Meet BukuWarung, the bookkeeping app built for Indonesia’s 60 million “micro-merchants”

In Indonesia, there are about 60 million “micro-merchants,” typically small store owners who sell food and other staple items, and have close relationships with their customers. Many often extend informal lines of credit to shoppers, but much of their financial tracking is still done with pen and paper ledgers. Chinmay Chauhan and Abhinay Peddisetty, the co-founders of BukuWarung, want to digitize the process with a financial platform designed especially for small Indonesian businesses. Their goal is to start with bookkeeping tools, before expanding into services including access to working capital.

The startup is currently taking part in Y Combinator’s startup accelerator program. BukuWarung has also raised seed funding from East Ventures, AC Ventures, Golden Gate Ventures, Tanglin Ventures, Samporna, as well as strategic angel investors from Grab, Gojek, Flipkart, PayPal, Xendit, Rapyd, Alterra, ZEN Rooms and other companies.

Chauhan and Peddisetty met while working together at Singapore-based peer-to-peer marketplace Carousell, where they focused on developing monetization products for sellers. Chauhan also worked on products for merchants at Grab, the largest ride-sharing and on-demand delivery company in Southeast Asia. But the inspiration behind BukuWarung is also personal, because both Chauhan and Peddisetty’s families run small neighborhood stores.

“We can look at this more deeply given the experience we have monetizing merchants at Grab and Carousell,” Chauhan said. “We also know good potential exists in Indonesia, where we can help 60 million micro-merchants come online and digitize. From a macro-level, we felt this would be a huge opportunity, and there is also the personal element of being potentially being able to impact millions of merchants.”

Paper records not only make tracking finances a labor-intensive process, but also means it is harder for merchants to gain access to lines of credit. Chauhan and Peddisetty told TechCrunch that their goal is to expand the company to financial services as well, doing for Indonesian merchants what KhataBook and OKCredit have done in India. Since launching last year, BukuWarung has signed up 600,000 merchants across 750 cities and towns in Indonesia and currently has about 200,000 monthly average users. The founders say their goal is to reach all 60 million micro-, small- and medium-sized businesses in Indonesia. It has already made its first acquisition: Lunasbos, one of the first Indonesian credit tracking apps.

BukuWarung founders Chinmay Chauhan and Abhinay Peddisetty

While preparing to launch BukuWarung, the founders traveled through Indonesia, speaking to almost 400 merchants about their challenges with bookkeeping, credit tracing and accounting. Based on those conversations, the two decided to start by focusing on a bookkeeping app, which launched 10 months ago.

Despite a partial lockdown in Indonesia from April to June, BukuWarung continued to grow because most of its users sell daily necessities, like groceries. In smaller cities and villages, merchants often offer credit lines because their customers’ cash flow is very tight, and many do not have a regular monthly paycheck, Chauhan said. “Everyone is buying and selling on credit, that is something we validated in our research.”

Then there is the community aspect, where many merchants are close to their customers.

“This changes depending on the location of the business, but business owners have often known a lot of people in their neighborhoods for a long time, and when it comes to credit, they typically offer 500 Indonesian rupiah all the way up to about one million rupiah [about USD $70.56],” Chauhan said. But when it’s time to settle bills, which often means going to customers’ homes and asking for payment, many merchants feel hesitant, he added.

“They will never chase or call the person. The app we built sends automatic reminders to customers, and this ‘soft message’ really helps merchants not feel shy while at the same time professionally giving customer reminders.”

While talking to merchants, BukuWarung’s founders also realized that many were using pay-as-you-go data plans and lower-end smartphones. Therefore, their app needed to be as lightweight as possible, and work offline so users could access and update their records anytime. This focus on making their app take up as little data and space as possible differentiates them from other bookkeeping apps, the founders said, and helps them sign up and retain users in Indonesia.

Chauhan and Peddisetty said the company will partner with financial tech companies as it grows  to give users access to online payment systems, including digital wallets, and financing.

In a statement to TechCrunch, Y Combinator partner Gustaf Alströmer said, “Building digital infrastructure for emerging economies is a huge opportunity, especially in the post-COVID world. And we believe BukuWarung is a team that can take on this challenge. We have seen this journey before with Khatabook and OkCredit in India and see that BukuWarung is on a similar growth trajectory to empower micro-businesses in Indonesia.”

 

Anthos Capital and NBA All-Star Baron Davis back LA-based college tuition savings service, UNest

UNest, a Los Angeles provider of financial planning and savings tools for parents including college savings plans and other beneficial investment vehicles for various life events, has raised $9 million in a new round of funding, the company said. 

