Threads raises $20M for its luxury goods ’boutique’ that exists only in messaging apps

When you think of e-commerce marketplaces, chances are that the first things that come to mind are storefronts built on websites and apps. But today an e-commerce startup that has never had either — and never plans to — has raised a fistful of cash to continue building out its shopping experience on the platform has been its growth engine: messaging apps.

London-based Threads has raised $20 million in funding for an operation that courts high-end, millennial, mostly female customers with tailored selections of luxury fashion, which it then sells to them on services like WeChat, WhatsApp, SnapchatInstagram and Apple’s iMessage for their primary interactions with a team of human (not AI) shopping assistants.

“We very intentionally didn’t build a website for consumers, just as we haven’t built an app,” founder and CEO Sophie Hill explained in an interview. “The idea behind Threads is curation and convenience. It’s a customer-centric business and it’s built on chat because that is where the customers wanted to be and transact. Chat may not have been used in the way we were using it in 2010” — when the company was founded — “but that was our problem to solve. We had to learn to serve through chat rather than create was for convenient for us as a business.”

The company says that it will be using the new funding — led by fashion and millennial-focused fund C Ventures, with participation from Highland Europe (which invests in Matches Fashion, among other related businesses) — to expand its business across the board: hiring more stylists, more engineers to build tech to help the operation run smoother, and other creative and other staff to bolster the 90 who already work for the business. But even before now, the company has been growing quite impressively.

With customers in 100 countries — 70 percent of them under the age of 35, with Asia one of its fastest-growing regions — Threads says that its average amount people spend in a shopping session (basket size) is a very unshabby $3,000. And because of its success in linking up expensive goods with people willing to buy it, it’s secured relationships with designers and brands like Dior, Fendi, Chopard and some 250 other luxury names to source key items for its clients. As a marketplace, Threads makes commissions from the suppliers when items are sold.

Threads materialised (sorry) as a business when founder and CEO Sophie Hill was still working as a buyer for Topshop owner Arcadia, her first job out of university (where she studied sociology).

The year was 2010, and even though messaging apps had yet to take off, and well before the ones you likely use today really had any functionality at all, with Instagram and the “stories” format nowhere on the scene, Hill started canvassing opinion among the people she hoped to target. She saw that they were already all avidly using messaging clients on their phones to chat to each other.

Messaging in the West was relatively feature-free, but Hill could see what was coming around the corner by looking at WeChat, the Chinese app that was well ahead of its time, and that — plus what her target audience was already using — was enough to convince her of how she needed to build her business.

Threads has a somewhat unconventional cost base as an e-commerce startup.

Without a site and app, its developer team instead is focused on ways of improving the processes that go into the selling that Threads does do: personalized, concierge style services. That means building tech to make tracking items more efficient for customers (that might come in the form of an actual chatbot at some point, Hill said); building a better search engine for the assistants to find specific pieces for Threads clients; and so on.

Another area where Threads’ costs are quite different from the typical e-commerce business is in customer acquisition. Hill says the startup company also has never really had a dedicated marketing budget (nor “someone leading the marketing function”). Instead, Threads has grown mainly by word of mouth among users, and later via social media platforms like Instagram as its own content and that of its customers gets attention.

On the other hand, one area where Threads has potentially weathered significantly more expense than the average e-commerce business is in how it connects clients with products.

Hill says that its chat-based shopping service fits into a wider world of busy activity and travel for a typical customer, who will nonetheless expect a high level of engagement as part of a five-star service, even if it originated in chat. So, Threads has been known to organise designers flying in from one city to another to show off a specific piece to a client, and also pulling together shopping to hand deliver it to a client in whatever location she happens to be, or even organising excursions to actual, physical boutiques when those customers take a trip to a city, either specifically to shop or for another reason.

“It is a complement to what they need and how they want to shop for luxury goods,” she said.

There is something about a business based fundamentally around a team of people serving users, versus a business that has built technology to do that job, which frankly feels very analogue. But Hill and her investors believe that there is scalability in Threads’ future, and tech will be what helps get it there (just as it has been what helped the startup materialise in the first place).

“Just because someone doesn’t have a website or app doesn’t mean we don’t have a direct purchase path,” Hill said. “We are going to be using technology to enhance that personalised experience. Using tech blended with human interaction will be the ultimate service for the luxury industry. We see it as a complement, a way to enhance the personal experience.

“Tech has moved quickly and we are starting to test and how we will integrate more AI,” she added. “You can see where the customers might be happy with that response versus talking to a person. It’s about us seeing how customers will react.”

