Warburg Pincus announces new $4.25 billion fund for China and Southeast Asia

Warburg Pincus, the private equity fund with over $60 billion under management, is doubling down on Asia after it announced a $4.25 billion fund dedicated to China and Southeast Asia.

The firm has been present in China for 25 years, and it has invested over $11 billion in a portfolio of over 120 startups that includes the likes of Alibaba’s Ant Financial and listed companies NIO (a Tesla rival), ZTO Express (a courier firm)among others. The new fund will work in tandem with the firm’s $14.8 billion global growth fund which was finalized at the end of last year.

What’s particularly interesting about the new fund is that it has expanded to include Southeast Asia, where internet adoption is rapidly expanding among 600 million consumers, for the first time. It is the successor to Warburg Pincus’ previous $2.2 billion ‘China’ fund and, with the addition of Southeast Asia, it’ll aim to build on initial investments in the region that have included Go-Jek in Indonesia (although it is going regional) and Vietnamese digital payment startup Momo from its Singapore office.

Indeed, the firm’s head of Southeast Asia — Jeff Perlman — said in a statement that Southeast Asia is “exhibiting many of the strong investment themes and trends which have driven our China business over the last 25 years.”

While there is plenty of uncertainty around China, and more widely Asia, due to the ongoing trade battle with the U.S. — which has ensnared Huawei and other tech firms — Warburg Pincus said it had received strong demand for LPs whilst out raising this new fund.

Though it declined to provide details of its backers — and you’d wager that few, if any, are U.S-based — it said it surpassed its initial target of $3.5 billion for the China-Southeast Asia fund. That’s despite evidence suggesting that China’s investment space is experiencing a slowdown in total funding raised despite more deals.

In terms of target investments, the firm said it intends to focus on areas including consumer and services, healthcare, real estate, financial services and TMT — technology, media and telecommunications.

Warburg Pincus is already one of the largest investors in Southeast Asia in terms of potential check size, although it has been fairly selective on deals at this point. The fund’s move to include the region alongside will be a boon for companies looking for growth-stage deals that are hard to find in the current venture capital ecosystem.

More broadly, it is also a major endorsement for Southeast Asia as a startup destination. The region has long been seen as having immense growth potential, but it often sits in the shadows of more mature regions like India and China.

Week-in-Review: YouTube’s awful comments and Google’s $1B tech-free investment

Hello, weekend readers. This is Week-in-Review where I give a heavy amount of analysis and/or rambling thoughts on one story while scouring the rest of the hundreds of stories that emerged on TechCrunch this week to surface my favorites for your reading pleasure.

Last week, I talked about how the top gaming industry franchises were proving immortal and how that could change. I mainly asked questions and I got some great answers in my email. Keep the feedback coming.

An interesting corollary to that conversation was Niantic releasing its Harry Potter title this week, a game that takes liberal gameplay cues from Pokémon GO but attaches it to new IP. The big question is whether Niantic can strike gold twice; here’s an Extra Crunch interview my colleague Greg did with the startup’s CEO.


This week, the biggest tech topic at hand from the big companies was probably Facebook’s Libra cryptocurrency, I’d normally dig into that but my colleague Josh did such a bang-up job breaking down Libra and why it’s important that I don’t feel the need to. You can read his explainer below.

Facebook announces Libra cryptocurrency: All you need to know 

In the midst of scouring this week’s headlines, a pretty low-key story from Friday caught my eye detailing how YouTube was testing a version of its app where the comments were hidden by default. Companies test this stuff all the time and it’s hardly a commitment but it did make me reflect on how the nature of user-submitted comments has shifted and how certain platforms develop community cultures based on the way those comments are sorted.

Web comments have been searching for their final form for a while now. Twitter turned comments into the main 140 character dish, but Twitter’s influence is getting baked into a ton of platforms. Sites like Instagram are starting to gain a greater understanding of how users want responses to complement their content and the opportunities they’ve seized on really showcase the user-submitted opportunities being wasted by platforms like YouTube and Twitch.