Its round will be used to speed up its growth through strategic hires and partnerships, according to UNest.

Ksenia Yudina initially founded the company to provide financial planning and services to lower- and middle-class families looking for ways to start saving for their children’s education, she said.

Over time, the company realized that tax-advantaged savings plans for college tuition weren’t providing the range of financial services that these families needed so UNest added Uniform Transfer To Minor Accounts  management services to its slate of offerings.

The business attracted interest from Northwestern Mutual Future Ventures, Artemis Fund, Draper Dragon and Unlock Ventures initially, and the company has now added Anthos Capital to its roster of investors.

Since its public launch in February, one month before the COVID-19 pandemic forced a major lockdown of US cities and sent the economy into a tailspin, UNest has actually signed up more than 25,000 users.

The savings app is similar to other financial planning services available, but funnels users’ money into 529 accounts and UTMAs so that parents can begin to save for the children’s future.

“To me the investment in UNest is a great opportunity to help my community. It aligns with my vision that all kids deserve a chance to get an education and have equal opportunities in life regardless of their race or ethnicity. All kids should have access to the financial resources that make these goals achievable,” said Baron Davis, two-time NBA All-Star, current CEO and Founder of Baron Davis Enterprises, in a statement. “As a father of two young boys, I care about their financial future and I know that other parents are feeling the same way. By making it easy for parents to step into saving plans, UNest is going to transform the future of the next generation and I’m excited to be a part of this journey.”

Users can open a savings account with as little as $25, according to Yudina. The company charges a $3 advisory fee per-user, per-month and on average customers are depositing around $250 per-month in the accounts, according to Yudina.

People who are more sophisticated and pick their own stocks themselves, according to a company executive, and see how their portfolio grows over ten or fifteen years.

“We have made it our priority to invest in minorities and exceptional female entrepreneurs that are transforming how individuals experience financial security,” said Craig Schedler, Managing Director, Northwestern Mutual Venture Fund, in a statement. “Our additional investment in UNest on top of our initial participation in the company’s Seed round is a testament to the tremendous progress UNest has demonstrated over the past several months. It also reflects the ongoing commitment to providing smart, practical financial solutions to people of all economic backgrounds. We are delighted to be part of UNest’s future in helping even more American families achieve financial stability.”

Honda global operations halted by ransomware attack

Honda has confirmed a cyberattack that brought parts of its global operations to a standstill.

The company said in a brief statement Tuesday that the attack caused production issues outside of its headquarters in Japan. “Work is being undertaken to minimize the impact and to restore full functionality of production, sales, and development activities,” according to the BBC.

It follows a tweet from the company, now pinned to the top of its Twitter feed, stating that its customer service and financial services are “unavailable” due to the attack.

Honda is one of the largest vehicle manufacturers in the world, employing more than 200,000 staff, with factories in the U.K., North America, and Europe.

Details of the attack are slim but an earlier report suggests that the Snake ransomware is the likely culprit. Snake, like other file-encrypting malware, scrambles files and documents and holds them hostage for a ransom, expected to be paid in cryptocurrency. But Honda said there was no evidence to suggest that data had been exfiltrated, a common tactic used by newer forms of ransomware.

The company said that affected factories and plants are expected to be brought back online as early as today.

Brett Callow, a threat analyst at security firm Emsisoft, said a sample of the file-encrypting malware was uploaded to VirusTotal, a malware analysis service, referencing an internal Honda subdomain, mds.honda.com.

“The ransomware will only encrypt files on systems capable of resolving this domain but, as the domain does not exist on the clear net, most systems would not be able to resolve it. mds.honda.com may well exist on the internal nameserver used by Honda’s intranet, so this is a fairly solid indicator that Honda was indeed hit by Snake,” said Callow.

Honda finds itself in similar company to IT giant Cognizant, cyber insurer Chubb, and defense contractor CPI, all of which were hit by ransomware this year.

How startups can leverage elastic services for cost optimization

Due to COVID-19, business continuity has been put to the test for many companies in the manufacturing, agriculture, transport, hospitality, energy and retail sectors. Cost reduction is the primary focus of companies in these sectors due to massive losses in revenue caused by this pandemic. The other side of the crisis is, however, significantly different.

Companies in industries such as medical, government and financial services, as well as cloud-native tech startups that are providing essential services, have experienced a considerable increase in their operational demands — leading to rising operational costs. Irrespective of the industry your company belongs to, and whether your company is experiencing reduced or increased operations, cost optimization is a reality for all companies to ensure a sustained existence.

