Crypto mining giant Bitmain is reportedly getting a new CEO as its IPO plan stalls

Bitmain, the Chinese crypto miner maker, looks like it has reached an interesting point in its pathway to going public. There’s been little heard since the company filed to go public in Hong Kong in September, but now it appears that a new CEO has been hired and its two founders are leaving.

That’s according to a report from SCMP which — citing two sources — said Wang Haichao, Bitmain’s director of product engineering, has assumed CEO duties following a transition that began in December. Founders Wu Jihan (pictured above) and Zhan Ketuan will be co-chairs with Wang described as the “potential successor.”

The publication said that it isn’t clear when a new CEO will be named, or indeed whether an outside appointment will be made.

Bitmain declined to comment on the report when asked by TechCrunch.

The company, which is said to have been valued as high as $15 billion, certainly appears to have stalled with its IPO following the filing of an application on September 26. That document opened up a treasure trove of financial information regarding the company, which is estimated to supply around three-quarters of the world’s crypto mining machines.

Indeed, Bitmain’s IPO filing showed heady growth in revenue. The company grossed more than $2.5 billion in revenue in 2017, a near-10X leap on the $278 million it claimed for 2016, while sales in the first six months of last year surpassed $2.8 billion.

However, there were no figures for Q3 2018 and, since September, the price of Bitcoin and other cryptocurrency has plummeted further still, therein reducing the appeal of buying a mining machine and likely impacting Bitmain’s sales.

Bitmain saw impressive revenue growth as the crypto market grew, but it isn’t clear how the business weathered the price slump that affected the market in 2017

We reported that the company likely made a loss of around $400 million in that Q3 quarter. Things are likely to have been trickier still in Q4, as crypto prices dropped so low that mining companies in China were reported to be selling off machines because the cost of power to mine was lower than the reward for doing so.

Bitmain has diversified into non-mining services, to its credit, but its efforts to grow Bitcoin Cash — a controversial fork of Bitcoin — have been controversial and likely loss-making, to boot.

The price of Bitcoin Cash is currently $162 at the timing of writing, that’s down significantly from around $2,500 one year ago. That doesn’t bode well for Bitmain’s investment into the cryptocurrency, and it likely explains why the company has made layoffs, like others in the crypto space.

What a difference four months can make. The challenge for the company’s (apparent) new CEO is certainly a daunting one.

But Bitmain’s struggle isn’t unprecedented. Just this week, its closest rival — Canaan — was linked with a U.S. IPO. The company had planned to go public in Hong Kong last year but it allowed its application to expire as crypto market prices went south.

There’s plenty to watch out for in the mining space in 2019!

Editorial note: The author owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life.

Banking startup N26 raises $300 million at $2.7 billion valuation

Fintech startup N26 is raising a Series D round of $300 million. Following this new funding round, the company is now valued at $2.7 billion. Insight Venture Partners is leading the round with Singapore’s sovereign wealth fund GIC and a few existing investors also participating.

N26 is building a retail bank from scratch. The company lets you open a bank account and get a card in just a few minutes. You can then control everything from your phone or computer. And it’s a much better user experience compared to traditional banks.

This round comes as a surprise as the startup announced a $160 million funding round ten months ago. I talked with N26 co-founder and CEO Valentin Stalf about this, and there are several reasons why raising money made sense.

First, N26 is a very different company now compared to early 2018. The user base has tripled and people are using their N26 accounts more and more. Around a third of N26’s customers are paying every month for a premium account.

The startup’s valuation has exploded as well. “The previous valuation was below $1 billion,” Stalf told me. In other words, N26 is in great shape and it made sense to grab more money before expanding to new markets around the world.

N26 is currently live in 24 European markets and has 2.3 million customers. The company plans to expand to the U.S. in the coming months as well as other markets around the world. Customers currently hold €1 billion in N26 accounts overall. And the company has processed €20 billion in transaction volume since its creation.

I interviewed Valentin Stalf about today’s funding round. This interview has been slightly edited for brevity and clarity.

