Why is Andreessen Horowitz (and everyone else) investing in Latin America now?

Investments by U.S. venture capital firms into Latin America are skyrocketing and one of the firms leading the charge into deals is none other than Silicon Valley’s Andreessen Horowitz .

The firm that shook up Silicon Valley with potentially over-generous term sheets and valuations and an overarching thesis that “software is eating the world” has been reluctant to test its core belief… well… pretty much anywhere outside of the United States.

That was true until a few years ago when Andreessen began making investments in Latin America. It’s the only geography outside of the U.S. where the firm has committed significant capital and the pace of its investments is increasing.

Andreessen isn’t the only firm that’s making big bets in companies south of the American border. SoftBank has its $2 billion dollar investment fund, which launched earlier this year, to invest in Latin American deals as well. (Although the most recent SoftBank Innovation Fund investment in GymPass is likely an indicator that the fund, much like SoftBank’s “Vision” fund, has a pretty generous interpretation of what is and is not a Latin American deal.)

“We previously didn’t invest internationally, [because] we weren’t as well set up to help these companies,” says Angela Strange, a general partner at Andreessen Horowitz. “Part of the reason for why LatAm is proximity.”

As payment and surveillance technologies collide, free speech could be a victim

Anyone who has traveled to Hong Kong knows how ubiquitous the Octopus Card is. Distributed by a company which is majority owned by the Hong Kong government, the cards are used to pay for everything from public transit to groceries, to Starbucks coffee. It’s an incredible payment solution that’s used by almost everyone in the city.

But as hundreds of thousands of people gather in the city center to protest against proposed regulations that residents view as tearing down the last protections against the authoritarian control of mainland China, those same citizens are viewing their Octopus cards in a different light.

Protestors in Hong Kong are waiting in line to pay cash for a single-use card rather then use an Octopus card that’s tied to their bank accounts and identity. Their fear, as QZ journalist Mary Hui notes, is that the government will track their data and location.

Already, China’s security apparatus are leaning on citizens. In one instance they allegedly requested that the organizer of a large Telegram group open their phone and reveal their contacts.

Potential privacy concerns are a huge downside for cashless technology. While electronic payments can make things more convenient for the people that can afford it, it opens up new avenues for government or corporate surveillance and monitoring.

On the mainland, the Chinese government is already experimenting with social credit scoring that can affect a citizen’s access to everything from home and personal loans to public transportation.

Examples like this are another argument against the push for cashless systems.

Indeed, as some cities in the U.S. consider — or enact — bans on cashless stores, companies are shifting their policies on how to develop the technology. Philadelphia became the first city to ban cashless stores in March and the state of New Jersey quickly followed suit. Other cities considering the bans include New York, San Francisco and Chicago.

As nations like China and India push to go cashless, it’s worth noting that the ease of use promised by integrated electronic payment systems can be coupled with increasingly sophisticated forms of surveillance. Locking citizens in to a model where all financial transactions can be tracked — or are intrinsically linked — to a smartphone, may be great for governments, but it’s potentially terrible for democracy and its support for free speech and assembly.

 

Facebook collected device data on 187,000 users using banned snooping app

Facebook obtained personal and sensitive device data on about 187,000 users of its now-defunct Research app, which Apple banned earlier this year after the app violated its rules.

The social media giant said in a letter to Sen. Richard Blumenthal’s office — which TechCrunch obtained — that it collected data on 31,000 users in the U.S., including 4,300 teenagers. The rest of the collected data came from users in India.

Earlier this year, a TechCrunch investigation found both Facebook and Google were abusing their Apple-issued enterprise developer certificates, designed to only allow employees to run iPhone and iPad apps used only inside the company. The investigation found the companies were building and providing apps for consumers outside Apple’s App Store, in violation of Apple’s rules. The apps paid users in return for collecting data on how participants used their devices and to understand app habits by gaining access to all of the network data in and out of their device.