One of the most reliable measures for cost optimization at this stage is to leverage elastic services designed to grow or shrink according to demand, such as cloud and managed services. A modern product with a cloud-native architecture can auto-scale cloud consumption to mitigate lost operational demand. What may not have been obvious to startup leaders is a strategy often employed by incumbent, mature enterprises — achieving cost optimization by leveraging managed services providers (MSPs). MSPs enable organizations to repurpose full-time staff members from impacted operations to more strategic product lines or initiatives.

Why companies need cost optimization in the long run

Zipline begins US medical delivery with UAV program honed in Africa

Drones are being deployed in the fight to curb COVID-19 in the U.S.

Novant Health and California based UAV delivery startup Zipline have launched distribution of personal protective gear and medical equipment in North Carolina.

Novant is a non-profit healthcare provider with a network in the Southeastern United States.

Through the partnership, Zipline’s drones will make 32 mile flights on two routes between Novant Health’s emergency drone fulfillment center in Kannapolis to the company’s medical center in Huntersville, North Carolina — where front line healthcare workers are treating coronavirus patients.

Zipline and Novant are touting the arrangement as the first authorized long-range drone logistics delivery flight program in the U.S. The activity has gained approvals by the U.S. Federal Aviation Administration and North Carolina’s Department of Transportation — though the FAA offered TechCrunch nuanced guidance on how it classifies the undertaking.

The story behind the Novant, Zipline UAV collaboration has a twist: the capabilities for the U.S. operation were developed primarily in Africa. Zipline has a test facility in the San Francisco area, but spent several years configuring its drone delivery model in Rwanda and Ghana.

Co-founded in 2014 by Americans Keller Rinaudo, Keenan Wyrobek and Will Hetzler, Zipline designs its own UAVs, launch and landing systems and logistics software for distribution of critical medical supplies.

The company turned to East Africa in 2016, entering a partnership with the government of Rwanda to test and deploy its drone service in that country. Zipline went live with UAV distribution of life saving medical supplies in Rwanda in late 2016, claiming the first national drone-delivery program at scale in the world.

Zipline co-founder Keller Rinaudo (L) with Rwandan President Paul Kagame (Middle) in 2016

The company expanded to Ghana in 2016, where in addition to delivering blood and vaccines by drone, it now distributes COVID-19 related medication and lab samples.

Based on its Africa operations, Zipline was selected by regulators to participate in medical drone delivery testing in the U.S. in 2016, in coordination with the FAA.

The company’s Africa business also led to its pandemic response partnership with Novant Health. The North Carolina based company was in discussion with Zipline on UAV delivery before the coronavirus outbreak in the U.S., but the crisis spurred both parties to speed things up, according to Hank Capps, a Senior Vice President at Novant.

That included some improvisation. For its current launch site the operation is using space donated by a local NASCAR competition team, Stewart-Haas Racing.

According to Capps, the current collaboration using drones to deliver medical supplies from that site could grow beyond the 32 mile route Zipline and Novant began flights on last Friday.

“Right now we plan to expand it geographically within our footprint, which is fairly large within North Carolina, South Florida, and Virginia,” he told TechCrunch on a call.

That, of course, will depend on regulatory approval. The FAA granted Novant Health permission to operate the current program — which the FAA classifies as a distribution vs. delivery operation — through a 107 waiver. This rolls up into the evolving federal code on operation of unmanned aircraft in the U.S. and allows Novant and Zipline to operate “until Oct. 31, 2020, or until all COVID-related restrictions on travel, business and mass gatherings for North Carolina are lifted, whichever occurs first,” according to the FAA. The U.S. regulatory body also stipulated that “Part 107 is a waiver, not a drone licence.”

The FAA offered cautious confirmation that the Zipline, Novant partnership is the first approved long range unmanned delivery service in the United States.

“I am not aware of any that are flying routes as far as what they are doing in North Carolina, but I try to be careful when talking about firsts,” an FAA spokesperson told TechCrunch.

Last month UPS and CVS announced a shorter range drone delivery program of prescription drugs to a retirement village in Florida.

Image Credits: Novant Health

The arrangement between Zipline and Novant is not for financial gain — according to both parties — but still supports Zipline’s profitability thesis advanced by co-founder Keller Rinaudo.

“Healthcare logistics is a $70 billion global industry, and it’s still only serving a golden billion on the planet,” he told me in a 2016 interview.