TechCrunch: Your list of investors is becoming more and more global. Does it mean that, in addition to the U.S., we can expect other countries and other regions as well?

Valentin Stalf: Absolutely. Our goal now for the next couple of years is to transform N26 from being a European company to being a global company. We started in Germany and Austria as you know. We’re now in 24 markets including the U.K. where we’re offering our product in a different currency.

And now the next step will be the U.S. in 2019. We would like to bring N26 to four to six new markets outside of the U.S. and Europe in the next couple of years. But this year is really about the U.S. and then by the end of the year one more market or a couple of markets probably. But we see the opportunity to take the business global. And that’s also what everybody who invested in this round signed up for.

TC: It’s the first time you’re sharing the valuation, which is quite high. Does it mean that the financials of the company are looking good? Are you making money and from what?

Stalf: Two things led to the success of this funding round. One is tremendous growth. We’ve more than tripled the number of customers in the last year. Globally, I think we’re the fastest growing mobile bank on the market now. It’s one driver of the valuation — the future potential that there are many more customers searching for a banking alternative.

We’ve also worked on the profitability of our company. We’re definitely today the most advanced player on the market in terms of profitability per customer. Obviously, we’ll be consuming cash in 2019 — that’s why we raised a round to invest in new markets. But if you look at our company on a per-customer basis, we’re profitable on a per-customer basis. And I think it’s very important.

Where is the revenue coming from today? We’re very much focused on the daily usage of our product. So one is really from card transactions and the interchange fee. Second is our subscription model. Depending on the market, up to 32 to 35 percent are choosing one of the premium products that we’re offering — it’s a really important revenue driver. And then you have the daily usage of financial products, such as overdraft, savings and consumer credit and these things that we have on the German market, the French market. We’re bringing that now to the U.K. and other markets.

TC: On the product front, are there other products that you’re going to roll out or are you more focused on launching the entire lineup of products across all your markets?

Stalf: I think we want to internationalize existing products to new markets and bring our financial products that we have to more of the markets that we’re in.

But I think the strong focus that we have in order to internationalize is really to innovate more on the product. We’ve launched Spaces before Christmas — I would say version one. The big update that is coming out in the next two months is really about sharing a space, creating a shared account either long term with your partner or short term with friends.

We’ll add much more functionality to Spaces. We’ll be adding virtual cards that you can add per account. We’ll be adding different account numbers.

TC: Let’s go back to the funding round. You’ve raised $160 million a year ago — it’s quite quick. If I read that correctly, does it mean that you’re thinking that competition is fierce or that you should get a war chest in case there’s an economic downturn?

Stalf: I wouldn’t call it an economic downturn, but if you look at the equity market, obviously valuations have been challenged over the last couple of weeks. And I think we were lucky in terms of when we raised funding. I think it was good timing.

Independent of that, we’ve never raised because of any timing thing or so. Our company managed to do incredibly well in the last year in terms of profitability and growth. And we’ve had a lot of people approaching us, we’re always in contact with different investors. I always think the best time to raise is when you don’t need to raise. GIC and Insight are the best investors we could have thought of.

TC: Let’s talk about the future. Now, that you’ve got a ton of funding in your bank account. How do you see N26 in a couple of years as a product, as a company and as a brand?

Stalf: I think we have the opportunity to really build a business with a hundred million customers globally. I truly believe in this. And that means that we’ll have to build the brand that you need for such as business. It’s going to be a big focus.

If you look more at our company, we have now 700 employees in three locations around the world — Berlin, Barcelona and New York. We will open a couple of offices throughout the next year in Europe and maybe somewhere else in the world. So it's really awesome to transform our company to be more global — we already have 50 different nationalities.

PSA: File your US tax return before scammers steal your refund

It’s tax season! You know what that means? It’s scamming season, too.

You might have heard this story before. A scammer starts by spoofing an email pretending to be the chief executive of a company, angrily demanding that someone in accounting or human resources immediately sends over their employees’ W-2 forms “or there will be trouble!” The person doesn’t think twice, not wanting to get told off, and emails back the forms, which spell out exactly how much the employees’ earned and how much the company withheld from your wages in tax for the year.