Apple banned the apps by revoking Facebook’s enterprise developer certificate — and later Google’s enterprise certificate. In doing so, the revocation knocked offline both companies’ fleet of internal iPhone or iPad apps that relied on the same certificates.

But in response to lawmakers’ questions, Apple said it didn’t know how many devices installed Facebook’s rule-violating app.

“We know that the provisioning profile for the Facebook Research app was created on April 19, 2017, but this does not necessarily correlate to the date that Facebook distributed the provisioning profile to end users,” said Timothy Powderly, Apple’s director of federal affairs, in his letter.

Facebook said the app dated back to 2016.

TechCrunch also obtained the letters sent by Apple and Google to lawmakers in early March, but were never made public.

These “research” apps relied on willing participants to download the app from outside the app store and use the Apple-issued developer certificates to install the apps. Then, the apps would install a root network certificate, allowing the app to collect all the data out of the device — like web browsing histories, encrypted messages and mobile app activity — potentially also including data from their friends — for competitive analysis.

A response by Facebook about the number of users involved in Project Atlas (Image: TechCrunch)

In Facebook’s case, the research app — dubbed Project Atlas — was a repackaged version of its Onavo VPN app, which Facebook was forced to remove from Apple’s App Store last year for gathering too much device data.

Just this week, Facebook relaunched its research app as Study, only available on Google Play and for users who have been approved through Facebook’s research partner, Applause. Facebook said it would be more transparent about how it collects user data.

Facebook’s vice president of public policy Kevin Martin defended the company’s use of enterprise certificates, saying it “was a relatively well-known industry practice.” When asked, a Facebook spokesperson didn’t quantify this further. Later, TechCrunch found dozens of apps that used enterprise certificates to evade the app store.

Facebook previously said it “specifically ignores information shared via financial or health apps.” In its letter to lawmakers, Facebook stuck to its guns, saying its data collection was focused on “analytics,” but confirmed “in some isolated circumstances the app received some limited non-targeted content.”

“We did not review all of the data to determine whether it contained health or financial data,” said a Facebook spokesperson. “We have deleted all user-level market insights data that was collected from the Facebook Research app, which would include any health or financial data that may have existed.”

But Facebook didn’t say what kind of data, only that the app didn’t decrypt “the vast majority” of data sent by a device.

Facebook describing the type of data it collected — including “limited, non-targeted content” (Image: TechCrunch)

Google’s letter, penned by public policy vice president Karan Bhatia, did not provide a number of devices or users, saying only that its app was a “small scale” program. When reached, a Google spokesperson did not comment by our deadline.

Google also said it found “no other apps that were distributed to consumer end users,” but confirmed several other apps used by the company’s partners and contractors, which no longer rely on enterprise certificates.

Google explaining which of its apps were improperly using Apple-issued enterprise certificates (Image: TechCrunch)

Apple told TechCrunch that both Facebook and Google “are in compliance” with its rules as of the time of publication. At its annual developer conference last week, the company said it now “reserves the right to review and approve or reject any internal use application.”

Facebook’s willingness to collect this data from teenagers — despite constant scrutiny from press and regulators — demonstrates how valuable the company sees market research on its competitors. With its restarted paid research program but with greater transparency, the company continues to leverage its data collection to keep ahead of its rivals.

Facebook and Google came off worse in the enterprise app abuse scandal, but critics said in revoking enterprise certificates Apple retains too much control over what content customers have on their devices.

The Justice Department and the Federal Trade Commission are said to be examining the big four tech giants — Apple, Amazon, Facebook and Google-owner Alphabet — for potentially falling afoul of U.S. antitrust laws.

Go-Jek doubles down on India with yet another talent acquisition

Go-Jek may be based in Southeast Asia, but the multi-billion-dollar ride-hailing firm continues to tap India for engineering talent. The Indonesia-headquartered firm announced today that it has acquired AirCTO, a recruitment platform based in Gurgaon.