On a recent call, Rinaudo noted the startup is generating income on operations to serve that market, through the company doesn’t release financial data.

“At the distribution centers that have been operating for more than a year, Zipline is making money on the deliveries that we do,” he said.

Rinaudo pointed to the more favorable margins of autonomous delivery using small, electric powered UAVs versus large internal combustion vehicles.

“I think that these kinds of services are going to operate, much more profitably than traditional logistic services,” he said.

Zipline sold investors on that value proposition. The company has raised (a reported) $233 million in VC from backers including Andreeson Horowitz and Goldman Sachs. Zipline intends to expand its drone delivery business in the U.S. and anywhere in the world it finds demand, according to its CEO.

In addition to partner Novant Health, Zipline has caught the attention of big logistics providers, such as UPS — which has supported (and studied) the startup’s Africa operations back to 2016.

The Zipline, Novant launch of UAV delivery of medical supplies in the U.S. is a high-point for the thesis that Africa’s tech ecosystem — which has become a hotbed for VC and startups — can produce innovation with global application.

The presidents of Rwanda and Ghana  — Paul Kagame and Nana Akufo-Addo — were instrumental in supporting Zipline’s partnerships in their countries. Other nations on the continent, such as Kenya, South Africa, and Zambia, continue to advance commercial drone testing and novel approaches to regulating the sector.

Image Credits: HHP/Harold Hinson

For all the talk that COVID-19 may force an isolationist shift across countries, the Zipline, Novant Health partnership is very much a globally incubated solution — applied locally in the U.S. — to an international problem.

The program combines a medical drone delivery startup founded in San Francisco with a model tested in Africa to an American healthcare venture in North Carolina, with a little help from a NASCAR race team. This could reflect the unique application of tech and partnerships to come in the fight against COVID-19.

Newton Mail founder returns with launch of personal net worth tracker, Kubera

Serial entrepreneur Rohit Nadhani, who last sold his Newton email app to Essential in 2018— an app so popular it’s been saved from shutting down multiple times — is today launching a new startup, Kubera. The service aims to offer an alternative to using a spreadsheet to keep track of your assets, investments, cryptocurrencies, debts, insurance, and other important documents that would need to be transferred to a loved one in the event of your death.

The founder was inspired to create Kubera — a reference to the Indian “lord of wealth” — due to a traumatic personal experience. While swimming in Costa Rica, he was caught in a riptide and had to be rescued. After coming home, the first thing he did was to start putting together a list of all his assets to share with his wife in the event of his death.

The task was fairly difficult, as it turned out, as that list now included more than just real estate, stocks and bonds, retirement accounts, and insurance.

Nadhani realized he also wanted to list other assets like crypto investments, collectibles, precious metals, private and foreign investments, trademarks and other digital assets, as well as debts owed him — like loans he had made to family and friends.

Plus, he wanted a few more features that a simple spreadsheet could provide — like the ability to automatically update the value of the assets, similar to Intuit’s Mint, and basic reporting. More importantly, he didn’t want to share access to his personal net worth data and accounts unless it was absolutely necessary.

Existing solutions didn’t meet Nadhani’s needs, he said, as they used outdated technology, lacked the features he wanted, or used users’ data to make budgeting or investment recommendations. That, along with feedback from friends who said they were also stuck using spreadsheets for this task, prompted the founder to create his own solution with Kubera.

To do so, he reached out to former colleague Manoj Marathayil, the founding engineer at Nadhani’s two prior companies, CloudMagic (Newton) and Webyog, which exited to IDERA in 2018. Also joining Kubera is the former Head of Product & Design from Newton Mail at CloudMagic, Umesh Gopinath.

Kubera is launching today as a custom-built solution for the task of listing your assets, both traditional and non-traditional alike.

To use the service, you begin by listing your assets in a simple table, then add details like cost, value, or the documents associated with them, if available. You can either opt to update the values in the table as you go, or you can connect assets to your online accounts to update their value automatically.

 

The service uses trusted financial data aggregation services like Plaid and Yodlee to make the connections, which means it has “read-only” access to your financial data — Kubera cannot make transactions on your behalf. This also allows it to support connections to over 10,000 banks across the world.

The service also uses the open standard AES-256 encryption algorithm to encrypt user data, requires HTTPS on all web pages, uses HSTS to require browsers use only secure connections, and supports 2-step verification through Google Sign-in with other 2-step options launching soon.