YouTube downgrading their comment visibility kind of highlights what a cesspool the company has allowed them to turn into, but rather than being a place where people are vile, the platform just hasn’t grown them into something useful or exciting over the past decade.

As Instagram continues to become a place where more and more famous users interact with each other, the comment fields are becoming the place where users “bond” with the accounts they follow even if they’re still lurking around and reading how the account responds to other high-profile users. 

This is how public channels with big audiences should operate. Sure, it’s partially a result of the culture of the platform, but algorithms can shape these cultures.

The issue is so many other comment systems are seemingly organized to treat anonymous users, real-name users and verified personalities the same. Ascribing an equal weight to all of these types of content is kind of a surprisingly quaint way to handle user-generated content, it’s also a great way for platforms to find engagement ceilings and the limits of what spam can become.

You don’t have to go searching far through TechCrunch’s stories to find some good old-fashioned “how I earned $72/hour working from home” spam, but just because something isn’t spam doesn’t means it’s worthwhile. Platforms have developed their own comment memes based on what can play the algorithms, it’s not particularly useful, “Like if Jimmy Fallon brought you here,” “Like if you’re watching this in 2019.”

Platforms organized around building communities have an incentive to elevate anonymous voices and foster relationships and dialogue. Back in the Gawker days, most of my time on the site was spent digging through the comments looking for commenters I recognized and enjoying their dialogue. That’s what Reddit has become in a lot of ways, a place where the posts are secondary to the reactions, but the forum systems of web 1.0 aren’t made for such general influencer-focused platforms of 2019 and it’s an area where there are a lot of wasted opportunities.

YouTube comments have garnered this reputation for being so laughable bad because the company has let the average of what’s submitted define them, acting as a one-size fits all for platforms that are decidedly more dynamic.

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On to the rest of the week’s news.

Trends of the week

Here are a few big news items from big companies, with green links to all the sweet, sweet added context.

  • Tesla paints it black (for a price)
    Tesla is looking to keep those margins hopping and there next play to make your Tesla a bit more pricey is by making the white paint job on its vehicles, making white the standard color. It may seem like a rough deal, especially when you can a monitor stand for your new Apple Display for the same price. Read more here about why Elon did this.
  • Google drops a B on the Bay
    To those living in the arena of Silicon Valley, it’s no secret that the housing shortage is hurting wallets. How much of that is big tech’s fault and how much of it is the local government’s fault is hard to tell at times, but certainly neither is doing as much as they could. This week Google pledged a whopping $1 billion worth of assistance to the problem. Forking over $750 million worth of real estate and a quarter-billion dollars worth of funding for residential projects is quite the pledge, let’s see how the money gets spent. You can read more here.
  • Slate failures
    Google’s Pixel Slate tablet was such hot garbage that the company is leaving the tablet game for good and focusing on its Pixel laptop line instead. Read more here.

GAFA Gaffes

How did the top tech companies screw up this week? This clearly needs its own section, in order of awfulness:

  1. Apple recalls some MacBooks:
    [Apple issues voluntary recall of 2015 MacBook Pro batteries due to overheating concern]
  2. Google swats down shareholder vote:
    [Google defeats shareholders on ‘Dragonfly’ censored search in China]
  3. Facebook in hot water over fake review sales: 
    [Facebook and eBay told to tackle trade in fake reviews]
  4. Maps keeping it real fake:
    [Google responds to report that concluded there are millions of fake business listings on Maps]

Image via Getty Images / Feodora Chiosea

Extra Crunch

Our premium subscription service had another week of interesting deep dives. TechCrunch’s Ron Miller wrote a story asking VCs and CEOs just how much startup founders should be paying themselves.

