Alibaba’s Ant Financial buys UK currency exchange giant WorldFirst reportedly for around $700M

Ant Financial, the financial services behemoth affiliated with Chinese e-commerce giant Alibaba, has made its first big move into Europe. It’s acquired London-headquartered payments company WorldFirst in a deal that sources tell us is valued at around $700 million.

(That price would also line up with multiple reports from December claiming the two were in talks for an acquisition of around £550 million, or $717 million at current exchange rates.)

This isn’t your average multi-hundred million dollar acquisition. The deal was confirmed by WorldFirst in a note to customers while Alibaba, which curiously didn’t put out an official press release, acknowledged the acquisition to us through a spokesperson.

Yet despite a relatively under-the-radar outing, the deal has potentially significant consequences. It not only underscores the strong market connections between China and Europe, but also the margin (and thus strategic) pressures that many smaller remittance companies are under in the wake of larger companies like Amazon building its own money-moving services, as well as competition from local players in Asia.

One of a number of globally active money remittance services, 15-year-old WorldFirst lets businesses and consumers move money between countries at prices that are lower than regular banks.

The company claims to have transferred over £70 billion ($90 billion) for customers since 2004, with more than one million transfers made each year. WorldFirst is a player in the competitive remittance market, in which migrant workers send money home to family, who can make transfers online or in person at WorldFirst outlets.

Ant Financial is best known for its Alipay service, which is China’s dominant mobile payment app with over 550 million registered users. Alibaba owns one-third of Ant, which is valued at as much as $150 billion, and it has been pushing to expand its empire outside of China and beyond Asia Pacific, too.

“Alipay and WorldFirst’s capabilities and international footprints are highly complementary,” WorldFirst co-founder and chief executive Jonathan Quin wrote in an internal memo obtained by TechCrunch.

According to Quin, WorldFirst will retain its brand and become a wholly-owned subsidiary of Ant Financial. Many merchants in the UK already accept Alipay, which has expanded to cater for Chinese tourists spending money overseas.

“The tie-up will add WorldFirst’s international online payments and virtual account products to Alipay’s range of technology solutions,” an Ant Financial spokesperson told TechCrunch without disclosing the size of the buyout.

WorldFirst has been financed by private equity investors and, as a private company, it keeps its financial details closely held, but in August 2018 it noted that it had transferred more than $95 billion for some 160,000 customers — businesses and individuals included. A source told us its GMV was around $10 billion a year.

But sources noted that it was under pressure of its own that would have made securing a deal with Ant even more of a priority.

“That whole sector of payments from the West to China sellers for e-commerce is under massive margin pressure from Amazon going direct with its own service, plus new China based entrants PingPong, LianLian and Airwallex,” one executive very close to the remittance space told us. “WorldFirst had recently seen low to declining growth because of this.” Another source said that it had been shopping itself around.

(The Amazon reference is related to Amazon PayCode, a new service it has built with Western Union to let people in markets where Amazon has not launched a local site to pay for goods in local currencies on its platform. The deal was first announced in October last year, and has seen the two companies offering payment alternatives in places like Thailand and Kenya to remove the need to transfer payments in other ways, via Alipay or whatever transfer service a seller or buyer might use.)

The acquisition gives Ant Financial a massive international boost, and for the first time a presence in Europe, but it comes amid some stumbles for the company in its other attempts to expand internationally.

Notably, the company agreed to acquire Nasdaq-listed MoneyGram for $1.2 billion in 2017 after it won a bidding war for the global payment company. Ultimately, however, the deal was blocked by the U.S. government. Bruised by the episode, which set its plans back by a year, Ant went on to raise an enormous $14 billion funding round last summer during which time it presumably kicked off the search for a MoneyGram alternative.

While WorldFirst is based out of the UK, the company last year made a key move to expand its US operations when it was announced in August that it would acquire the retail money transfer business of San Francisco-based startup Wyre, which had built the network on blockchain technology but was selling it to focus on the other side of its business, providing currency exchange APIs to larger B2B customers.

It looked like all systems go for WorldFirst to move deeper in the US after that. But then, the company abruptly announced on February 20 that it planned to close the U.S-based business. The move may have been made to prevent a repeat of that scuppered MoneyGram acquisition.