The acquisition, the price of which has not been disclosed, is a talent grab. AirCTO’s platform uses a mix of AI and humans to help companies hire “top” developer talent — that’s of interest to Go-Jek because the company intends to double down on India, which houses a significant number of its R&D workforce already thanks to prior acquisitions.

Indeed, the company said that AirCTO’s entire team will join it to develop “products that accelerate the recruitment of talent” within its ranks.

First up, the deal will see a Gurgaon office opened as part of a wider plan to hire 100 new tech staff this year to increase Go-Jek’s headcount in India to 500. The firm said that some of that hiring could come from other acquisitions — that makes sense given that Go-Jek is the midst of raising a round that it claims has already passed the $1 billion mark at a valuation approaching $10 billion.

It’s challenging to keep up with Go-Jek acquisition spree because many of its deals are not announced at the time, or, indeed, at all.

But we do know there have been many. According to Crunchbase data, AirCTO is its tenth purchase. Three of those came from India — C42 Engineering, Pianta and Leftshift Technologies — to form an offshored R&D division. In addition, the company’s group CTO is Ajey Gore, a hire from India who spends a large chunk of his time at Go-Jek’s Bangalore office.

Go-Jek isn’t alone in setting up R&D centers in India, rival Grab, which is backed by SoftBank’s Vision Fund and valued at $14 billion, is present in the country, too.

Aware of the limits of the talent pool in its native Southeast Asia, Grab has long maintained engineering outposts overseas. These include Beijing, Seattle and — as of 2017 — Bangalore, in addition to various countries in Southeast Asia. Grab has also made an acquisition in India.

Back on the battlefield of Southeast Asia, Grab and Go-Jek are competing to become the region’s ‘super app.’ Since Uber exited more than a year ago, the ride-hailing war has developed into a contest to become the daily go-to app for the region’s 600 million consumers. That’s seen Go-Jek and Grab steadily add new features and services. Those range from the obvious like food and grocery deliveries, to messages, haircuts and other services on demand, and now even games, video streaming and other entertainment.

Grab operates in eight countries while Go-Jek, which finally forayed outside of Indonesia last year, is present in four.

India’s Jumbotail raises $12.7 million to digitize convenience stores with its wholesale marketplace

With most small grocery stores in India yet to get online, startups racing to digitize them continue to see promising backing from investors. Jumbotail, an online wholesale marketplace for grocery and food items, today said it has raised $12.7 million to scale its operations.

The Series B financing round for the Bangalore-based startup was led by Heron Rock, with participation from Capria Fund, BNK Ventures and William Jarvis and existing investors Nexus Venture Partners, and Kalaari Capital . The three-and-a-half-year old startup has raised about $24 million to date.

More than 10 million grocery stores, locally known as kiranas, bridge urban cities, towns and villages in India. They control over 95% of the $350 billion food and grocery market in the nation, according to some estimates.

Jumbotail operates a marketplace that connects tens of thousands of these kirana stores with brands and traders. It offers a whole suite of services including supply chain logistics, a mobile app for placing orders, integration with point-and-sales devices, and credit solutions to shop owners that can’t easily get loan from banks.

Ashish Jhina, cofounder and COO of Jumbotail, told TechCrunch in an interview that the startup will invest the fresh capital in developing AI solutions to improve its supply chain network, and make it easier for brands to get started on the marketplace.

Jumbotail, which is only operational in Bangalore area for now, offers its mobile app and support in four languages (English, Hindi, Malayalam, and Kannada), something that is crucially important for their business.

“Our fundamental principle is to serve our customers in languages they are comfortable in. Many of these people are not using other apps. They are using smartphones for the first time. This is also their first experience with e-commerce,” he said.

Jhina added that even as Bangalore area is the only place the startup operates in, Jumbotail is on track to clock $100 million in GMV there by year-end. The startup is exploring expansion in other cities and will make moves in that space soon enough, he said, without disclosing the geography.