Startup founders need to decide how much salary is enough

“…Murat Bicer,  general partner at CRV,  says you could probably ask 10 VCs this question, and get 10 different answers, but he sees the range at the low end of perhaps $125,000 and at the high end maybe $200,000, depending on the location of the startup and the cost of living in a particular city…”

Here are some of our other top reads this week for premium subscribers. This week TechCrunch writers talked a bit about keeping your H-1B status and how you should be negotiating your term sheet with strategic investors.

Want more TechCrunch newsletters? Sign up here.

China’s housing unicorn Danke appoints ex-Baidu exec as new COO

A few months after nabbing a handsome $500 million funding round, China’s shared housing startup Danke Apartment got a talent boost.

On Monday, Danke announced the appointment of Gu Guoliang as its new chief operating officer to ramp up the company’s offline operational crew. Gu, whose nickname is Michael, stepped down from Baidu after five years as one of the key figures in search, historically the company’s biggest revenue-generating division. He’s known to have managed several tens of thousands of marketing staff and helped generate sales of close to 100 billion yuan ($14.44 billion) for Baidu annually.

Gu’s arrival followed a period of explosive expansion at Danke, which is now managing almost 500,000 units of rooms across 10 Chinese cities after founding four years ago. The startup takes the co-living approach akin to that of WeWork’s Welive and rents out fully furnished apartments targeted at young professionals who can’t afford a full suite. Backed by Tiger Global and Alibaba’s financial affiliate Ant Financial, Danke’s valuation crossed $2 billion in its funding round in February.

Gu is one of the former Baidu executives who resigned during a recent top-level exodus (report in Chinese) that involved at least five leaders, including the search division boss Xiang Hailong, to whom Gu reported. There were speculations that Xiang’s exit might have triggered his lieutenants to leave, though TechCrunch has learned from a person close to Gu that he had left “one to two weeks” prior to Xiang’s departure.

For Gu, joining Danke would almost feel like returning home. “We welcome our comrade and good friend Michael,” said Danke chief executive Gao Jing, who previously worked alongside Gu at Nuomi, the local services startup that was sold to Baidu for $3.2 billion and became integral to the internet giant’s online-to-offline business. Derek Shen, an investor and current chairman of Danke, co-founded Nuomi in 2010 before heading up LinkedIn China between 2014 and 2017. Several other core members of Danke have also hailed from Nuomi.

Danke is confident that Gu’s addition will be a boon to its operational capacity. “Gu has abundant experience in operational management, sharp business insights, outstanding leadership, and a deep understanding of the internet sector and user needs,” said Gao. “Under his direction, Danke will enter a new phase of refined operation.”

By that, Gao means Gu will be tasked with rolling out more targeted marketing, more efficient housing renovation, more precise acquisition of apartment space, among other quality-control measures to drive sustainable growth at the company.

Flexible housing startup Anyplace raises $2.5M

Anyplace, a startup offering furnished rooms and apartments to anyone who’s not interested in signing a long-term lease, is announcing that it has raised $2.5 million in seed funding.

CEO Satoru Steve Naito said he co-founded the company to meet his own needs as a “digital nomad” who likes to move from city to city every few months.

“I wanted this product for myself: I hate to commit to a long-term contract, and I want utilities and wifi taken care of when I secure a room,” Naito said.

For him, that meant moving into a hotel, where he said the rooms are “easy-to-book and fully furnished.” And while Naito’s far from the first person to call a hotel room home (I did it myself for a summer journalism internship back in 2006), with Anyplace, he’s created an online marketplace where you can rent hotel rooms and other furnished housing on a month-to-month basis.

Naito said Anyplace normally negotiates a 30 to 50 percent discount with the hotels. (Checking the Anyplace website this morning, it looks like monthly prices in New York range from $1,331 to $4,157.) Those hotels then get a new source of monthly revenue, which may be particularly important as they try to compete with services like Airbnb.

Anyplace App

And while the pitch might sound similar to a serviced apartment or a co-living space, Naito noted that Anyplace functions purely as an online marketplace, without operating any properties of its own. So it actually partners with apartments and co-living companies to bring them more renters.