WorldFirst is closing its business in the U.S. in a move widely seen as a precursor to its acquisition by Ant Financial

Outside of the U.S. and China, Ant Financial has aggressively expanded its presence in Asia through a series of investment deals that have seen it put $200 million into Kakao Pay in Korea, and find similar deals in Southeast Asia. The overall strategy appears to be to replicate the success of Alipay in China, where it offers mobile payments and digital financial services that cover loans, banking and wealth management.

In a show of its global ambition, Alipay just this week announced a deal to bring its payment option to U.S. Walgreens stores. A previous partnership with point-of-sale company First Data added Alipay to four million retail partners Stateside, and the company has similar deals in Europe and parts of Asia.

Chat app Line injects $182M into its mobile payment business

Japanese messaging app company Line is pumping 20 billion JPY ($182 million) into its mobile payment business as it tries to turn things around following a challenging year in 2018.

The company announced the infusion into Line Pay, a subsidiary that it fully owns, in a filing which stated that the new capital is “necessary funds for its future business operation.” No further details were provided.

The investment comes on the heels of Line’s latest financial report which saw it post a 5.79 billion JPY loss as revenue grew by 24 percent to reach 207.18 billion JPY in 2018. Line has long been a top money maker in the App Store, but its efforts to build out content around its messaging platform and games division have turned out to be expensive, with a job service, manga platform and e-commerce business among its ventures.

In addition to additional content, payments are also seen as ‘glue’ that can increase engagement within the Line ecosystem and its main messaging app.

The company is going after the cashless opportunity in Japan, where it is the dominant chat app with an estimated 50 million registered users. The country is notable for its continued use of cash, but the government is using the upcoming 2020 Olympic Games as an opportunity to move towards a digital future. Aside from its core Line Pay service, which sits inside the Line chat app, Line is introducing its own credit card with Visa and it has gone after Chinese tourists through a tie-in with Tencent, the internet giant behind China’s top messaging app WeChat.

Outside of Japan, Line Pay is also available in Thailand (where it works with the Bangkok metro provider), Taiwan (where it counts two banks as partners) and Indonesia, which Line says are its next three largest markets in terms of user numbers. Together, across those four countries, Line claims it has 165 million monthly active users and 40 million registered Line Pay users. Line said GMV reached 55 billion JPY ($482 million) per month back in November 2017, there’s been no update since.

The service was launched more widely but it has shuttered in other markets, including Singapore where it was ended in February 2018.

Beyond payment, Line is also moving into banking and financial services. It is working to launch a digital bank in Japan and last year it announced plans to investigate the potential to roll out loans, insurance and other services backed by its own cryptocurrency. While it didn’t hold an ICO — its ‘Link’ token is earned or can be bought on exchanges — Line did dive into crypto in a major way, opening its own exchange and starting a crypto investment fund, too. With the bear market in full effect, and token valuations dropping by 90 percent across the board, we haven’t heard too much more from Line on its crypto plans.

Go-Jek makes first close of $2B Series F round at $9.5B valuation

Go-Jek, the Indonesia-based ride-hailing company that is challenging Grab in Southeast Asia, has announced the first close of its Series F round, as TechCrunch reported last week. The company isn’t revealing numbers but sources previously told us it has closed around $920 million. Go-Jek is planning to raise $2 billion for the round, as reported last year.

Go-Jek said that the first close is led by existing backers Google, JD.com, and Tencent, with participation from Mitsubishi Corporation and Provident Capital. It didn’t provide a valuation but sources told us that week that it is around $9.5 billion.

Starting out with motorbike taxis in 2015, Go-Jek has since expanded to taxis, private car and more. The company said it plans to spend the money deepening its business in Indonesia, its home market, and growing its presence in new market expansions Vietnam, Singapore and Thailand. It is also working to enter the Philippines, where it had a request for an operating license rejected although it did complete a local acquisition after buying fintech startup Coins.ph.

The Go-Jek business in Indonesia includes transportation, food delivery, services on demand, payments and financial services. That’s very much the blueprint for its expansion markets, all of which are in different stages. Go-Viet, its Vietnamese service, offers food delivery and motorbike taxis, Get in Thailand operates motorbike taxis and in Singapore Go-Jek provides four-wheeled car options.

Combined those efforts cover 204 cities, two million drivers and 400,000 merchants, the company said, but the majority of that is in Indonesia.