The startup employs about 140 people and has an additional 400 staff that work in supply chain network. It’s a small team compared to the likes of Amazon India and Walmart -owned Flipkart that are increasingly working with small retailers in the country to grow their wholesale operations. And then there is Reliance Retail, which is expanding its footprint quickly, too.

But Jhina, an alumnus of Stanford, don’t necessarily seem them as a big threat. On the contrary, he believes that since much of the market remains untapped, any player with deep pockets is helping educate the masses about the potential of e-commerce in the nation. In some ways, Jumbotail also competes with the likes of BigBasket, Grofers, Udaan, and ShopX, all of which are comparatively heavily backed.

WhatsApp is finally going after outside firms that are abusing its platform

WhatsApp has so far relied on past dealings with bad players within its platform to ramp up its efforts to curtail spam and other automated behavior. The Facebook -owned giant has now announced an additional step it plans to take beginning later this year to improve the health of its messaging service: going after those whose mischievous activities can’t be traced within its platform.

The messaging platform, used by more than 1.5 billion users, confirmed on Tuesday that starting December 7 it will start considering signals off its platform to pursue legal actions against those who are abusing its system. The company will also go after individuals who — or firms that — falsely claim to have found ways to cause havoc on the service.

The move comes as WhatsApp grapples with challenges such as spam behavior to push agendas or spread false information on its messaging service in some markets. “This serves as notice that we will take legal action against companies for which we only have off-platform evidence of abuse if that abuse continues beyond December 7, 2019, or if those companies are linked to on-platform evidence of abuse before that date,” it said in an FAQ post on its site.

A WhatsApp spokesperson confirmed the change to TechCrunch, adding, “WhatsApp was designed for private messaging, so we’ve taken action globally to prevent bulk messaging and enforce limits on how WhatsApp accounts that misuse WhatsApp can be used. We’ve also stepped up our ability to identify abuse, which helps us ban 2 million accounts globally per month.”

Earlier this year, WhatsApp said (PDF) it had built a machine learning system to detect and weed out users who engage in inappropriate behavior, such as sending bulk messages or creating multiple accounts with intention to harm the service. The platform said it was able to assess the past dealings with problematic behaviors to ban 20% of bad accounts at the time of registration itself.

But the platform is still grappling to contain abusive behavior, a Reuters report claimed last month. The news agency reported about tools that were readily being sold in India for less than $15 that claimed to bypass some of the restrictions that WhatsApp introduced in recent months.

TechCrunch understands that with today’s changes, WhatsApp is going after those same set of bad players. It has already started to send cease and desist letters to marketing companies that claim to abuse WhatsApp in recent months, a person familiar with the matter said.

India’s largest video streaming service, owned by Disney, breaks Safari compatibility to fix security flaw

Hotstar, India’s largest video streaming service with more than 300 million users, disabled support for Apple’s Safari web browser on Friday to mitigate a security flaw that allowed unauthorized usage of its platform, two sources familiar with the matter told TechCrunch.

The incident comes at a time when the streaming service — operated by Star India, part of 20th Century Fox that Disney acquired — enjoys peak attention as millions of people watch the ongoing ICC World Cup cricket tournament on its platform.

As users began to complain about not being able to use Hotstar on Safari, the company’s official support account asserted that “technical limitations” on Apple’s part were the bottleneck. “These limitations have been from Safari; there is very little we can do on this,” the account tweeted Friday evening.

Sources at Hotstar told TechCrunch that this was not an accurate description of the event. Instead, company’s engineers had identified a security hole that was being exploited by unauthorized users to access Hotstar’s content, they said.

Hotstar intends to work on patching the flaw soon and then reinstate support for Safari, the sources said.

The security flaw can only be exploited through Safari’s desktop and mobile browsers. On its website, the company recommends users to try Chrome and Firefox, or its mobile apps, to access the service. Hotstar did not respond to requests for comment.

Hotstar, which rivals Netflix and Amazon Prime Video in India, maintains a strong lead in the local video streaming market (based on number of users and engagement). Last month, it claimed to set a new global record by drawing more than 18 million viewers to a live cricket match.