Anyplace handles the booking and payment process, in return for collecting a 10 percent commission. It also reduces the risk for the hotel or property owner by performing basic background checks, and Naito also plans to introduce insurance that will cover eviction costs for up to $10,000.

And there are new features for renters in the works, including a “nomad loyalty program” that rewards frequent customers with things like airplane ticket discounts, and an online community to help you find friends when you’re in a new city.

“We don’t want to become boring housing rental marketplace,” Naito said. “We are not a housing business, we are a freedom business.”

When Naito and I met to discuss the funding, he estimated that there were around 100 people currently staying in Anyplace properties. He also said the service generated $1.3 million in bookings last year.

He acknowledged that while digital nomadism sounds appealing, it’s “a very niche and small group,” so Anyplace is also designed to serve anyone in need of temporary housing, whether they’re relocating for a new job, taking an extended business trip or moving somewhere for an internship.

The startup’s seed funding comes from Jason Calacanis, FundersClub,
UpHonest Capital, East Ventures, Keisuke Honda, Kenji Kasahara Bora Uygun and Global Brain.

PropTech startup Kodit.io raises $13M to automate house buying and selling

As anyone who has ever tried to buy or sell a home knows, the entire process can be the most stressful of one’s life. Traditional real estate agents rarely make the process any less stressful, leaving the industry ripe for disruption by tech companies which can automate many of the existing processes.

Startups like Offerpad in the US have done just this by becoming an on-demand, tech-enabled direct home buyer and seller, and raising as much as $155M in VC to achieve this. The market in Europe is less well developed, which is why it’s clearly interesting that Kodit.io, a Finnish Proptech company that gives homeowners a “stress-free way to quickly sell their homes for a fair price”, has announced the close of a €12M ($13.4M) venture round to fund expansion in Europe.

Investors include New York-based FJ Labs, Austrian Speedinvest and Spanish All Iron Ventures, as well as Norwegian Adevinta (formerly Schibsted Marketplaces) that owns leading marketplaces in 16 different countries. Kodit.io previously raised €2M in seed capital and is planning to use its new funding to strengthen its expansion to new markets.

Kodit.io is a so-called iBuyer that offers home sellers ‘fair cash offers’ for their properties within 24 hours based on market assessments using machine learning. After purchase, Kodit.io renovates the properties to offer home buyers move-in ready and risk-free homes to buy, they say.

The idea is to disrupt the outdated and time consuming process of selling residential real estate on the retail side, while bringing more transparency and liquidity to housing markets on the B2B side.

Kodit.io launched in Madrid two years ago, and is also operating in Tallinn and six cities in Finland. Later this year, the startup expects to expand to Paris, Barcelona and Warsaw.

Hugo Mardomingo, Principal of All Iron Ventures, commented: “The real estate market is undergoing a strong transformation. Kodit.io brings a transparent and disruptive model to the table to eliminate the friction experienced by home buyers and sellers.”

Beyond costs, what else can we do to make housing affordable?

This week on Extra Crunch, I am exploring innovations in inclusive housing, looking at how 200+ companies are creating more access and affordability. Yesterday, I focused on startups trying to lower the costs of housing, from property acquisition to management and operations.

Today, I want to focus on innovations that improve housing inclusion more generally, such as efforts to pair housing with transit, small business creation, and mental rehabilitation. These include social impact-focused interventions, interventions that increase income and mobility, and ecosystem-builders in housing innovation.

Nonprofits and social enterprises lead many of these innovations. Yet because these areas are perceived to be not as lucrative, fewer technologists and other professionals have entered them. New business models and technologies have the opportunity to scale many of these alternative institutions — and create tremendous social value. Social impact is increasingly important to millennials, with brands like Patagonia having created loyal fan bases through purpose-driven leadership.

While each of these sections could be their own market map, this overall market map serves as an initial guide to each of these spaces.