Grab, meanwhile, became the top dog after buying Uber’s local business, and it operates in eight countries. It recently crossed three billion rides to date and claims 130 million downloads. Grab said revenue for 2018 was $1 billion, it expects that to double this year. It has raised $6.8 billion from investors, according to Crunchbase, and its current Series H round could reach $5 billion.

Go-Jek claims it has 130 million downloads — despite just being in three markets — while it said it reached an annualized transaction volume of two billion in 2018 and $6.7 billion in annualized GMV. Those figures require some explaining as Go-Jek is being a little creative with its efforts to compete with Grab on paper.

Transactions don’t mean revenue — a transaction could be a $1 motorbike ride or a payment via QR code — and GMV is not revenue either, while both are ‘annualized’ which means they are scaled up after measuring a short period. In other words, don’t take these figures too literally, they aren’t comparable to Grab.

Digital Garage teams up with Blockstream to develop blockchain financial services in Japan

The global crypto market may have tanked last year, but notable names have joined forces to develop Bitcoin and blockchain financial services in Japan, which has emerged as one of the world’s most crypto-friendly markets.

Blockstream, a blockchain startup founded by Bitcoin contributors, announced this week that it has launched a joint venture in Japan alongside Digital Garage, an early-stage investor/incubator that’s backed local launches from Twitter, Square and others, and financial services firm Tokyo Tanshi.

Crypto Garage — as the new venture is called — is “is dedicated to building Bitcoin and blockchain solutions for the Japanese institutional market.” The venture was first unveiled last year, and it looks like Blockstream recently came onboard through an undisclosed investment. The startup said it is providing “technical expertise” for the effort.

That’s about all the color on the venture for now, although it has released its first product, “SETTLENET.” That is described as a platform that uses Liquid Network, Blockstream’s blockchain that is designed for exchanges and brokers with a focus on speed and security.

Settlenet — because nobody likes all-caps product names — is said to have already gotten clearance from the Japanese Financial Services Agency (FSA), which regulates exchanges and crypto projects, and its first launch will be a stablecoin for the Japanese Yen. The goal is very much to arm exchanges with liquidity and, as such, the stablecoin will be tradable for Bitcoin pegged to the Liquid sidechain using atomic swaps.

The companies have collaborated for some time already. An existing investor in Blockstream, Digital Garage has plowed a further $10 million into the business in what is its third investment since 2016. That deal takes Blockstream to around $110 million raised to date.

Tokyo Tanshi, meanwhile, is a brokerage firm that was founded over 100 years ago. It has worked with Digital Garage on crypto projects since last year, when the two companies first announced Crypto Garage and a broader goal to operate blockchain financial services in Japan.

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

Another day, another reversal in the stock market

Signs that the Federal Reserve could hold off on further interest rate hikes coupled with a booming jobs report sent stocks on Wall Street surging to close a volatile first trading week for the New Year.

After yesterday’s Apple-induced slide, and in the face of economic indicators that signaled a potential slowdown in global and domestic growth, the chairman of the Federal Reserve, Jerome Powell, said that the central bank would be “patient” when it comes to raising interest rates.

That news, coupled with a strong jobs report, sent stocks rocketing up. The Dow Jones Industrial Average climbed 746.9 points, or roughly 3.3 percent, while the Nasdaq shot up 4.3 percent, or 275.4 points.

It wasn’t just the Fed chairman’s observations about the potential for rate hikes in 2019 that had investors buying, but assurances about Powell’s job security in the face of increasing pressure from President Trump.

Speaking at a panel discussion of the American Economic Association alongside former Federal Reserve chairs Janet L. Yellen and Ben Bernanke, Powell said that he would not resign if asked by the president.

Immediately after Powell’s comments stocks began surging.

“With the muted inflation readings that we’ve seen coming in, we will be patient as we watch to see how the economy evolves,” Powell was quoted as saying in The Washington Post. “We’re always prepared to shift the stance of policy and to shift it significantly if necessary.”

Stock markets suffer their worst Christmas Eve trading day

Twas the last trading day before Christmas, and on the trading floor
Most stocks were falling, and then falling some more;
Treasury Secretary Steven Mnuchin all the banks had called,
In hopes that full coffers were still in their vaults;

The analysts were shaken by news of the call;
which initially caused the stock market to fall;
Then President Trump took to Twitter, to blame the Federal Reserve,
Which was something the Fed chairman just didn’t deserve

So banks and traders rushed to their phones with a clatter,
Causing stock market value further to shatter.
Markets don’t like decisions made in a flash,
And criticizing sound economic policy can exacerbate a crash.