The company’s business model is a subscription service, which allows it to generate revenue without having to share data with a third-party or advertiser. The basic service is free to use if you don’t want to automatically update your asset values. If you do, it’s $10 per month.

Once the initial entry has been done, Kubera will periodically remind you to update asset values and check in. Its “life beat” check will track if you’ve been inactive for a certain number of days (specified by you during setup) and try to reach you.

If you don’t respond to Kubera’s attempts to reach you, it will then try to reach your beneficiary by way of email and text, if provided. The service sends an email with all the information you’ve provided in a downloadable format to your beneficiary. If they don’t respond after several reminders, Kubera will then reach out to your backup contact, a “Trusted Angel.”

Kubera to some extent competes with services like Mint, YNAB and other online budgeting tools. But these services don’t offer the same extensive net worth tracking and have a different focus. It also competes with financial advisor and wealth management companies, like Personal Capital. But instead of pushing you to connect with a financial advisor or other paid services, Kubera isn’t doling out investing advice.

Further down the road, Kubera may expand into estate planning — like helping with wills or trusts, or connecting you to partners who can provide these services. But for the time being, the service is meant to be used in conjunction with users’ existing wills and trusts.

The bootstrapped startup is a five-person team. At launch, Kubera is offering 100-day free trials, allowing you the time to organize assets before making a decision on subscribing to the service.

 

This UX specialist opened 12 UK bank accounts and ‘logged everything’

“I’ve got a really high attention to detail, which might sound great, but it’s possibly a curse because I can’t help but spot problems with everything around me,” says Peter Ramsey .

He’s the founder of Built for Mars, a U.K.-based UX advisory, and he has spent the last three months documenting and analyzing the user experience of a dozen leading British banks — both incumbents and challengers — including Barclays, HSBC, Santander, Monzo, Starling and Revolut.

“Quite literally, I opened 12 real bank accounts,” he explains. “You remember the stress of opening one account? I did that 12 times, [and] it was probably a terrible idea. But I really needed to control as many variables as possible, and this was the only way of doing that.”

Next, Ramsey says he “logged everything,” recording every click, screen and action. “I saved every letter, and made a note of when they arrived. I recorded pretty much everything I could,” he recalls. “At one point I even weighed all the debit cards to see if some were heavier. That was a total waste of time though, because they all weighed the same amount. But you see what I mean, I just thought about making it as scientific as possible. Also, UX is really quite subjective, so I wanted to back up my opinions with some more quantifiable metrics.”

The resulting analysis — covering opening an account, making a first payment and freezing your card — supported by individual bank case studies, is being published on the Built for Mars website over the month with a new interactive chapter released weekly.

After being given early access to the first three chapters and an initial series of case studies, I put several questions to Ramsey to understand his motivation, methodology and what he learned. And if you’re wondering which bank came out on top, keep reading.

TechCrunch: Why did you choose to do this on banks?

Peter Ramsey: My background is in fintech, and I think the banks are just in this weird place right now. When they first came out I think consumers were surprised at how much better the apps were. Banking was renowned for having old software, it was almost acceptable for an old bank to be buggy. But now that these challenger banks have been out for five years, I think that perception has changed. So I chose the banks because they represent this industry of “challenger” versus “legacy.” Plus, for billion-dollar companies, you’d expect them all to really care about experience.

TikTok parent ByteDance leads $6M round in financial AI startup Lingxi

TikTok’s parent company ByteDance has added Lingxi, a Beijing-based startup that applies machine intelligence to financial services such as debt collection and insurance sales, to its ever-expanding portfolio of investments.

The AI startup has raised a $6.2 million Series A round co-led by ByteDance and Rocket Internet, the German accelerator that has incubated e-commerce giants Lazada and Jumia. Junsan Capital and GSR Ventures also participated in the round, which officially closed in April.

This marks one of ByteDance’s first investment deals for purely monetary returns, rather than for an immediate strategic purpose. However, with ByteDance’s recent foray into the financial services domain, that relationship could shift over time.

ByteDance as an investor

TikTok’s parent company previously focused narrowly on strategic deals, with the aim of leveraging these smaller startups’ technology, industry know-how, talents and other resources for its own business objectives. The most prominent example is perhaps its acquisition of Musical.ly, through which TikTok gained access to tens of millions of American users and a reputed product team led by founder Alex Zhu.

In 2019, ByteDance’s strategic investment team began its search for venture capital-style funding opportunities. Spearheading the effort is former Sequoia China investor Yang Jie.