Social impact innovations

These innovations address:

Market map: the 200+ innovative startups transforming affordable housing

In this section of my exploration into innovation in inclusive housing, I am digging into the 200+ companies impacting the key phases of developing and managing housing.

Innovations have reduced costs in the most expensive phases of the housing development and management process. I explore innovations in each of these phases, including construction, land, regulatory, financing, and operational costs.

Reducing Construction Costs

This is one of the top three challenges developers face, exacerbated by rising building material costs and labor shortages.

Innovations in inclusive housing

Housing is big money. The industry has trillions under management and hundreds of billions under development.

And investors have noticed the potential. Opendoor raised nearly $1.3 billion to help homeowners buy and sell houses more quickly. Katerra raised $1.2 billion to optimize building development and construction, and Compass raised the same amount to help brokers sell real estate better. Even Amazon and Airbnb have entered the fray with high-profile investments.

Amidst this frenetic growth is the seed of the next wave of innovation in the sector. The housing industry — and its affordability problem — is only likely to balloon. By 2030, 84% of the population of developed countries will live in cities.

Yet innovation in housing lags compared to other industries. In construction, a major aspect of housing development, players spend less than 1% of their revenues on research and development. Technology companies, like the Amazons of the world, spend nearly 10% on average.

Innovations in older, highly regulated industries, like housing and real estate, are part of what Steve Case calls the “third wave” of technology. VCs like Case’s Revolution Fund and the SoftBank Vision Fund are investing billions into what they believe is the future.

These innovations are far from silver bullets, especially if they lack involvement from underrepresented communities, avoid policy and ignore distributive questions about who gets to benefit from more housing.

Yet there are hundreds of interventions reworking housing that cannot be ignored. To help entrepreneurs, investors and job seekers interested in creating better housing, I mapped these innovations in this package of articles.

To make sense of this broad field, I categorize innovations into two main groups, which I detail in two separate pieces on Extra Crunch. The first (Part 1) identifies the key phases of developing and managing housing. The second (Part 2) section identifies interventions that contribute to housing inclusion more generally, such as efforts to pair housing with transit, small business creation and mental rehabilitation.

Unfortunately, many of these tools don’t guarantee more affordability. Lowering acquisition costs, for instance, doesn’t mean that renters or homeowners will necessarily benefit from those savings. As a result, some tools likely need to be paired with others to ensure cost savings that benefit end users — and promote long-term affordability. I detail efforts here so that mission-driven advocates as well as startup founders can adopt them for their own efforts.


Topics We Explore

Today:

Coming Tomorrow:

  • Part 2. Other contributions to housing affordability
    • Social Impact Innovations
    • Landlord-Tenant Tools
    • Innovations that Increase Income
    • Innovations that Increase Transit Accessibility and Reduce Parking
    • Innovations that Improve the Ability to Regulate Housing
    • Organizations that Support the Housing Innovation Ecosystem
    • This Is Just the Beginning
    • I’m Personally Closely Watching the Following Initiatives
    • The Limitations of Technology
    • Move Fast and Protect People


Please feel free to let me know what else is exciting by adding a note to your LinkedIn invite here.

If you’re excited about this topic, feel free to subscribe to my future of inclusive housing newsletter by viewing a past issue here.

What we want to know in the We Company (WeWork) S-1

With news that the We Company (formerly known as WeWork) has officially filed to go public confidentially with the SEC today, there’s a big question on everyone’s mind: is this the next massive startup win or a house of cards waiting to be toppled by the glare of the public markets?

No company I follow has as much polarized opinion as the We Company. And while the company will have to reveal at least some of its hand in its official S-1, my guess is that the polarization around the company will not be alleviated until well after it goes public, if ever.