Mnuchin made his call with banks from a tropical isle,
and analysts criticized his decision’s lack of guile,
They were more concerned with policy stupidity,
Since there’s already enough administrative volatility.
Like threatening to oust the chairman of the Federal Reserve,
Someone whose position it would be better to preserve.

So now the Dow has fallen some 653 points
And doctors may advise traders to light up their joints
Because U.S. indices are on track for their worst December
Since the 1930s, which almost no one alive remembers.

Indonesia e-commerce leader Tokopedia raises $1.1B from Alibaba and SoftBank’s Vision Fund

Indonesia-based e-commerce firm Tokopedia is the latest startup to enter the Vision Fund after it raised $1.1 billion led by the SoftBank megafund and Alibaba.

SoftBank and Alibaba are existing investors in the business — the Chinese e-commerce giant led a $1.1 billion round last year, while SoftBank recently transitioned its shareholding in Tokopedia to the Vision Fund. That latter detail is what held up this deal which had been agreed in principle back in October, TechCrunch understands.

Tokopedia didn’t comment on its valuation, but TechCrunch understands from a source that the deal values the company at $7 billion. SoftBank Ventures Korea and other investors — including Sequoia India — also took part in the deal.

Founded nine years ago, Tokopedia is often compared to Taobao, Alibaba’s hugely successful e-commerce marketplace in China, and the company recently hit four million merchants. Despite this new round, CEO and co-founder William Tanuwijaya told TechCrunch that there are no plans to expand beyond Indonesia, which is Southeast Asia’s largest economy and the world’s fourth most populous country with a population of over 260 million.

“We do not have plans to expand beyond Indonesia at this moment. We will double down on the Indonesia market to reach every corner of our beautiful 17,000-island archipelago,” Tanuwijaya said via an emailed response to questions. (Tokopedia declined a request for an interview over the phone.)

In recent times, Tokopedia has moved into payments, including mobile top-up, and financial services, and Tanuwijaya hinted that it will continue its strategy to become a ‘super app.’

“We will go deeper and serve Indonesians better – from the moment they wake up in the morning until they fall asleep at night; from the moment a person is born, until she or he grows old. We will invest and build technology infrastructure-as-a-services, in logistics and fulfillment, payments and financial services, to empower businesses both online and offline,” Tanuwijaya added.

But, with the Vision Fund comes controversy.

A recent CIA report concluded that Saudi Crown Prince Mohammed bin Salman ordered the murder of journalist Jamal Khashoggi. The prince manages Saudi Arabia’s PIF sovereign fund, the gargantuan investment vehicle that anchored the Vision Fund through a $45 billion investment.

SoftBank chairman Masayoshi Son has condemned the killing as an “act against humanity” but, in an analyst presentation, he added that SoftBank has a “responsibility” to Saudi Arabia to deploy the capital and continue the Vision Fund.

“We are deeply concerned by the reported events and alongside SoftBank are monitoring the situation closely until the full facts are known,” Tanuwijaya told us via email, although it remains unclear exactly what Tokopedia could (or would) do even in the worst case scenario. Given that the Trump administration seems focused on continuing the status quo, the situation remains in flux although there’s been plenty of discussion around whether the Saudi link makes the Vision Fund tainted money for founders.

Son himself said he hadn’t heard of any cases of startups refusing an investment from the Vision Fund, but he did admit that there “may be some impact” in the future.

Tanuwijaya didn’t directly address our question on whether he anticipates a backlash from this investment. The Vision Fund’s recent deal with Coupang, Korea’s leading e-commerce firm, doesn’t appear to have generated a negative reaction.

Even the involvement of Alibaba throws up other ethical questions, given that it owns Lazada — which is arguably Southeast Asia’s most prominent e-commerce service.

Unlike Tokopedia, Lazada covers six markets in Southeast Asia and it maintains close links to Alibaba’s Taobao service, giving merchants a channel to reach into the region. According to sources who spoke to TechCrunch earlier this year, Tokopedia’s management was keen to take money from Alibaba’s rival Tencent, but the intervention from SoftBank forced it to bring Alibaba on instead.

Tanuwijaya somewhat diplomatically played down the rivalry and any rift, insisting that there is no impact on its business.