Lo and behold, they’ve just handed over the crown jewels for committing fraud to criminals.

Then, after the scammers steal your W-2 forms, they file your tax returns as though they were you. By fudging the numbers, they can trick the Internal Revenue Service into turning over a tax refund — which then they cash in, using none other than the information from your stole W-2 form.

All the while, you’re putting off doing your taxes until late March because the thought of doing them is so depressing that you literally need months of mental preparation before you start crunching the numbers.

These so-called “W-2 scams” are far too easy to carry out. They’re easy for scammers to obtain and the scammers go undetected for weeks or months, and the IRS doesn’t tell you when your tax return has been filed, meaning anyone can do it without your knowledge.

Scamming consumers out of their tax refunds costs taxpayers billions of dollars each year — and the IRS knows full well how damaging these scams can be. Earlier this year, a government watchdog said that the IRS could do a lot more to prevent W-2 scams in the future — not least telling taxpayers when their filings have been accepted, so that it can be withheld and refunds are protected in case the taxpayer flags it as fraudulent.

Right now, the U.S. is in the midst of a government shutdown — and that’s affecting the IRS. Normally, the IRS lets you start submitting your tax returns by the end of January. This year, it’s not clear when taxpayers can start submitting their filings. Worse, because of the shutdown, any refunds are expected to be delayed.

But it doesn’t mean you can drag your feet and put things off. Now’s a better time than ever to get prepared.

If you haven’t already received your W-2 by mail, you’ll receive it from your employer the end of January. (Many companies these days let you download your W-2 form early through Workday, if you’re subscribed, or other internal corporate portals.) Once you’ve received all of the documents and paperwork you need to file, sit down with a pot of coffee and get the return done.

Once the IRS flings open the doors, file your return as soon as possible.

You should check before you file using the IRS’ filing status checker to see if your tax return has already been submitted. If it has, contact your company and speak to the IRS to file a certain form to get it voided.

Remember, in security, humans are the weakest link. And that’s never been more true than during tax season.

Square finds its Sarah Friar replacement with new CFO Amrita Ahuja

Founder and chief executive Jack Dorsey says Square has poached Amrita Ahuja from Blizzard Entertainment, a division of the gaming company Activision Blizzard, to lead finance at the merchant services and mobile payments company.

Ahuja will join Square later this month, about three months after long-time Square chief financial officer Sarah Friar exited the company in favor of a CEO opportunity at Nextdoor, a neighborhood social networking site. Friar, often described as Dorsey’s right-hand woman, joined Square in 2012 and led the startup through an initial public offering that valued the company at about $3 billion.

Prior to an eight-year stint at Blizzard, Ahuja clocked in a few years at Fox Networks Group, the Walt Disney Company and Morgan Stanley, where she was an analyst in the investment banking division.

“In Amrita, we have found an amazing, multidimensional business leader,” Dorsey said in a statement. “Amrita brings the ability to consider and balance opportunities across our entire business, and she will help strengthen our discipline as we invest, build, and scale.”

Shares of Square [NYSE: SQ] dropped more than 8 percent on Thursday.

Auto marketplace CarDekho grabs $110M to double down on insurance and financial services

CarDekho, an online marketplace for car sales in India, has pulled in a new $110 million Series C funding round from a clutch of existing investors to push deeper into financial services and insurance.

Sequoia India, Hillhouse and Alphabet’s CapitalG led the round which also saw participation from Axis Bank, one of CarDekho’s financing partners. No valuation was disclosed, but a report from Economic Times one month ago suggested that the round would value the company in the $400-$500 million range. That’s up slightly on a $360 million valuation from CarDekho’s previous fundraising in 2016.

The deal takes the company to $185 million to date from investors, which also include Times Internet, Ratan Tata — Tata Group’s Chairman Emeritus — HDFC Bank and Dentsu.