The mix of a business born in the concept of high-touch customer service, with luxury boutique-style profit margins, but with roots in a very popular technology (messaging) and the potential to bring on even more tech to make it work more efficiently, is the crux of what caught investors’ attention.

“People who are Threads’ customers clearly like to transact like this,” Tony Zappala, a partner at Highland Europe, said. “And both Threads and those customers are getting more responses. It’s much harder to achieve that on a website these days.”

The next stop for Threads will be expanding to more product categories beyond fashion and jewellery — although Hill would not say what — and adding more offices to provide services closer to its customers on both sides of the marketplace. New York and Hong Kong are first on the list.

FiveAI to start a trial of its shared autonomous car fleet in London in 2019

After raising $35 million to develop driverless car technology and a strategy to build a fleet of shared vehicles, UK startup FiveAI is announcing its first on-street trial: a service aimed at commuters in the London outer boroughs of Bromley and Croydon. Projected to begin in late 2019, it will kick off first with a 10-month “data gathering” exercise, which will see five FiveAI vehicles, with drivers, collect information about road conditions, the movement of pedestrians and various vehicles, and other variables to help train its AI platform.

The new trial will be the first on-street effort from the UK startup, which has up to now been testing its technology primarily in Bedfordshire, at automotive testing centre Milbrook Proving Ground, according to Ben Peters, FiveAI’s VP of product who is also a co-founder of the company (alongside Stan BolandSteve Allpress, John Redford and Simon Walker).

The news of the London trial comes as TechCrunch has learned that FiveAI is also in the process of raising a new round of funding.

While the $35 million FiveAI has raised to date is considered the highest amount of funding for an autonomous car company in Europe, it is a very modest figure when compared to startups in the US and China. Indeed, although transportation across Europe is estimated to be a $400 billion market, Peters estimates that no more than $100 million has been raised by autonomous driving startups in the region, versus around $8 billion by autonomous car startups the US, home to startups like Zoox and Nutonomy (which, like FiveAI, are building platforms that they plan to use in their own fleets), transportation providers like Uber, and car makers (which themselves are acquiring startup talent to kickstart their efforts), and tech giants like Google that approach cars like the next big hardware challenge.

But there is a clear opportunity: Europe has a lot of urban density, roads that are less likely to follow grid patterns, and road names are very often the opposite of clearly marked. These factors make Europe a hard problem to tackle, but one that a local company might be more amenable to trying.

With that in mind, Peters would not say how much FiveAI is looking to raise, or anything about the investors, but he did confirm that the round would be FiveAI’s largest to date, with the aim of expanding trials to more cities across Europe. The round should be closed by the end of this year.

In the meantime, Bromley and Croydon may not be the most high-profile parts of London to those outside of England, but Peters said that FiveAI is eschewing Central London and opting instead to focus on these two boroughs for a couple of reasons.

One is that the area affords the startup some sympathetic guinea pigs, or as Peters calls them, “friendly users.” First Direct, the insurance company that is an investor in FiveAI, has recently moved its offices to Bromley from Croydon, and so there are employees living in the latter borough who have to commute to the former on a regular basis. This gives FiveAI an opportunity to build a service tailored to that market.

Another is the opportunity to fill a gap that isn’t being addressed by others. The center of London is very congested, but there are already a number of transportation alternatives attempting to address that issue. “There are a lot of problems to solve there, but they are very well served by current providers,” said Peters. “But in Zones 4 to 6 [the outer boroughs of London], about one quarter of people are still driving their own vehicles to and from work.” That presents an opportunity for a shared mobility service.

It will take a good 10 months before the first FiveAI vehicles can offer rides, and likely more months before no driver has to be present to engage the vehicle if something goes awry. Peters said that this slow early work will help the startup add more roads, areas and cities to the service more quickly down the line. “It doesn’t have to be as slow in the future, maybe just a few months to get up and going,” he said. “We’re really targeting an urban service, which is the difficult part. Autonomous driving in urban areas is the hardest challenge, one that is still unsolved.”

Slack is raising $400M+ with a post-money valuation of $7B or more

Slack — the app that lets coworkers and others in professional circles chat with each other and call in data from hundreds of integrated apps in the name of getting more work done (or at least procrastinating in an entertaining way) — has been on a growth tear in the last few years, most recently passing 8 million daily active users, 3 million of them paying. Now, the company is planning to capitalise on that with some more funding.

