over the holidays

• December 28, 2020
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Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines. This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here — and don’t forget to check out the first of our two holiday eps, the last one talking to VCs about what surprised them in 2020.

Anyhoo, from vacation, here’s what Chris and I got up to:

• A report looking at how ecommerce changed during 2020.
• The epic carnage surrounding the Chinese government’s clamping down on its tech sector (more here, and here from TechCrunch).
• Lalamove raised $515 million in a Series E.
• Yuanfudao raised another $300 million.
• Indian startups did not have the strongest year of venture fundraising, which felt a bit surprising.
• And it doesn’t appear that Japan did either.
• But here in the United States, holy shit things were bonkers.

Tune in Thursday for one more fun episode, and then we’re back to regular programming the week after!

Equity drops every Monday at 7:00 a.m. PST and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.

News: 4 keys to international expansion

• December 28, 2020
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Adopt a “hire slow, fire fast” mentality for your expansion strategy. Don’t be afraid to pull the plug if things don’t work out.

During my five years with Global Founders Capital, Rocket Internet’s $1 billion VC arm, I saw more than a hundred of Rocket’s incubated companies attempt to internationalize. For background, Rocket Internet has helped launch some very successful businesses internationally, including HelloFresh ($12.9 billion market cap), Lazada ($1 billion exit to Alibaba), Jumia ($3.2 billion market cap), Zalando ($21.2 billion market cap) and many others. Rocket often followed the Blitzscaling model popularized by Reid Hoffman — earning them an appearance in his book of the same name.

After an initial success helping Groupon scale internationally via a merger with Rocket’s incubation firm CityDeal, Rocket’s team have aggressively scaled businesses from Algeria to Zimbabwe — sometimes in a matter of weeks. No surprise, Rocket also has a graveyard of failed companies that were victims of bad internationalization efforts.

My personal observations on Rocket’s successes and failures start with this crucial point: These learnings might not apply to your unique combination business model, market and timing. No matter how well you prepare and plan your internationalization, in the end you need to be agile, alert and smart as you dip your toes into your first foreign market.

Fail fast and cheaply

Internationalization can be a big driver of growth and consequently enterprise value, which is why investors always push for it. But going abroad can also destroy value just as quickly. As a founder, it’s your job to manage financial and operational risks. Finding the right balance between keeping costs in check and not underinvesting can mean doing things more slowly than your board would like. For example, you might launch new markets sequentially instead of rolling 10 out at the same time.

Adopt a “hire slow, fire fast” mentality for your expansion strategy. Don’t be afraid to pull the plug if things don’t work out.

Our team at Heartcore Capital use the following framework and learnings to guide internationalization strategies for our portfolio companies. A successful internationalization strategy needs to answer and address the “Four Ws”: When, Where, Which and With whom to internationalize. (Regarding the fifth W from journalism, you should not need to ask the “Why” question if you want to build a large business!)

1. When is the right time to start?

Many companies make the costly mistake of launching abroad too soon. They look at internationalization as a detached function, isolated from the rest of the business and then launch their second market prematurely. Follow this simple rule: Wait to internationalize until you hit product/market fit.

How do you know exactly when you’ve reached product/market fit? According to Marc Andreessen, “Product/market fit means being in a good market with a product that can satisfy that market.” He adds that experienced entrepreneurs can usually feel if they’ve reached this point.

Let’s take the man for his word and move on to the actual argument: Until you have product/market fit, you will not be able to distinguish between what you’ve learned from your business model and what you’ve learned from your in-country experience. Mistakes will compound. Complexities and costs will multiply. I contend that insufficient understanding of their business and operating model is the main reason why companies fail with their expansion strategies.

Founders should also consider the underlying costs of internationalizing before they decide to expand (more about this in the “What” section below). Some companies are global by default — think mobile gaming companies — or simply require language localization. Others need to build new warehouses, hire local teams or build entirely new products. The costs and respective risks of expanding prematurely depend heavily on the business model.