There are, however, clear strategic synergies in ByteDance’s first financial investment. The online entertainment giant has already received an insurance broker license and is in the process of obtaining one for consumer finance, according to Lingxi founder and chief executive Zhongpu “Vincent” Xia. When asked if he sees ByteDance eventually deploying Lingxi’s machine intelligence in its future financial services, Xia responded, “Why not?”

ByteDance declined to comment on its entry into the financial sector.

Despite billing themselves as AI-first companies, both ByteDance and Lingxi recognize the essential role of humans before AI reaches the desired level of sophistication. ByteDance today relies on thousands of human auditors to screen content published across its TikTok, Douyin, Today’s Headlines and other apps. Likewise, Lingxi is labor-intensive and manages 200 customer representatives aided by a team of 30 AI experts.

The core of Lingxi is to “augment humans, not to replace them,” said Xia in a phone interview with TechCrunch .

Too big to change

Xia was leading a team of 90 people to work on Baidu’s commercialization of AI when he had an epiphany to do something of his own. He was convinced that AI would enhance humans’ cognitive capability, he said, the same way the steam engine had boosted humans’ physical production a century ago. The Chinese search pioneer has widely been perceived as the poster child of the nation’s booming AI industry because of its early and outsized investment in the technology, but by the end of 2017, Xia felt Baidu’s model of touting AI as a tool wasn’t working.

“We hit a bottleneck. The technology [AI] wasn’t mature enough yet, which means you have to combine it with a big team of people to perform manual tasks like data labeling, so you not only need to hire AI experts, professionals in the business you serve, but also a large number of workers to label data and train the machines,” he said.

Xia is among the industry practitioners who recognize the limitation of machines. While computers can outperform humans in completing repetitive, menial tasks, they remain unreliable in handling complex human emotions and can lead to counterproductive and even detrimental repercussions were they left with full autonomy.

The result of relying completely on machines is “client dissatisfaction,” said Xia. “The client might be very happy for the first few months, but as its business evolves and new needs arise, it will start to realize that the so-called machines are getting dumber and dumber. Artificial intelligence becomes artificial retardedness.”

Lingxi staff at work during the COVID-19 pandemic

Most self-proclaimed AI startups in China make money by selling bots akin to how old-fashioned software was sold with pre-programmed objectives, allowing little room for iteration or upgrade later on. Lingxi, in contrast, is service-based and takes a commission from client revenues.

Take debt collection — Lingxi’s primary focus at this stage — for example. When a client, a financial affiliate of one of China’s biggest internet firms, assigned Lingxi with 1.9 million yuan (about $270,000) worth of debt, the startup’s algorithms first determined how much the machines could handle. It turned out that the robots recovered 1.7 million yuan and left the rest of the cases, which Xia categorized as “irrational and complicated,” to human staff. By Q1 2020, Lingxi was able to achieve 2.5 times the average output of debt collection agencies, and it aims to ramp up the ratio to 4 times by the end of the year.

Human control

Conventionally, a company selling AI tools deals only with the IT department from its clients. Lingxi works with the business department instead. In the client’s eye, the AI startup is no different from a traditional debt collector. In practice, Lingxi is a debt collector with souped-up productivity enabled by computing power.

“The client doesn’t care what tools we use. They care only about the result,” said Xia. “The difference in working with these two departments is that the one in charge of the actual business is result-driven and will give us much stricter KPIs.”

The immediate impact of this model is that the AI-driven vendor must keep improving its algorithms, manually sampling and correcting machine decisions to improve their accuracy. “We might not be making money in the beginning, but over time, our output will certainly surpass those of our competitors.”

The service-oriented approach pushes Lingxi to get its hands dirty, upending the image of tech startups coding away in their sleek and comfortable offices. Its engineers are asked to regularly talk to clients about their real-life business challenges, whereas its customer representatives are required to attend training in how AI works.

“Fusion is what defines our company culture,” said Xia introspectively. “The technical team needs to understand business practices. Vice versa, our business people need to understand technology.”

Coveted sector

It’s not hard to see why Xia chose to target China’s financial services industry. The booming sector is lucrative and tends to be more progressive in embracing technological innovations. Competition in fintech runs high, leveling the playing field for newer entrants against those that are more established.

“There’s a saying in the Chinese tech world that goes: If you can conquer the financial industry, you have conquered the business-to-business world,” said the founder.

The three-year-old startup is targeting 40-80 million yuan ($5.6 million to $11.3 million) in revenue in 2020. It’s one of the few businesses that have, against the odds, thrived under the COVID-19 pandemic because more people are taking out loans to tide the looming economic downturn.