TechCrunch has learned that Slack is raising another round, this time in the region of $400 million or possibly more, with a post-money valuation of at least $7 billion — adding a whopping $2 billion on top of the company’s last valuation in September 2017, when SoftBank led a $250 million round at a $5.1 billion valuation.

We’ve heard from multiple sources that a new investor, General Atlantic, is leading this round, with possibly another new backer, Dragoneer, also in the mix. It’s not clear which other investors might be involved; the company counts no less than 41 other backers on its cap table already, according to PitchBook. (You might even say Several People Are Funding…) We also don’t know whether this round has closed.

At $400 million, this would make it Slack’s biggest round to date. That size underscores a few different things.

First, it points to the existing opportunity in enterprise messaging. Consumerisation has taken hold, and apps that let users easily start and carry on a mix of serious and diverting conversations, infused with GIFs or whatever data they might need from other applications, are vying to replace other ways that people communicate in the workplace, such as email, phone conferences and in-person chats, even when people are in the same vicinity as each other. With consumer messaging apps like WhatsApp topping 1.5 billion users, there’s plenty of room for enterprise messaging to grow.

Second, the round and valuation emphasize Slack’s position as a leader in this area. While there were other enterprise social networking apps in existence before Slack first launched in 2013 — Yammer, Hipchat and Socialcast among them — nothing had struck a chord quite as Slack did. “Things have been going crazy”, was how co-founder and CEO Stewart Butterfield described it to me when Slack exited beta: teams trialling it were seeing usage from “every single team member, every day.”

That growth pace has continued. Today, the company counts 70,000 paid teams including Capital One, eBay, IBM, 21st Century Fox, and 65 percent of Fortune 100 companies among its bigger users; and with customers in 100 countries, half of its DAUs are outside North America (UK, Japan, Germany, France and India are its biggest international markets).

But thirdly — and this could be key when considering how this funding will be used — Slack is not the only game in town.

Software giant Microsoft has launched Teams, and social networking behemoth Facebook has Workplace. Using their respective dominance in enterprise software and social mechanics, these two have stolen a march on picking up some key customer wins among businesses that have opted for products that are more natural fits with what their employees were already using. Microsoft reported 200,000 paying organizations earlier this year, and Facebook has snagged some very large customers like Walmart.

Slack’s bottom-up distribution strategy could give it an edge against these larger companies and their broader but more complex products. The lightweight nature of Slack’s messaging-first approach allows it more easily be inserted into a company’s office stack. Nearly every type of employee needs office messaging, creating potential for Slack to serve as an identity layer for enterprise software. It’s own Slack Fund invests in potential companies that plug in, as the company hopes to build an ecosystem of partners that can fill in missing functionality.

AUSTIN, TX – MARCH 15: Stewart Butterfield, CEO of Slack speaks onstage at ‘Stewart Butterfield in Conversation with Farhad Manjoo’ during the 2016 SXSW Music, Film + Interactive Festival at Austin Convention Center on March 15, 2016 in Austin, Texas. (Photo by Mindy Best/Getty Images for SXSW)

Alongside dozens of other, smaller rivals offering comparative mixes of tools, it’s no surprise that last month Slack tightened up its bootlaces to take on the role of consolidator, snapping up IP and shutting down Hipchat and Stride from Atlassian, with the latter taking a stake in Slack as part of the deal.

Slack, which has a relatively modest 1,000+ employees, has ruled out an IPO this year, so this latest round will help it shore up cash in the meantime to continue growing, and competing.

Contacted for this story, Slack said that it does not comment on rumors or speculation.

PayU acquires Zooz to take on international payment services

A week after PayPal led a $50 million round in the cross-border payment specialist PPRO, one of its big competitors in the developing world has announced an acquisition of its own in the same space. PayU — the payments division of Naspers that is sometimes described as the PayPal of the developing world — has acquired Zooz, a startup based out of Israel that provides an API to merchants that lets them accept a variety of payments depending on the market.

The two had already been working together — specifically to provide PayU payment options to merchants in markets where PayU is active — and the plan will be to integrate the services further to enable PayU to step deeper into the cross-border payment services space, potentially even by enabling the integration of the payment methods of competitors as part of the mix of payment options.

“In the choice between building a closed walled garden and open platform, we decided to go with the second model,” PayU’s CEO Laurent le Moal said in an interview. “The reality is that you need to be neutral and work with everyone.”

PayU will also invest in adding further features to the Zooz platform, such as fraud management (which you could argue is table stakes these days in payments), real-time reporting and smart routing.