“Tokopedia is an independent company with a diversified cap table,” he said via email. “No single shareholder owns the majority of the company. We work closely with our shareholders’ portfolio companies and tap into available synergies.”

“For example, Tokopedia works closely with both Grab — a SoftBank portfolio — and Gojek — a Sequoia portfolio. We see Lazada having a different business model than us: Lazada is a hybrid of retail and marketplace model, whereas Tokopedia is a pure marketplace. Lazada is [a] regional player, we are a national player in Indonesia,” he added.

More to follow, please refresh for updates

Walmart partners with Rakuten to open its first e-commerce store in Japan

Walmart is continuing its strategy of revamping its businesses in Asia after the U.S. retail giant opened its first e-commerce store in Japan, where it is working with local retail giant Rakuten.

The companies first announced a collaboration in January when they agreed to team up on the launch of an online grocery service in Japan and the sale of e-readers, audiobooks and e-books from Rakuten-owned Kobo in the U.S. That e-grocery service — Rakuten Seiyu Netsuper — rolled out in October, and now the duo have launched the Walmart Rakuten Ichiba Store to help Walmart grab a slice of Japan’s e-commerce market, which is estimated to be worth 16.5 trillion yen ($148 billion) per year.

The store, which sits on Rakuten Ichiba — Japan’s largest e-commerce store — will cover 1,200 “U.S. branded” products that include clothing, outdoor items and kids toys. Walmart will fulfill orders in the U.S. and they will be sent by air to Japan where Rakuten will use its e-commerce smarts to deliver them. There’s no word on how long the process will take, but it will include shipping cost, duties and taxes in the final price.

The move is an interesting one for Walmart, which has struggled in Japan for some time.

Earlier this year, the company was forced to deny rumors that it was in the process of offloading its Seiyu GK unit, a business it acquired in full in 2007 which operates its Japan-based supermarkets. A sale may not be happening (yet) but Walmart has shuttered some 100 Seiyu stores, according to CNBC, which shows that it isn’t performing as expected in the country.

Partnering with Rakuten, the $10 billion e-commerce giant that also covers financial services, travel, mobile and more, is a smart way to take a bite out of Japan’s online market with risk or exposure. Though it does have its limits. Amazon, Walmart’s big domestic rival, is taking on Rakuten directly, by contrast, and seeing some success albeit at a high cost of investment.

The partnership approach isn’t new for Walmart in Asia.

The partner of choice in China is JD.com, second to Alibaba, which acquired Walmart’s floundering Yihaodian marketplace in 2016. As part of that deal, Walmart became a retailer inside Yihaodian thus leveraging JD’s platform and logistics know-how to generate sales in China.

That relationship was deepened this year when Walmart co-led a $500 million in a grocery delivery service that’s part-owned by JD– yep right, another case of online grocery in tandem with e-commerce.

Elsewhere, Walmart decided to enter India this year when it scooped up local Amazon rival Flipkart for $16 billion, a record deal for the U.S. firm.

Payment service Toss becomes Korea’s newest unicorn after raising $80M

South Korea has got its third unicorn startup after Viva Republica, the company beyond popular payment app Toss, announced it has raised an $80 million round at a valuation of $1.2 billion.

This new round is led by U.S. firms Kleiner Perkins and Ribbit Capital, both of which cut their first checks for Korea with this deal. Others participating include existing investors Altos Ventures, Bessemer Venture Partners, Goodwater Capital, KTB Network, Novel, PayPal and Qualcomm Ventures. The deal comes just six months after Viva Republica raised $40 million to accelerate growth, and it takes the company to nearly $200 million raised from investors to date.

Toss was started in 2013 by former dentist SG Lee who grew frustrated by the cumbersome way online payments worked in Korea. Despite the fact that the country has one of the highest smartphone penetrations rates in the world and is a top user of credit cards, the process required more than a dozen steps and came with limits.

“Before Toss, users required five passwords and around 37 clicks to transfer $10. With Toss users need just one password and three steps to transfer up to KRW 500,000 ($430),” Lee said in a past statement.

Working with traditional finance

Today, Viva Republica claims to have 10 million registered users for Toss — that’s 20 percent of Korea’s 50 million population — while it says that it is “on track” to reach a $18 billion run-rate for transactions in 2018.

The app began as Venmo -style payments, but in recent years it has added more advanced features focused around financial products. Toss users can now access and manage credit, loans, insurance, investment and more from 25 financial service providers, including banks.