Founded in 2005 as GirnarSoft, CarDekho operates a range of online portals that sell new and second-hand cars and motorbikes in India. The company has also branched out into Southeast Asia where it operates portals in Malaysia, Philippines and Indonesia and, on the content side, it operates a YouTube channel and an auto blog and reviews site. CarDekho claims 39 million monthly unique visitors to its websites, and six million downloads of its apps, but it is not sharing revenue details.

CarDekho claims to work “actively” with 5,000 dealerships in India while it has direct retail partnerships with eight car and motorbike makers. It claims to influence 42 percent of sales for those dealerships and 15-30 percent of annual sales for those auto- and bike makers, although the company didn’t provide specific details on how it calculates those figures.

Beyond helping facilitate sales, it also offers car financing in partnership with over 10 financial entities who offer terms to its customers. It has provided insurance options too since 2017 and, with this new funding in the bag, it said that it intends to double down and build out more “transaction services” that go hand-in-hand with auto sales.

“Our contribution to a person buying a new car has grown manifold and this will continue to be a bulwark for us. Our used cars engine has scaled up tremendously and has also enabled us to incubate allied businesses like insurance and finance business as they are one of the largest opportunities ahead of us. The opportunity lies in extending formal credit and insurance coverage to the new-to-formal economy population and will continue to be a focus area for us” said CEO and co-founder Amit Jain in a statement.

CarDheko is rivaled by the likes of CarTrade, which is backed Temasek and Warburg Pincus and previous gobbled up rival CarWale, Truebil and Cars24, a service that buys cars from consumers and resells them to dealers. Notably, Sequoia India is also an investor in Cars24.

Lightspeed announces new $560 million fund for China

Global investor Lightspeed is starting 2019 with its largest-ever fund for China, where it has backed a number of new internet challengers. The firm announced this week that its fourth China fund has closed with a total capital commitment of $560 million.

The firm had a massive 2018, with no fewer than five of its portfolio holding IPOs including two of China’s up-and-coming startups that are challenging the country’s internet establishment — they are Meituan, the super app firm that specializes in deliveries, and Pinduoduo, a group e-commerce company that is threatening Alibaba’s dominance.

Based on those successes, it is perhaps not a surprise that Lightspeed has pulled in a record new fund. TechCrunch previously reported that the new fund was aimed at $360 million based on filings, but it added more capital to give more options.

Lightspeed said it has $360 million for early-stage deals aimed at Series A and Series B stages, with an additional $200 million set aside for “growth investments.” The new fund dwarfs Lightspeed’s previous vehicles in China — the firm’s previous two China funds each closed at $260 million while it raised $168 million for its debut fund in the country in 2013.

Lightspeed Venture Partners is a well-known investor that is anchored in Silicon Valley with global funds in India, Israeli and — of course — China. Together, those funds manage around $6 billion in capital, according to the firm.

Led by partners Chris Schaepe, Herry Han and James Mi, the China operation has backed a range of unicorns, including the aforementioned Meituan, which raised over $4 billion via a Hong Kong IPO last year, and Pinduoduo, which raised $1.6 billion via a U.S. listing in 2018. Other Lightspeed China IPOs from last year were PPDai, Rong360 and InnoLight while the firm also counts $9 billion-valued Full Truck Alliance, real estate platform Fangdd and Airbnb-like Tujia, both of which are valued in the billions, among the more mature bets in its portfolio.

“We believe there are plenty of new opportunities in China consumer Internet given the depth of China’s mobile payment and social networks. Innovation and entrepreneurship in the next decade will bring more China-based startups to the world stage. This will be China’s first decade of truly global innovation. Chinese entrepreneurs are now developing business plans with global expansion in mind from day one,” said Han, one of the firm’s founding partners, in a statement.

Last year, Lightspeed Venture Partners — the U.S. entity — filed to raise a record $1.8 billion in new capital commitments. In December, it added five new partners to its consumer and enterprise investment teams, including Slack’s former head of growth and Twitter’s former vice president of global business development.