Zooz’s whole team of 70 will be joining, including co-founders Oren Levy (CEO) and Ronen Morecki (CTO), who will respectively take senior roles at PayU as business development with larger merchants, and CTO of innovation.

Terms of the deal have not been disclosed, but that PayU has said that this deal brings its total spend on acquisitions and investments to about $350 million to date. That includes acquiring CitrusPay for $130 million, investing €100 million (between $120 million and $130 million) in Kreditech and several other investments. Doing the math, this potentially puts this deal at a range of between $50 million and $100 million.

Zooz was founded in 2010 and had raised around $33 million, from investors that include Target Global Ventures, Fang Fund, iAngels, Kreos Capital and existing investors Blumberg Capital, lool ventures, Rhodium, Claltech (Access Industries’ Israeli tech vehicle), XSeed Capital, CampOne Ventures and angel investor Eilon Tirosh.

Similar to PPRO, the company in which PayPal invested earlier this month, Zooz’s service addresses the widespread fragmentation that exists in payments globally. While credit cards are very much the norm in the US, globally they account for just under 20 percent of all e-commerce transactions, with consumers and businesses in different geographies developing their own localised payment methods and preferences. For example, cash on delivery or deposited with convenience stores, or bank transfers also play big roles.

This can be a problem for a merchant that is based in one country but interested in selling to people in another — an opportunity estimated to be worth $994 billion globally — if it doesn’t accept whatever the local payment method happens to be. Zooz addresses this by providing an API to merchants that gives them the option of a number of payment providing companies and methods so that they can enable the most popular variety of payment options to buyers depending on the market.

It will be worth watching whether payment companies will continue to be happy integrating with Zooz after its sale to PayU is complete. The fact that Zooz already integrates with different payment options, and itself is not a payment services provider, was one reason why PayU was interested in it.

At a time when there are multiple options for payment methods, including PayU itself, there is potentially an opportunity to be able to make revenues by trying to play in as many of those transactions as possible. Notably, PayU already lets people integrate some 250 methods into its own wallet, and it says it’s the leading online payment service provider in 16 markets out of the 17 in which it is active..

Zooz potentially will be boosting that footprint with more than just a platform that enables multiple payment options, but the transaction data and analytics that come with those transactions, which can become useful for other services in other parts of the business.

“The unique contribution we bring to PayU is an advanced technological layer which not only helps merchants worldwide to upscale their operations and provide a better customer experience, but also offers analytics and optimization capabilities that equip them with unprecedented insights,” noted Levy, Zooz’s CEO.

EBay paid $573M to buy Japanese e-commerce platform Qoo10, filing reveals

EBay is a very distant second behind Amazon when it comes to e-commerce sales in the U.S., but abroad — and in particular in Asia — it is willing to invest to grow its footprint in a targeted way. In February, eBay paid a total of $573 million to acquire Qoo10, a Japanese sales platform, according to the company’s quarterly earnings filing.

In more detail, the deal consisted of $306 million in cash and the relinquishment of about $266 million in shares in Giosis, a pan-Asian e-commerce marketplace business originally founded as a joint venture with Korea’s Gmarket. Qoo10, which claims two million shoppers, was originally part of Giosis.

The acquisition is similar to a deal eBay did in Korea in 2001 when it purchased Internet Auction Co and linked the Korean service up to its global network of buyers and sellers. That integration has been successful, and today South Korea is eBay’s fourth largest market based on revenue behind only the U.S., Germany and UK, respectively.

Although the acquisition of Qoo10 was first announced in February, the actual price was not disclosed until the company’s earnings report dropped on Thursday. “We believe the acquisition will allow us to offer Japanese consumers more inventory and grow our international presence,” eBay explained in the filing.

The deal underscores how eBay is at the same time pulling back from general plays while doubling down on more targeted opportunities. Earlier this year, the company gave up its stake in Flipkart as part of its acquisition by Walmart, but at the same time committed to investing in a new, standalone eBay operation in India, using some of the $1.1 billion in proceeds it made from selling its Flipkart stake to Walmart.

EBay had an unsuccessful effort in China which ended in 2006 and it hasn’t returned to the country.

According to its latest financial results, the company’s U.S.-based business accounted for $1.1 billion out the company’s total quarterly sales of $2.6 billion. That North American revenue was up five percent year-on-year, but eBay’s revenue from other international locations grew by more over the same period to give the company’s total sales a nine percent annual increase.

