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AC Ventures

AC Ventures announces the first close of its $80 million fund for Indonesian startups

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As one of the world’s most populated countries, with a fast-growing internet economy, Indonesia offers plenty of opportunity for startups. AC Ventures wants to tap into that with its $80 million ACV Capital III L.P. fund. The firm announced the first close of the fund today, with $56 million already committed.

The capital will be invested into 30 Indonesian startups over the next three years, with first checks of up to $3 million going to seed to Series A-stage companies.

Based in Jakarta with a team of twelve people, ACV is a strategic alliance between AC Ventures and Indies Capital. ACV’s founding partners are Adrian Li and Michael Soerijadji, both founders and managing partners at AC Ventures, and Indies Capital managing partner Pandu Sjahrir. Sjahrir is also on the board of two Indonesian unicorns, Gojek and Sea.

The alliance has already made investments in nine startups: Shipper, Kargo, Stockbit, Bukuwarung, ESB, Co-Learn, KitaBeli, Aruna and Soul Parking. It will focus on e-commerce, financial tech, startups that serve MSMEs (or micro, small and medium-sized enterprises) and digital media-enabled services, which Li told TechCrunch could encompass sectors like education and healthcare, in addition to entertainment.

ACV also plans to work closely with the companies it invests in, guiding them through business development, key executive hires and later rounds of funding. Its also launched programs like AC Academy to coach founders on skills like growth hacking and fundraising.

Internet penetration and online payments have grown a lot over the past five years, but e-commerce still accounts for a tiny fraction of Indonesia’s overall retail market. This gives startups plenty of room to innovate. For example, logistics is very fragmented in Indonesia, because it has 600 inhabited islands. Shipper, another ACV investment, offers a platform to help sellers manage multiple shipments through different providers at once.

Fundraising for ACV Capital III began before the COVID-19 pandemic and despite the crisis’ economic toll, Li said that in countries like Indonesia, it may speed up the adoption of many kinds of technology. For example, BukuWarung, which focuses on digitizing operations for neighborhood shops and other small businesses, recently launched digital payments in response to demand for online orders and contactless payments. Another ACV portfolio company, ESB, is doing the same thing for restaurants, and Li said interest in its services increased as food and beverage businesses turned to online orders and deliveries during social distancing measures.

“We’re really seeing some great opportunities in Indonesia, and we’re seeing more interest globally going into startups in Indonesia,” said Li. “This is the world’s fourth most populous country and there are so many products and services which can be delivered better and more efficiently through technology.”

Airtel

India’s Razorpay becomes unicorn after new $100 million funding round

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Bangalore-headquartered Razorpay, one of the handful of Indian fintech startups that has demonstrated accelerated growth in recent years, has joined the coveted unicorn club after raising $100 million in a new financing round, the payments processing startup said on Monday.

The new financing round, a Series D, was co-led by Singapore’s sovereign wealth fund GIC and Sequoia India, the six-year-old Indian startup said. The new round valued the startup at “a little more than $1 billion,” co-founder and chief executive Harshil Mathur told TechCrunch in an interview.

Existing investors Ribbit Capital, Tiger Global, Y Combinator, and Matrix Partners also participated in the round, which brings Razorpay’s total to-date raise to $206.5 million.

Razorpay accepts, processes, and disburses money online for small businesses and enterprises. In recent years, the startup has expanded its offerings to provide loans to businesses and also launched a neo-banking platform to issue corporate credit cards, among other products.

Mathur and Shashank Kumar (pictured above), who met each other at IIT Roorkee, started Razorpay in 2014. They began to explore opportunities around payments processing business after realizing just how difficult it was for small businesses such as young startups to accept money online less than a decade ago. There were very few payment processing firms in India then and startups needed to produce a long-list of documents.

The early team of about 11 people at Razorpay shared a single apartment as the co-founders rushed to meet with over 100 bankers to convince banks to work with them. The conversations were slow and remained in a deadlock for so long that the co-founders felt helpless explaining the same challenge to investors numerous times, they recalled in an interview last year.