There are edge cases where companies need to move quickly to internationalize for strategic reasons — despite uncertainty about their market fit. For instance, companies like Groupon or those engaged in food delivery face winner-takes-most markets, where opportunities for product differentiation are limited. “Blitzscaling” makes sense in cases like these.

However, you should tread carefully if your only reason to start scaling abroad is a large fundraise or to match a competitor’s internationalization efforts. Scaling prematurely for the wrong reasons might just cost you your entire company.

When Rocket Internet announced it would launch the Homejoy model into European markets with Helpling, the American “original” company launched quickly in Germany in an effort to squash their new competitor. In the early days of “on-demand everything,” a managed marketplace for cleaning services sounded like the next unicorn in the making.

In 2013, Homejoy had a fresh $24 million Series A from Google Ventures and First Round — considered a huge round at a time when Instacart had just raised an $8 million Series A and Snapchat had done a $13 million Series A round. It must have seemed like a good idea to squash the German competition early.

As it turned out, Homejoy’s product was not yet ready to scale internationally. Just 13 months after launching in Germany, Homejoy had to cease operations globally, while Rocket’s Helpling is still alive and kicking. Helpling focused carefully on product, automation and making their unit economics work. A rush to crush an international competitor caused the demise of a would-be unicorn.

Homejoy expanded internationally in 2014 in a rush to squash a new German competitor Helpling. Their websites in 2020 show starkly different outcomes. Image Credits: Homejoy/Helpling

2. Where should you internationalize?

When deciding which new international market to tackle, it is vital to do your homework. Analyze the competitive environment, partner availability, infrastructure, culture, regulation and synergies with your home market.

In the early days of e-commerce, it was rather easy to analyze if a market was an expansion target. In the absence of professional competition, Rocket chose new countries based solely on GDP and internet penetration.

News: Chinese online education app Zuoyebang raises $1.6 billion from investors including Alibaba

• December 28, 2020
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The rivalry between China’s top online learning apps has become even more intense this year because of the COVID-19 pandemic. The latest company to score a significant funding round is Zuoyebang, which announced today (link in Chinese) that it has raised a $1.6 billion Series E+ from investors including Alibaba Group. Other participants included returning

The rivalry between China’s top online learning apps has become even more intense this year because of the COVID-19 pandemic. The latest company to score a significant funding round is Zuoyebang, which announced today (link in Chinese) that it has raised a $1.6 billion Series E+ from investors including Alibaba Group. Other participants included returning investors Tiger Global Management, SoftBank Vision Fund, Sequoia Capital China and FountainVest Partners.

Zuoyebang’s latest announcement comes just six months after it announced a $750 million Series E led by Tiger Global and FountainVest. The latest financing brings Zuoyebang’s total raised so far to $2.93 billion. The company did not disclose its latest worth, but Reuters reported in September that it was raising at a $10 billion valuation.

One of Zuoyebang’s main competitors is Yuanfudao, which announced in October that it had reached a $15.5 billion valuation after closing a $2.2 billion round led by Tencent. This pushed Yuanfudao ahead of Byju as the world’s most valuable ed-tech company. Another popular online learning app in China is Yiqizuoye, which is backed by Singapore’s Temasek.

Zuoyebang offers online courses, live lessons and homework help for kindergarten to 12th grade students, and claims about 170 million monthly active users, about 50 million of whom use the service each day. In comparison, there were about 200 million K-12 students in 2019 in China, according to the Ministry of Education (link in Chinese).

In fall 2020, the total number of students in Zuoyebang’s paid live-stream classes reached more than 10 million, setting an industry record, the company claims. While a lot of the growth was driven by the pandemic, Zuoyebang founder Hou Jianbin said in the company’s funding announcement that it expects online education to continue growing in the longer term, and will invest in K-12 classes and expand its produt categories.