That didn’t impress investors, however, and the company’s share price dropped by 10 percent to close Thursday at $34.11.

EBay doesn’t break out revenue for Japan — where Qoo10 operates — but revenue from Korean rose by 13 percent to $304 million in the most recent quarter. Sales for ‘rest of the world’ were up nine percent to $505 million.

While it used to be neck-and-neck with Amazon in terms of e-commerce sales and presence in the US, it has fallen behind over the years and now accounts for just 6.6 percent of online transactions in the country, versus 49.1 percent for its bigger rival.

More growth abroad could be one route to improving those fortunes, with India one of the world’s fastest-growing and most populous economies. But success in the country will be challenging with Flipkart joining forces with Walmart and Amazon’s India unit continuing to grow in strength.

But eBay isn’t going to go head-to-head with those two. Instead, its India operations will focus on cross-border sales, so essentially looking to connect buyers and sellers in the country with opportunities overseas within its network. That’s the same model it has used to effect in other parts of the world, so its acquisition of Qoo10 and its other international services will be a key part of that India strategy, and vice versa.

Amazon’s share of the US e-commerce market is now 49%, or 5% of all retail spend

Amazon has already been in the crosshairs of the White House when it comes to threats of antitrust investigations, and while some say this is simply Trumpian bluster that has a slim chance of going anywhere, some new numbers out from the researchers at eMarketer could prove to be a fan to the flames.

Amazon is set to clear $258.22 billion in US retail sales in 2018, according to eMarketer’s figures, which will work out to 49.1 percent of all online retail spend in the country, and 5 percent of all retail sales.

It started as an online bookstore, but today Amazon is a behemoth in all areas of e-commerce, fuelled by a strong Marketplace network of third-party sellers, an ever-expanding range of goods from groceries to fashion, and a very popular loyalty program in the form of Prime.

Now, it is fast approaching a tipping point where more people will be spending money online with Amazon, than with all other retailers — combined. Amazon’s next-closest competitor, eBay, a very, very distant second at 6.6 percent, and Apple in third at 3.9 percent. Walmart, the world’s biggest retailer when counting physical stores, has yet to really hit the right note in e-commerce and comes in behind Apple with 3.7 percent of online sales in the US.

The figures — which eMarketer says are estimates “based on an analysis of quantitative and qualitative data from research firms, government agencies, media firms and public companies, plus interviews with top executives at publishers, ad buyers and agencies” — are also remarkable not because of their size, but because of Amazon’s pace has not slowed down. Its sales are up 29.2 percent versus a year ago, when it commanded 43 percent of all e-commerce retail sales.

The rocket ship for Amazon’s growth at the moment is its Marketplace — the platform where Amazon allows third-party sellers to use its retail and (if they choose) logistics infrastructure to sell and deliver items to Amazon shoppers. It’s currently accounting for 68 percent of all retail sales, working out to nearly $176 billion, versus 32 percent for Amazon’s direct sales, and eMarketer projects that by the end of this year, Marketplace’s share will be more than double that of Amazon’s own sales (it’s already about double).

It’s no wonder that so many other online commerce businesses are chasing the marketplace model, which essentially creates transactions on two fronts for the platform operator, thereby improving margins that might be cut by not selling items directly.

“The continued growth of Amazon’s Marketplace makes sense on a number of levels,” eMarketer principal analyst Andrew Lipsman notes in the eMarketer report. “More buyers transacting more often on Amazon will naturally attract third-party sellers. But because third-party transactions are also more profitable, Amazon has every incentive to make the process as seamless as possible for those selling on the platform.”

In terms of popular categories, consumer electronics and tech continue to be the leading product category: eMarketer projects sales of $65.82 billion, around one-fourth of all turnover. Second will be apparel and accessories, which will pull in $39.88 billion of sales. Third in 2018 are health, personal care and beauty with $16 billion. Fourth is food and beverage at a distant $4.75 billion.

All of these are already up by 38 percent or more over a year ago (see the full table below), but what’s perhaps most notable is how Amazon has been investing in being a direct player in each of the categories as well.

In tech, it has its Kindles and Fire tablets, Fire TV, and of course its huge hit Alexa-powered Echo devices, among many other products. Apparel is being pushed heavily in the company’s private-label efforts. Amazon just the other week announced that it was acquiring online drug seller PillPack for $1 billion, which will be a major lever in its wider health products and services strategy. And lastly, there is Amazon’s acquisition of Whole Foods and its much wider play around meal kits and its server-free physical shops. The physical aspect, eMarketer believes, will play a strong role in Amazon’s growth in this category.