To say things have changed for Razorpay would be an understatement. It’s become the largest payments provider for business in India, said Mathur. Razorpay, which competes with Prosus Ventures’ PayU, accepts a wide-range of payment options including credit cards, debit cards, mobile wallets, and UPI.

“Razorpay has established itself as a clear leader, with its strong focus on customer experience and product innovation,” said Choo Yong Cheen, Chief Investment Officer for Private Equity at GIC, in a statement. “GIC has a long track record of partnering with leading fintech companies globally and is delighted to partner with Razorpay in its journey to transform payments and banking.”

Some of Razorpay’s clients include budget lodging decacorn Oyo, e-commerce giant Tokopedia, top food delivery startups Zomato and Swiggy, online learning platform Byju’s, ride-hailing giant Gojek, supply chain platform Zilingo, caller ID service Truecaller, travel ticketing firms Yatra and Goibibo, and telecom giant Airtel.

The startup expects to process about $25 billion in transactions — up five times from last year — for nearly 10 million of its customers this year, said Mathur.

He attributed some of the growth to the coronavirus pandemic, which he said has accelerated the digital adoption among many businesses.

On the neo-banking and capital side, Mathur said, Razorpay expects RazorpayX and Razorpay Capital to account for about 35% of the startup’s revenue by the end of March next year.

Mathur said the startup’s payment processing service continues to be its fastest growing business and does not need much capital to grow, so the startup will be deploying the fresh funds to expand its neo-banking offerings to include vendor payment, and expense and tax management and other features.

The startup, which aims to work with over 50 million businesses by 2025, may also acquire a few firms as it explores opportunities around inorganic expansion in the neo-banking category, said Mathur.

“We will continue to make an impactful contribution to the growth of the industry, aid adoption in the under-served markets and drive new practices and a new thinking for the industry to follow. And this investment fits perfectly with our growth strategy,” he said.

While the coronavirus pandemic has slowed down deal-makings in India, about half a dozen startups in the country including online leaning platform Unacademy, and Pine Labs have secured the unicorn status.

Cloud

Twilio is buying customer data startup Segment for between $3B and $4B

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Sources have told TechCrunch that Twilio intends to acquire customer data startup Segment for between $3 and $4 billion. Forbes broke the story on Friday night, reporting a price tag of $3.2 billion.

We have heard from a couple of industry sources that the deal is in the works and could be announced as early as Monday.

Twilio and Segment are both API companies. That means they create an easy way for developers to tap into a specific type of functionality without writing a lot of code. As I wrote in a 2017 article on Segment, it provides a set of APIs to pull together customer data from a variety of sources:

Segment has made a name for itself by providing a set of APIs that enable it to gather data about a customer from a variety of sources like your CRM tool, customer service application and website and pull that all together into a single view of the customer, something that is the goal of every company in the customer information business.

Segment has a plan to help companies comply with GDPR data privacy requests

While Twilio’s main focus since it launched in 2008 has been on making it easy to embed communications functionality into any app, it signaled a switch in direction when it released the Flex customer service API in March 2018. Later that same year, it bought SendGrid, an email marketing API company for $2 billion.

Twilio’s market cap as of Friday was an impressive $45 billion. You could see how it can afford to flex its financial muscles to combine Twilio’s core API mission, especially Flex, with the ability to pull customer data with Segment and create customized email or ads with SendGrid.

This could enable Twilio to expand beyond pure core communications capabilities and it could come at the cost of around $5 billion for the two companies, a good deal for what could turn out to be a substantial business as more and more companies look for ways to understand and communicate with their customers in more relevant ways across multiple channels.

Twilio launches Flex, a fully programmable contact center

As Semil Shah from early stage VC firm Haystack wrote in the company blog yesterday, Segment saw a different way to gather customer data, and Twilio was wise to swoop in and buy it.