Fintech platform Synapse raises $33M to build ‘the AWS of banking’

Synapse, a San Francisco-based startup that operates a platform enabling banks and fintech companies to easily develop financial services, has closed a $33 million Series B to develop new products and go after international expansion.

The investment was led by Andreessen Horowitz with participation from existing backers Trinity Ventures and Core Innovation Capital . Synapse — which recently rebranded (slightly) from ‘SynapseFi’ — announced a $17 million Series A back in September 2018 so this deal takes it to $50 million raised to date.

The startup was founded in 2014 by Bryan Keltner and India-born CEO Sankaet Pathak, who came to the U.S. to study but grew frustrating at the difficulty of opening a bank account without U.S. social security history. Inspired by his struggles, Synapse, which operated under the radar prior to that Series A deal, is focused on democratizing financial services.

Its approach to doing that is a platform-based one that makes it easy for banks and other financial companies to work with developers. The current system for working with financial institutions is frankly a mess; it involves a myriad of different standards, interfaces, code bases and other compatibility issues that cause confusion and consume time. Through developer- and bank-facing APIs, Synapse aims to make it easier for companies to connect with banks, and, in turn, for banks to automate and extend their back-end operations.

Pathak previously told us the philosophy is a “Lego brick” approach to building services. Its modules and services include payment, deposit, lending, ID verification/KYC, card issuance and investment services.

“We want to make it super easy for developers to build and scale financial products and we want to do that across the spectrum of financial products,” he told TechCrunch in an interview this week.

Synapse CEO Sankaet Pathak

“We don’t think Bank Of America, Chase and Wells Fargo will be front and center” of new fintech, he added. “We want to make it really easy for internet companies to distribute financial services.”

The product development strategy is to add “pretty much anything that we think would be an accelerant to democratizing financial services for everyone,” he explained. “We want to make these tools and features available for developers.”

Interestingly, the company has a public product roadmap — the newest version is here.

The concept of an ‘operating system for banking’ is one that resonates with the kind of investment thesis associated with A16z, and Pathak said the firm was “number one” on his list of target VCs.

With more than half of that Series A round still in the bank, Pathak explained that the Series B is less about money and more around finding “a partner who can help us on the next phase, which is very focused on expansion.”

As part of the deal, Angela Strange A16z’s fintech and enterprise-focused general partner — has joined the startup’s board. Strange, whose portfolio includes Branch, described Synapse as “the AWS of banking” for its potential to let anyone build a fintech company, paralleling the way Amazon’s cloud services let anyone, anywhere develop and deploy a web service.

Having already found a product market fit in the U.S. — where its tech reaches nearly three million end users, with five million API requests daily — Synapse is looking overseas. The first focuses are Canada and Europe, which it plans to launch in before the end of the year with initial services including payments and deposits/debit card issuance. Subsequently, the plan is to add lending and investment products next year.

Members of the Synapse team

Further down the line, Pathak said he is eager to break into Asia and, potentially, markets in Latin America and Africa, although expansions aren’t likely until 2020 at the earliest. Once things pick up, though, the startup is aiming to enter two “key” markets per year alongside one “underserved” one.

“We’ve been preparing for [global expansion] for a while,” he said, pointing out that the startup has built key tech in-house, including computer vision capabilities.

“Our goal is to be in every country that’s not at war or under sanction from the U.S,” Pathak added.

At home, the company is looking to add a raft of new services for customers. That includes improvements and new features for card issuance, brokerage accounts, new areas for its loans product, more detailed KYC and identification and a chatbot platform.

Outside of product, the company is pushing to make its platform a self-service one to remove friction for developers who want to use Synapse services, and there are plans to launch a seed investment program that’ll help Synapse developer partners connect with investors. Interesting, the latter platform could see Synapse join investment rounds by offering credit for its services.

More generally on financial matters, the Synapse CEO said the company reached $12 million ARR last year. This year, he is aiming to double that number through growth that, he maintains, is sustainable.