Fintech startups are ‘rip it out and start again’ in the West –such as Europe’s challenger banks — but, in Asia, the approach is more collaborative and assistive. A numbe of startups have found a sweet spot in between banks and consumers, helping to match the two selectively and intelligently. In Toss’s case, essentially it acts as a funnel to help traditional banks find and vet customers for services. Thus, Toss is graduating from a peer-to-peer payment service into a banking gateway.

“Korea is a top 10 global economy, but no there’s no Mint or Credit Karma to help people save and spend money smartly,” Lee told TechCrunch in an interview. “We saw the same deep problems we need to solve [as the U.S.] so we’re just digging in.”

“We want to help financial institutions to build on top of Toss… we’re kind of building an Amazon for the financial services industry,” he added. “We try to aggregate all those activities, covering saving accounts, loan products, insurance etc.”

Former dentist SG Lee started Toss in 2013.

Lee said the plan for the new money is to go deeper in Korea by advancing the tech beyond Toss, adding more users and — on the supply side — partnering with more companies to offer financial products.

There’s plenty of competition. Startups like PeopleFund focus squarely on financial products, while Kakao, Korea’s largest messaging platform, has a dedicated fintech division — KakaoPay — which rivals Toss on both payment and financial services. It also counts the mighty Alibaba in its corner courtesy of a $200 million investment from its Ant Financial affiliate.

Alibaba and Tencent tend to move in pairs as opposites, with one naturally gravitating to the rivals of the other’s investees as recently happened in the Philippines. It’s tricky in Korea, though. Tencent is caught in limbo since it is a long-standing Kakao backer. But might the Ant Financial deal spur Tencent into working with Toss?

Lee said his company has a “good relationship” with Tencent, including the occasional home/away visits, but there’s nothing more to it right now. That’s intriguing.

Overseas expansion plans

Also of interest is future plans for the business now that it is taking on significantly more capital from investors who, even with the most patient money out there, eventually need a return on their investment.

Lee is adamant that he won’t sell, despite Viva Republica increasingly looking like an ideal entry point for a payment or finance company that has missed the Korean market and wants in now.

He said that there are plans to do an IPO “at some point,” but a more immediate focus is the opportunity to expand overseas.

When Toss raised a PayPal-led $48 million Series C 18 months ago, Lee told TechCrunch that he was beginning to cast his eyes on opportunities in Southeast Asia, the region of over 650 million consumers, and that’s likely to see definitive action next year. The Viva Republica CEO said that Vietnam could be a first overseas launchpad for Toss.

“We’re thinking seriously about going beyond Korea because sooner or later we will hire saturation point,” Lee said. “We think Vietnam is quite promising. We’ve talked to potential partners and are currently articulating ideas and strategy materialized next year.

“We already have a very successful playbook, we know how to scale among users,” Lee added.

While the plan is still being put together, Lee suggested that Viva Republica would take its time expanding across Southeast Asia, where six distinct countries account for the majority of the region’s population. So, rather than rapidly expanding Toss across those markets, he indicated that a more deliberate, country-by-country launch could be the strategy with Vietnam kicking things off in 2019.

The Toss team at HQ in Seoul, Korea

Korea rising

Toss’s entry into the unicorn club — a vaunted collection of private tech companies valued at $1 billion or more — comes weeks after Coupang, Korea’s top e-commerce company, raised $2 billion at a valuation of $9 billion.

While that Coupang round came from the SoftBank Vision Fund — a source of capital that is threatening to become tainted given its links to the murder of journalist Jamal Khashoggi — it does represent the first time that a Korea-based company has joined the $100 billion mega-fund’s portfolio.

Some milestones can be dismissed as frivolous, but these two coming so close together are a signal of increased awareness of the potential of Korea as a startup destination by investors outside of the country.

While Lee admitted that the unicorn valuation “doesn’t change a lot” in daily terms for his business, he did admit that he has seen the landscape shift for Korea’s startup ecosystem — which has only two other privately-held unicorns: Coupang and Yello Mobile.

“More and more global VCs are aware that South Korea is a really good opportunity to do a startup. It is getting easier for our fellow entrepreneurs to pitch and get access to global funds,” he said, adding that Korea’s top 25 cities have a cumulative population (25 million) that matches America’s top 25.