The challenge with understanding its business is how much the details of each of its leases, real estate markets, and tenants matter to its bottom line. We already know the top line numbers: the company had revenue of $1.8 billion in 2018, and a net loss of $1.9 billion that year. That led to the received opinion that the company has an extraordinarily weak business. As Crunchbase News editor Alex Wilhelm put it:

$44M-funded Omni pivots from storage to rentals via retailers

Omni simply couldn’t scale storing stuff in giant warehouses while dropping it and off picking it up from people on demand. Storage was designed to bootstrap Omni into peer-to-peer rentals of the goods in its care. But now it’s found a better way by partnering with retailers which will host and rent out goods for Omni that users will pick up themselves.

With that strategy, Omni is now formally pivoting from storage alongside its expansion from San Francisco and Portland into Los Angeles and New York. In SF and its new markets starting today, users can rent GoPros, strollers, drills, guitars, and more for pickup and dropoff at 100 local storefronts which will receive 80 percent of the revenue while Omni keeps 20 percent.

“Storage was always meant to supply a rentals marketplace. We launched storage in an Uber-for everything era and now it’s no secret that physical operations are tough to scale” Omni’s COO Ryan Delk tells me. “This new model gives our users more supply, local entrepreneurs a new revenue stream, and us the ability to launch new markets much more quickly than the old model of building rentals on top of the storage business.”

LA Omni users will be able to rent surf equipment for pickup and dropoff from local surf shop Jay’s

To that end, storage won’t come to any more markets, though storage services with delivery will continue in San Francisco. Users there and in Portland will also be able to pick up and drop off rental items from a few Omni-owned locations including its SF headquarter office. Omni will add retailer pickups in Portland and more in San Francisco soon. At least that’s one way to make Omni’s investors like Highland, Founders Fund, Shrug.vc, and Dream Machine feel better about SF real estate prices. Omni also recently doubled the monthly storage price of closed bins in SF, triggering ire from customers to cover its overhead and encourage storing individual items that can then be rented out

“Ownership has a bit of a burden associated with it” Delk tells me, referencing the shifting attitudes highlighted by Marie Kondo and the tidiness movement. Ownership requires you to pay up front for tons of use down the line that may never happen. “Paying for access when you need it unlocks all these amazing experiences.”

Omni’s COO Ryan Delk (left) and CEO Thomas McCleod (right)

Omni discovered the potential for the model when it ran an experiment. “What if we could pick up items directly from Omni?” Delk explains. Omni learned that many people “can’t afford to pay for transit both ways. It was pricing out a lot of people.” But pick-ups unlocked a new price demographic.

Meanwhile, Omni noticed some semi-pro renters had cropped up on its platform who were buying tons of a popular item like chairs on Amazon, shipping them to its warehouse, then renting them out and quickly recouping their costs. It saw an opportunity to partner with local retailers who could give it instant supplies of items in new markets while handling all the pickup and dropoff logistics.

Omni’s retail partners like Adventure 16 Outdoor & Travel Outfitters, Blazing Saddles and Sierra Surf School can choose their own prices and adjust for demand, set black-out dates, pause for vacations, and sell items like normal and let Omni know to restock them so rentals don’t cannibalize their sales. Rentals are covered by up to $10,000 in insurance so both the retailers and people who rent from them don’t have to worry. Omni users just show their ID at pick up to verify their identity, but that will soon be part of the app. Last fall, Omni hired Uber’s head of sales strategy and operations who oversaw UberEats growth from zero to 200,000 restaurants to run its retail partnerships as VP of special projects.

Delk says Omni is “all-in on the rentals” which he sees as a “pure play marketplace vs a recurring ARR business” that “democratizes access to Omni to people who aren’t the 1% in major markets.” Now someone who couldn’t afford to buy a drill for a quick home improvement project or pay to have a rental delivered and picked up can stop by their local retailer to grab it and return it later for $6 per day with no extra fees.

That in-store experience of actually being able to go same-day, hold an item, and ask questions about it could allow Omni’s rental model to compete with Amazon’s prices and delivery logistics. The one thing Amazon can’t do right now is let you try before you buy. Omni could win by letting you try without ever having to.