Meanwhile, traditional debt collectors are struggling to hire during city lockdowns due to travel bans across the country, which started to ease in March, while machine-only vendors still fail to satisfy the whole range of client demands. That gave Lingxi a big window to onboard a significant number of new clients, prompting it to hire new staff.

B2B challenger bank Finom raises $7M Seed from Target Global and General Catalyst

Just as challenger banks have appeared in the B2C space, so to have B2B startup banks aimed small businesses, among them startups like Qonto (Fr), Tide (UK), Penta (GER) and CountingUp (UK).

Today another such firm, Finom, has closed a €6.5m ($7M) seed funding round led by Target Global, with participation from General Catalyst. Further investors include FJ Labs, Raisin founders Tamaz Georgadze, Frank Freund and Michael Stephan, and Ilya Kondrashov, the founder of MarketFinance. The company will primarily use the fresh capital to develop its product, and to expand further into Italy and France in the summer of 2020.

Finom puts accounting, financial management and banking functions for early-stage businesses and SMEs into one ‘mobile-first’ product. Businesses can set up an online account, with accounts payable and account receivable from both the app and the site in fairly short order. The company was started by the team that also launched Modulbank, ‘neobank’ for SMEs in Russia.

Konstantin Stiskin, co-founder of Finom, told Techcrunch: “The EU SME banking market size is more than €100bn. But according to McKinsey research, European entrepreneurs spend 74% of their time on non-core activities and pay for expensive and inconvenient products. Our goal is to enable small businesses in Europe to become more efficient and to thrive.”

He added: “We are not just a card with an account. We aim to be a foundation for SME’s and their everyday business, covering banking, accounting and financial management within one product.

Finom is now live in France, Italy and Germany and started with e-invoicing in Italy, which allowed it to gain market knowledge and collect the data for accounting/payments and lending.

Mike Lobanov, General Partner and COO at Target Global said: “At Target Global we are great believers in the SME segment… The team of exceptional entrepreneurs standing behind Finom shares our view, and has already built a new standard for offering financial services to SMEs.”

Although Target Global is headquartered in Berlin, it has more than €700m in assets under management, with offices in London, Tel Aviv and Barcelona. Poortfolio includes companies such as Auto1, Delivery Hero, Omio (formerly GoEuro), TravelPerk, Rapyd and WeFox.

Can API vendors solve healthcare’s data woes?

A functioning healthcare system depends on caregivers having the right data at the right time to make the right decision about what course of treatment a patient needs.

In the aftermath of the COVID-19 epidemic and the acceleration of the consumer adoption of telemedicine, along with the fragmentation of care to a number of different low-cost providers, access to a patient’s medical records to get an accurate picture of their health becomes even more important.

Opening access to developers also could unlock new, integrated services that could give consumers a better window into their own health and consumer product companies opportunities to develop new tools to improve health.

While hospitals, urgent care facilities and health systems have stored patient records electronically for years thanks to laws passed under the Clinton administration, those records were difficult for patients themselves to access. The way the system has been historically structured has made it nearly impossible for an individual to access their entire medical history.

It’s a huge impediment to ensuring that patients receive the best care they possibly can, and until now it’s been a boulder that companies have long tried to roll uphill, only to have it roll over them.

Now, new regulations are requiring that the developers of electronic health records can’t obstruct interoperability and access by applications. Those new rules may unlock a wave of new digital services.

At least that’s what companies like the New York-based startup Particle Health are hoping to see. The startup was founded by a former emergency medical technician and consultant, Troy Bannister, and longtime software engineer for companies like Palantir and Google, Dan Horbatt.

Particle Health is stepping into the breach with an API -based solution that borrows heavily from the work that Plaid and Stripe have done in the world of financial services. It’s a gambit that’s receiving support from investors including Menlo Ventures, Startup Health, Collaborative Fund, Story Ventures and Company Ventures, as well as angel investors from the leadership of Flatiron Health, Clover Health, Plaid, Petal and Hometeam.

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“My first reaction when I met Troy, and he was describing what they’re doing, was that it couldn’t be done,” said Greg Yap, a partner with Menlo Ventures, who leads the firm’s life sciences investments. “We’ve understood how much of a challenge and how much of a tax the lack of easy portability of data puts on the healthcare system, but the problem has always felt like there are so many obstacles that it is too difficult to solve.”