“If we stop hiring, we could break even and be profitable in three to four months,” said Pathak. “I like to keep the burn like that… it stabilizes us as a company.”

Amazon, reeling from recent regulatory hurdles, pumps $404M into its India business

Following months-long intense regulatory setback in India, Amazon is moving back to spending big bucks to grow its business in the world’s second largest internet market.

Amazon has infused Rs 2,999 crores ($404 million) in its India business, according to a regulatory filing published this week. Amazon periodically deploys cash to its business in India, the most recent infusion being around $315 million from its international arm six months ago.

The big spendings in India is the latest signs of how crucial the country has become for Amazon, where it entered exactly six years ago and has spent more than $5.5 billion. The bet has largely worked for Amazon, which rivals Flipkart, that was snatched by Walmart for $16 billion last year.

The fight between the two companies for the tentpole position in India’s e-commerce market took a dark turn late last year, when the government announced new policies to mandate how these two companies source goods for their marketplaces. The local law prohibits Flipkart and Amazon to stock and sell their own inventories, so their wholesale units purchase goods in bulk and sell them to resellers.

To circumvent this, the two companies had bought stakes in a number of companies that sell a range of products on their platforms. The new law, which came into effect on February 1, closed that loophole. As a result, hundreds of thousands of products disappeared from both the shopping sites overnight, according to some estimates.

Barclays claimed in a report last year, seen by TechCrunch, that Amazon was quickly closing in on the lead that Flipkart has in the e-commerce space in India.

In its six years in India, Amazon has sprawled its tentacles in many businesses other than e-commerce, including payments that recently started offering flight tickets, cloud services, video and music streaming services, and in-house products that include a lineup of handsets that it worked closely to build and sell.

Even for a heavily-funded company like Amazon, India has emerged as a very competitive market in recent years. In addition to Flipkart getting the backing of global retail giant Walmart, startups such as BigBasket, Grofers, Swiggy, and Dunzo are quickly changing the way millions of Indians shop. And they have successfully courted major backers with deep pockets, too.

And then there is the ever lingering Reliance Industries, the biggest industrial house in India owned by Mukesh Ambani, the richest man in the country. Earlier this year, Ambani said that Reliance Retail, the largest retailer in India will join forces with Reliance Jio, a telecom operator that has disrupted the local market, to create an e-commerce platform.

Line teams up with Visa to boost its mobile payment service

Messaging app Line has partnered with Visa to bring traditional financial clout to its mobile payment service.

The deal will see Line Pay become compatible with Visa’s 54 million merchant partner locations worldwide, boosting the service outside of its native Japan, where it has been pitched heaviest so far and where Line claims 80 million users.

The tie-up will allow Line users to use the app’s payment system even where Line Pay isn’t accepted. That’s through a ‘virtual’ visa card that’ll show up in the chat app.

Beyond that, the two sides said they will explore “ways for merchants to interact with the Line Pay service” and its digital wallet. That’s pretty lukewarm, and it’s hard to imagine that it’ll make much of a dent outside of Japan. Line’s three other major markets, in terms of users, are in Asia: Thailand (44 million), Taiwan (21 million) and Indonesia (19 million.)

One intriguing element of the deal involves blockchain, which Line has jumped into with its own crypto token (Link) and a blockchain investment arm. Line said it’ll work with Visa around “new experiences based on blockchain” that could include international money transfers among other things.

Finally, as is often the case with Japanese tech deals, there’s also an Olympics focus — with Tokyo scheduled to host the summer games in 2020.

Mobile payments are one of the Japanese government’s big focuses ahead of the games — organizing its taxis through tech, is another — and, thus, Visa and Line said they plan to heavily promote their ‘cashless’ alliance ahead of 2020.

Line and Visa are far from the first to combine traditional and new payments. Paytm and Uber rival Ola in India have both launched cards in partnership with banks, while cross-border payment companies like TransferWise, Monzo and others have tie-ups with Visa and Mastercard to enable spending.