Despite that potential, Korea has tended to focus on its ‘chaebol’ giants like Samsung — which accounts for a double-digital percentage of the national economy — LG, Hyundai and SK. That means a lot of potential startup talent, both founders and employees, is locked up in secure corporate jobs. Throw in the conservative tradition of family expectations, which can make it hard for children to justify leaving the safety of a big company, and it is perhaps no wonder that Korea has relatively fewer startups compared to other economies of comparable size.

But that is changing.

Coupang has been one of the highest profile examples to follow, alongside the (now public) Kakao business. But with Viva Republica, Toss and a charismatic dentist-turned-founder, another startup story is being written and that could just inspire a future generation of entrepreneurs to rise up and be counted in South Korea.

Africa’s agtech wave gets $10 million richer as Twiga Foods raises more capital

Kenya’s Twiga Foods has raised $10 million from investors led by the International Finance Corporation to add processed food and fast moving consumer goods to its product line-up.

The startup has built a B2B platform to improve the supply chain from farmers to markets. Twiga Foods now aims to scale additional merchandise on its digital network that coordinates pricing, payment, quality control, and logistics across sellers and vendors.

CEO and co-founder Grant Brooke sees “a growth horizon…to build a B2B Amazon,” with produce as the base.

“If we can build a business around fresh fruit and vegetables, everything else after that is much simpler to add on,” he told TechCrunch.

“Fresh food and vegetables gives you clients that are ordering every two days, and now that’s paying for access to vendors and a proper way to be on every street,” said Brooke.

“It’s now much easier to lay things over that that would have been very expensive to get to end retailers.” In addition to the processed food FMCG it will add now, CEO Grant Brooke named household goods, such as light-bulbs that stock and sell in lower volumes than produce, as something the startup could include in the future.     

The $10 million IFC led investment—co-led by TLcom Capital—comes in the form of convertible notes, available later as equity, according to Wale Ayeni, regional head of IFC’s Africa VC practice. As part of the deal, Ayeni will join Twiga Foods’ board.

Of the decision to fund the startup, Ayeni indicated IFC likes what the company’s already done in “figuring out a way to service a mass market with a digital platform focused on food in a sector that’s not really been touched,” he said. Another factor was Twiga’s prospects to create additional revenue by improving B2B supply chain for FMCG and other consumer products.

Co-founded in Nairobi in 2014 by Brooke and Kenyan Peter Njonjo, Twiga Foods serves around 2000 outlets a day with produce through a network of 13,000 farmers and 6000 vendors. Parties can coordinate goods exchanges via mobile app using M-Pesa mobile money for payment.

The company has reduced typical post-harvest losses in Kenya from 30 percent to 4 percent for produce brought to market on the Twiga network, according to Brooke.

“That’s savings we can offer the outlets and better pricing we can offer the farmers,” he said.

Twiga Foods generates revenues from margins on the products it buys and sells. As an example, the company could buy bananas at around 19 Schillings ($.19) a kilo and sell at 34 ($.34) Schillings a kilo.

“Our margin is how efficient we are at moving products between those two elements” and the company purchases from farmers at roughly 10 percent higher than Kenya’s traditional produce middle-men, according to Brooke.

Agtech has become a prominent startup sector in Africa. A number of companies, such as Ghana’s Agrocenta and Nigeria’s Farmcrowdy, have raised VC for apps that coordinate payments, logistics, and working capital across the continent’s farmers and food markets.

In 2017 Twiga Foods raised a $10.3 million Series A round lead by Wamda Capital. Earlier this year the startup partnered with IBM Africa to introduce a blockchain enabled finance working capital platform to its network of vendors.

With the new investment and product expansion, Twiga Foods will explore offering additional financial services to its client network. The startup doesn’t divulge revenue information but “profitability is on the horizon for us,” said Brooke.

Twiga Foods will maintain its focus primarily on Kenya, but “we’re starting to research and dabble in Tanzania,” according to Brooke.

The startup doesn’t plan to move beyond B2B to direct online retail. “I don’t think B2C e-commerce is viable on the continent once you factor in job size and cost of acquisition versus lifetime value,” said Brooke. He also named the high cost of marketing: “In B2C e-commerce space you really have to be in the advertising space. Our clients are ordering every two days with no marketing budget,” said Brooke.

So for the time being, Twiga Foods aims to stick with improving the supply chain for products between Kenya’s buyers and sellers.