Segment’s belief was that a traditional CRM wasn’t robust enough for the enterprise to properly manage its pipe. Segment entered to provide customer data infrastructure to offer a more unified experience. Now under the Twilio umbrella, Segment can continue to build key integrations (like they have for Twilio data), which is being used globally inside Fortune 500 companies already.

Segment was founded in 2011 and raised over $283 million, according to Crunchbase data. Its most recent raise was $175 million in April on a $1.5 billion valuation.

Twilio stock closed at $306.24 per share on Friday up $2.39%.

Segment declined to comment on this story. We also sent a request for comment to Twilio, but hadn’t heard back by the time we published. If that changes, we will update the story.

Twilio acquires email API platform SendGrid for $2 billion in stock

disinformation

Election result delays mean “the system is working,” says cybersecurity chief

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With an unprecedented number of Americans voting by mail this year, it may take longer than normal for results to come in this Election Day—including even unofficial results. Yet President Donald Trump’s disinformation campaign about election security continues to falsely suggest that any “delay” would be the result of fraud.

Government officials charged with protecting the election made it clear, however, that slower-than-usual results should be totally expected.

“We are likely to see delays in the processing of the election,” says Brandon Wales, the executive director at the Cybersecurity and Infrastructure Security Agency, or CISA. “The truth is that nothing about this process changes when the election will be officially done.”

“Results might not be available on election night … [but] it doesn’t mean the process has been compromised; it means the system is working.”

“Everything you hear on Election Day has always been unofficial results,” he adds. “The vote isn’t done until the election is certified by that state’s chief election official, which often comes several weeks after the election. Even the unofficial results might not be available on election night in some places, including in crucial swing states, so we may not have results on election night. We encourage people to not be concerned about that. That is normal. It doesn’t mean the process has been compromised; it means the system is working. Local and state officials are professionals. Let them do their jobs.”

The comments, which were made during MIT Technology Review’s Spotlight On Cybersecurity event, outline the challenge faced during this year’s election.

The Election Project, a running tally of early voting activity, shows that over 2.5 million Americans have already returned mail-in ballots. Counting them can take longer than counting in-person votes because of security measures like verifying signatures and processing the outer and secrecy envelopes. Add to that the fact that counting often starts late, and it can push back the expected timeline for results. Mail ballots are still secure and fraud is extremely rare, contrary to the president’s repeated lies about the subject.

But we’re not out of the woods yet

If America doesn’t get results on Election Day, a storm of disinformation is likely to be kicked up in an attempt to undermine the legitimacy of the vote. Federal officials, like Wales, have said that foreign actors like Russia could insert extra chaos at a delicate time for American democracy.

“I think our role is, first, trying to correct election disinformation,” Wales said.

In one recent example, a Russian news site reported that a Michigan voter database was hacked, and news began to spread quickly. CISA—and journalists—corrected the record: all the information that had been apparently “stolen” was actually already publicly available, as most state voter rolls are. There was in fact no compromise of the system, even though word of an attack spread like a small wildfire.

On Election Day, though, the threat is a much bigger blaze.

While the threat of foreign disinformation is serious, it’s also simpler to deal with than the almost-guaranteed domestic disinformation. The president has effectively promised that he will claim the election is stolen if he is losing or if results are not immediately reported.

What is the playbook for Wales when the malicious actor is American rather than foreign?

“There certainly is a difference in what the United States government can do because under the First Amendment people have freedom of speech,” he said. “Social-media companies can take action under their terms of service. CISA’s role doesn’t change. Our role is to get to the American people and provide them the right way to evaluate information they’re seeing. Ultimately we can do that whether disinformation comes from foreign or domestic sources.”

CISA’s plan, whether disinformation comes from abroad or home, is to point Americans to trusted sources.

“In almost all cases,” Wales explains, “that’s likely to be state and local election officials, who are the professionals who run these elections and who have a vested interest in making sure votes are counted correctly.”