What convinced Yap’s firm, Menlo Ventures, and the company’s other backers, was an ability to provide both data portability and privacy in a way that put patients’ choice at the center of how data is used and accessed, the investor said.

“[A service] has to be portable for it to be useful, but it has to be private for it to be well-used,” says Yap. 

The company isn’t the first business to raise money for a data integration service. Last year, Redox, a Madison, Wis.-based developer of API services for hospitals, raised $33 million in a later-stage round of funding. Meanwhile, Innovaccer, another API developer, has raised more than $100 million from investors for its own take.

Each of these companies is solving a different problem that the information silos in the medical industry presents, according to Patterson. “Their integrations are focused one-to-one on hospitals,” he said. Application developers can use Redox’s services to gain access to medical records from a particular hospital network, he explained. Whereas using Particle Health’s technology, developers can get access to an entire network.

“They get contracts and agreements with the hospitals. We go up the food chain and get contracts with the [electronic medical records],” said Patterson.

One of the things that’s given Particle Health a greater degree of freedom to acquire and integrate with existing healthcare systems is the passage of the 21st Century Cures Act in 2016. That law required that the providers of electronic medical records like Cerner and EPIC had to remove any roadblocks that would keep patient data siloed. Another is the Trusted Exchange Framework and Common Agreement, which was just enacted in the past month.

“We don’t like betting on companies that require a change in law to become successful,” said Yap of the circumstances surrounding Particle’s ability to leapfrog well-funded competitors. But the opportunity to finance a company that could solve a core problem in digital healthcare was too compelling.

“What we’re really saying is that consumers should have access to their medical records,” he said.

Isometric Healthcare and technology concept banner. Medical exams and online consultation concept. Medicine. Vector illustration

This access can make consumer wearables more useful by potentially linking them — and the health data they collect — with clinical data used by physicians to actually make care and treatment decisions. Most devices today are not clinically recognized and don’t have any real integration into the healthcare system. Access to better data could change that on both sides.

“Digital health application might be far more effective if it can take into context information in the medical record today,” said Yap. “That’s one example where the patient will get much greater impact from the digital health applications if the digital health applications can access all of the information that the medical system collected.” 

With the investment, which values Particle Health at roughly $48 million, Bannister and his team are looking to move aggressively into more areas of digital healthcare services.

“Right now, we’re focusing on telemedicine,” said Bannister. “We’re moving into the payer space… As it stands today we’re really servicing the third parties that need the records. Our core belief is that patients want control of their data but they don’t want the stewardship.”

The company’s reach is impressive. Bannister estimates that Particle Health can hit somewhere between 250 and 300 million of the patient records that have been generated in the U.S. “We have more or less solved the fragmentation problem. We have one API that can pull information from almost everywhere.”

So far, Particle Health has eight live contracts with telemedicine and virtual health companies using its API, which have pulled 1.4 million patient records to date.

The way it works right now, when you give them permission to access your data it’s for a very specific purpose of use… they can only use it for that one thing. Let’s say you were using a telemedicine service. I allow this doctor to view my records for the purpose of treatment only. After that we have built a way for you to revoke access after the point,” Bannister said.

Particle Health’s peers in the world of API development also see the power in better, more open access to data. “A lot of money has been spent and a lot of blood and sweat went into putting [electronic medical records] out there,” said Innovaccer chief digital officer Mike Sutten.

The former chief technology officer of Kaiser Permanente, Sutten knows healthcare technology. “The next decade is about ‘let’s take advantage of all of this data.’ Let’s give back to physicians and give them access to all that data and think about the consumers and the patients,” Sutten said.

Innovaccer is angling to provide its own tools to centralize data for physicians and consumers. “The less friction there is in getting that data extracted, the more benefit we can provide to consumers and clinicians,” said Sutten.

Already, Particle Health is thinking about ways its API can help application developers create tools to help with the management of COVID-19 populations and potentially finding ways to ease the current lockdowns in place due to the disease’s outbreak.

“If you’ve had an antibody test or PCR test in the past… we should have access to that data and we should be able to provide that data at scale,” said Bannister. 

“There’s probably other risk-indicating factors that could at least help triage or clear groups as well… has this person been quarantined has this person been to the hospital in the past month or two… things like that can help bridge the gap,” between the definitive solution of universal testing and the lack of testing capacity to make that a reality, he said. 

“We’re definitely working on these public health initiatives,” Bannister said. Soon, the company’s technology — and other services like it — could be working behind the scenes in private healthcare initiatives from some of the nation’s biggest companies as software finally begins to take bigger bites out of the consumer health industry.