“Amazon’s strategy for food and beverage is no different, in some respects, than it was for books—dominate the category,” eMarketer senior analyst Patricia Orsini notes in the report. “However, e-commerce in the grocery sector is a challenge. Share of online sales in this category is low because most people, for a host of reasons, prefer to buy food in brick-and-mortar stores. Amazon has an advantage because its shopper base is comfortable with shopping online. Along with insights gathered about Whole Foods shoppers, Amazon probably has the best chance of converting in-store grocery buyers to online grocery buyers.”

All of these will not just boost Amazon’s own direct sales but help create an environment for people to come to Amazon to buy either these at price-busting rates, or other-brand alternatives.

So far, people think that it is unlikely that Amazon would stand an antitrust investigation because e-commerce is still a small part of all commerce (as evidenced by the five percent of all retail sales figure), and Amazon would argue that in the world of “omnicommerce” it’s still just a bit player. However, Amazon’s dominance is clear when considering e-commerce alone.

BYD and Generate Capital launch $200M electric bus leasing JV in the US

There are 345,000 electric buses in use today across the world, but the US accounts for only 300 of them. Now, Chinese electric vehicle company BYD is launching a new JV in the country in an attempt to boost that number: in partnership with clean-energy financing company Generate Capital, BYD is starting a leasing program for electric buses. The two say they will initially put in $200 million to the project to get it off the ground.

The partnership says it has secured several clients already, including universities and corporations who use the buses to transport students and employees to, from and around large campuses; and smaller municipalities.

BYD calls itself the world’s biggest electric car maker and supplies about two-thirds of all the electric buses in use in the US currently. The company is traded publicly in Shenzhen but also picked up a huge cash infusion of $450 million from Samsung in 2016.

“BYD’s mission is to fundamentally change the world by reducing our dependency on carbon-based fuels through the development and advancement of battery and electric vehicle technology,” said BYD Motors’s President Stella Li in a statement. “This partnership will be critical in that effort by creating new financing alternatives to a broader range of clients.”

Electric and hybrid buses provide a greener and quieter public transportation option compared to older vehicles — and while some will always insist on having their own space and their own vehicle, there is a strong argument to be made for shuttles and buses to reduce traffic congestion, not to mention the pressure on your wallet, too.

BYD cites figures from the U.S. Department of Transportation, which state that every zero-emission bus eliminates approximately 1,690 tons of CO2 over a 12-year period, equivalent to taking 27 cars off the road, as well as 10 tons of nitrogen oxide, and 350 pounds of diesel particulate matter.

Yet city governments, typically strapped for money, will often be the last to offload their legacy buses if they are still able to take people from A to B, even if the running costs of the newer buses over a period of time work out to be much cheaper.

That’s in contrast with companies like Uber, which is backed by billions of dollars, some of which it has used to invest in experimental new services: the company has worked with BYD in London and Chicago to run electric vehicle tests, although now that Uber has moved out of the leasing game, it’s not clear how this will follow through in terms of rolling out such vehicles to its drivers.

In any case, a leasing program that reduces upfront costs, is an important way to ease municipalities into making the switch.

This is also important because some believe leasing could potentially going to become a cornerstone of how all cars are “owned” in the future. The thinking goes like this: the newer generation of autonomous and electrified vehicles will simply end up being too cost-prohibitive to own outright for the majority of consumers (and public and private organisations), and so in many cases they will go the way of airplanes, where the ownership costs are handled by one party, and paying for periods of usage will be handled by another.

As an example of how much savings an electric bus can provide over a legacy bus, Antelope Valley Transit Authority in Los Angeles County says that it’s saved $46 million over the lifetime of a new fleet so far, which in its case works out to $46,000 per bus per year in savings on diesel fuel (it’s aiming to be all-electric by the end of this year). That’s before considering the 50 percent reduction in harmful emissions and quieter experience.

Generate Capital itself has raised at least $200 million in equity to finance green and new energy projects — these also include new systems for battery storage — and it regularly also offers debt to help finance new initiatives.

“We founded Generate Capital to bring precisely this type of proven solution to the world,” said Scott Jacobs, Generate Capital’s CEO and co-founder, in a statement. “Electric buses produce almost no greenhouse gas emissions; they’re cheaper to operate than diesel buses; have lower maintenance costs; and they’re quieter and more pleasant for the rider. Traditional leasing companies typically don’t value any residual in electric vehicles, which makes financing difficult. Programs like these are an all-around win for project developers, customers, and for the environment.”

GrubMarket gobbles up $32M led by GGV for its healthy grocery ordering and delivery service

As consumers become more discerning about the food they eat, a wave of startups has emerged that is catering to that demand with convenient alternatives to the more ubiquitous options that are available today. One of these, GrubMarket — which sources organic and healthy food directly from producers and then delivers it to other businesses (Whole Foods is a customer) as well as consumers at a discount of 20-60 percent over other channels — is today announcing a $32 million round to grow its already profitable business, including making acquisitions and expanding on its own steam as it eyes a public listing.

“We are looking to buy companies to make more revenues ahead of an upcoming IPO,” said Mike Xu, the founder and CEO. He said GrubMarket is “in proactive steps” to expand from its home base in California to the East Coast, starting in New York and New Jersey, by October this year. The plan, he said, will be to file with the SEC sometime between the end of this year and early 2019, with the IPO taking place in the second half of 2019.

E-commerce, and in particular food-related businesses with perishable items and associated waste, can be tricky when it comes to margins, and indeed, there have been many casualties in the world of food startups. Xu said in an interview that GrubMarket is already profitable and working at a $100 million run rate.

One of the reasons it’s profitable may also be the same reason you may have never heard of GrubMarket. Currently, between 60 and 70 percent of its business is in the B2B space. Xu says that customers number in the thousands and include offices, grocery stores and restaurants across the San Francisco Bay Area, Los Angeles, Orange County and San Diego.

And so, if you don’t know GrubMarket, you might know some of its customers, which include all WeWorks between San Diego and San Francisco, Whole Foods, Blue Apron, Hello Fresh and Chipotle. GrubMarket has also cornered some very specific niches: It has become the biggest mushroom supplier in all of Northern California, and it’s the biggest supplier of Hawaiian farm produce in the Bay Area.

Another point in the company’s favor is the technology it uses. Working directly with farmers and other producers, GrubMarket has built apps that allow it and its partners to manage the logistics of the business in an efficient way. The idea will be to bring more AI to the platform over time: for example, to be able to run better modelling to figure out how much fruit and veg might sell during a given season, and how to price items.

GrubMarket also is dabbling in areas that you might not normally associate with a grocery-on-demand delivery company: it built an educational app called Farmbox, which — when you play it — can be used to collect points to spend on GrubMarket; and it’s also exploring how blockchain technology can be used in a “next-generation open platform for direct farm-to-table.”

Xu says that as the company continues to grow, it will shift more into direct-to-consumer deliveries to complement its wholesale business.

This latest round is a mixture of equity and debt and is being led by GGV with other previous investors Fusion Fund (formerly New Gen Capital) and Great Oaks Venture Capital participating, along with new investors Max Ventures, Castor Ventures, Bascom Ventures, Millennium Technology Value Partner, Trinity Capital Investment, Investwide Capital and others. The company is not publicly disclosing its valuation; it has raised around $64 million to date.

Many eyes are on Amazon these days, and what moves it might make next in groceries after acquiring Whole Foods, ramping up its own Pantry offerings, courting restaurants for delivery and making its own meal kits. This is not a question that keeps up Xu at night, however.

“Food is the largest and biggest opportunity in e-commerce,” he said, estimating that today the total value for the global food and agricultural industry is around $9 trillion (versus $8 trillion in 2017), with only about one percent of buying done online. “That’s a big enough opportunity to have a few giant companies, and not just Amazon.”

It’s also an opportunity that could sustain some slightly smaller companies, too: One of my favorite e-commerce businesses in England is a service that I’ve been using for years, an organic grocery delivery called Abel & Cole that brings us a box of organic fruit and vegetables (and whatever else I order on top of that) each week. Like GrubMarket, it’s working directly with smaller producers who might have otherwise found it hard-going to find a way of selling their produce directly to buyers (and buyers would have found it hard-going to ever buy directly from these producers). Unlike GrubMarket, it takes a more modest approach that doesn’t involve eventually becoming a leviathan itself. May they all be around for years to come.

Index Ventures closes 2 funds, $1B for growth rounds and $650M for early-stage investing

Make way for more money into the startup investing pool: today, Index Ventures announced that it has closed a total of $1.65 billion in new funds — $1 billion that it plans to invest in later-stage, growth rounds, and $650 million that it plans to put into earlier rounds for smaller startups.

The venture fund is Index’s ninth; the growth round is its fourth since it was founded in 1996.

The funding is significant for a couple of reasons. Index is one of Europe’s (and America’s) most prominent investors, backing recent hits like AdyenDropboxiZettle, and Zuora (all of which have now either gone public or, in the case of iZettle, been acquired), so its backing has become something of a signal for quality (similar to a number of others, it should be noted).

The funding is also notable because of the size of it. To date, Index has raised $7.25 billion over the years, using that money to seed and grow hundreds of startups, helping to fuel — alongside the growth of the internet and technologies like mobile — what has become a veritable tech boom over the last couple of decades. 

But even within that longer trend, more recent years have seen an even bigger infusion of venture funding into the tech ecosystem, with outsized backers like Softbank bringing together syndicates of tech titans to bring in tens (and even hundreds) of billions of dollars into the mix.

The strong returns that the very biggest startups deliver — the world’s most valuable companies today are dominated by tech names — has led to even more money pouring into the sector. This latest $1.65 billion from Index is a leap on its previous growth and venture fund close: in 2016 it raised $1.25 billion ($550 million for venture and $700 million for growth), which at the time seemed huge and now seems almost modest.

All this, in turn, is leading to a big shift in how startups are evolving. The most highly capitalised are staying private for longer, because private money is much easier to come by than it was before: this means large growth rounds, more secondaries for investors to get their returns, and longer cycles before “exits.” In that vein, it’s notable that Index has raised $1 billion for growth investments.

Index says that the money in this fund will be going to some of the biggest names in its stable already, including the likes of AuroraBirdDeliverooElasticFarfetchRobinhoodRevolut and Slack. (In other words, if you didn’t already know about the startups in this list raising even more money… you do now.)

The firm now has 21 on its investment team, but with only one woman among its nine investing partners — Sarah Cannon.

Zebra Technologies is buying rugged tablet maker Xplore for around $90M in cash

Some more consolidation is afoot in the world of enterprise mobility. Today, Zebra Technologies — a company that makes handheld scanners, printers and other portable hardware, and develops the technology to tag things to be read by them — is acquiring Xplore Technologies, one of the older and bigger makers of ruggedised tablets and other hard-wearing hardware. Both companies are publicly listed and Zebra says it will be paying $6 per share in cash for Xplore, which works out to about $90 million — a premium on the company’s current market cap of about $65 million.

Zebra’s market cap is just under $8 billion.

The deal will give Zebra deeper inroads into the retail, manufacturing, transportation, logistics and healthcare verticals and also give the company avenues to sell into further markets where Xplore already has customers such as the energy sector, government and public safety, Zebra said. Xplore booked $87 million in revenue in the 12 months that ended March 31.

Xplore generated revenue of $87 million in the 12-month period ended March 31, 2018, but it’s never been massively profitable. In the fourth quarter, which the company reported earlier today, Xplore scraped out a net profit of $300,000 (compared to a loss of $2.6 million a year ago).

As with a lot of enterprise consolidation, which sees smaller companies coming together or bigger fish gobbling up smaller but promising fish, the idea will be to bring together its hardware business into a wider operation to create more manufacturing efficiencies and to sell more services to Xplore customers to improve margins on those deals, which Zebra says is in line with how businesses are looking to operate today anyway.

“In today’s on-demand economy, investments to digitize operations are central to our customers’ strategies. The acquisition of Xplore enhances our product lineup and gives Zebra a complete rugged tablet portfolio that enables our customers to gain a performance edge,” said Anders Gustafsson, chief executive officer of Zebra Technologies, in a statement. “We’d previously outlined potential areas of expansion that are a natural fit for Zebra and its Enterprise Asset Intelligence vision, and this acquisition is aligned with that strategy. The addition of Xplore provides access to a great team and great products in an attractive market and should enable us to grow the category double digits going forward.”

Zebra has carved out a place for itself as a buyer of operations that need more scale to see their potential realised, making around 14 since 1998. Perhaps most notably, it acquired the enterprise business of Motorola Solutions for $3.5 billion in a big Internet of Things play. Xplore’s emphasis on devices complements that with a set of hardware for when machine-to-machine communications may not be enough.

“We are excited to join Zebra, the worldwide leader in enterprise mobility and visibility. This acquisition validates the incredible work our team does every day to develop innovative solutions and serve our customers,” said Tom Wilkinson, chief executive officer of Xplore Technologies, in his statement. “Our products are a natural fit for Zebra, creating a comprehensive rugged mobility portfolio that stands against any competitor.”

The companies say the deal is expected to close in Q3 2018.