Maybe neobanks will break even after all

The Exchange is back after its brief hiatus. Anna and I have some really neat stuff planned, so stick with us every morning this week. — Alex

Building a consumer-facing fintech company is expensive. And if you want to build one in a sector crowded by both incumbent companies and richly funded startups, it can be super expensive.

That was the lesson we learned in late 2020 by examining operating results from a number of neobanks.

Neobanks are essentially software layers atop banking infrastructure, offering consumers digital-first, mobile-friendly and often lower-fee banking services. The push to rethink consumer banking is a global effort, with neobanks cropping up in essentially every market you can think of. Private investors have shown up in droves to fund competing neobanks because they have the potential to secure users — customers — that generate revenues for long periods of time.


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Investors have proven more than willing to fund huge investments in growth and product at many neobanks, leading to steeply negative operating results at the unicorns. In short, while American consumer fintech Chime has disclosed positive EBITDA — an adjusted profitability metric — many neobanks that we’ve seen numbers from have demonstrated a stark inability to paint a path to profitability.

That could be changing.

Recent results from Revolut that TechCrunch covered earlier this morning show that the company had a deeply unprofitable 2020. But if we dig into its quarterly results, there’s good news to be found. Neobanks could be maturing into their cost structure at last.

So today we’ll parse the key Revolut financial results and look at what we can dig up from Starling and Monzo. Perhaps the somewhat good financial news from Revolut is not merely to be found at just one neobank?

Revolut’s 2020

Our own Romain Dillet has a broad look at Revolut’s business here, if you would like a wider lens. We only care about its raw financial results at the moment.

Here are the big numbers:

  • 57% revenue growth from £166 million in 2019 to £261 million in 2020
  • Gross profit growth of £123 million in 2020, up 215% from 2019
  • Gross margin of 49% in 2020, what Revolut described as nearly a doubling
  • 2020 operating loss of £122 million from £98 million in 2019
  • Total loss of £168 million in 2020, up from £107 million in 2019

The gist of these figures is that the company’s revenue growth was solid, but improving gross margins allowed its gross profit to spike in 2020.

Porsche to make high-performance batteries in joint venture with Customcells

Luxury sports car manufacturer Porsche AG is going into the battery business. The automaker said Monday it plans to open a new factory that will produce high-performance cells through a joint venture with lithium-ion battery developer Customcells.

Porsche invested in “the high double-digit millions” in the new joint venture, dubbed Cellforce Group GmbH, executive board member Michael Steiner told reporters in a media briefing ahead of the announcement. The factory also benefited from a €60 million ($71.4 million) investment from the German government and the state of Baden-Württemberg, where it will be located. Chemical company BASF SE was selected to supply the cathode materials.

The batteries will use silicon as the anode material, which Porsche says will significantly boost the energy density and their capacity to withstand high temperatures – both important variables for racing cars, which must be recharged quickly, but challenging in battery production (batteries don’t tend to like getting very hot).

For that reason, the factory will be small scale, at least compared to other automakers such as the 35 gigawatt-hour “gigafactory” capacity at the Tesla and Panasonic joint facility in Sparks, Nevada or even its parent company VW’s plan to bring 240 GwH of production to Europe by 2030. Porsche and Customcells’ aim is an annual capacity of 100 megawatt-hours, or around enough batteries for 1,000 vehicles, starting in 2024. The initial workforce is expected to grow from around 13 people to up to 80 by 2025.

The automaker has no plans to scale the technology for use in Porsche’s more mainstream lineup of vehicles, Steiner said, though he noted that there may be a chance for higher volume in the future if the company sees a potential to bring down production costs. “In this market, we are looking for special purpose cells for high-end cars and motorsports, and this is not available in the market today,” he said.

It may be a challenge to scale this technology to passenger vehicles. The silicon anode-based cell chemistry has not shown the capacity to function in very cold conditions or to remain stable over many charging cycles, Porsche said in a statement. But it wouldn’t be the first time that a Porsche vehicle benefited from technology developed for the race track: its leading electric model Taycan borrowed many of its technical features from the Porsche 919 Hybrid racing car.

Although the first vehicles to use these batteries will be Porsche-made, Steiner said the technology will be made available to other brands in the Volkswagen Group, like Lamborghini or Bugatti.

“The battery cell is the combustion chamber of the future,” Porsche CEO Oliver Blume said in a statement Monday. “This joint venture allows us to position ourselves at the forefront of global competition in developing the most powerful battery cell and make it the link between the unmistakable Porsche driving experience and sustainability. This is how we shape the future of the sports car.”

Seed is not the new Series A

The incredible success of the cloud business applications space in recent years has driven up valuations and fundraising across all stages of venture investment. That has in turn increased VC fund sizes, led to massive cloud IPOs and brought a new cadre of investors to further fuel the fire.

The median Series A raised by cloud companies these days is about $8 million and can often go well above $10 million, according to PitchBook data from the first quarter of 2021. Series Cs now routinely include secondary capital for founders, and many Series Ds are above $100 million with valuations in the billions.

There is a widening gap in the funding continuum between angel/seed funding at inception and the new-age $10 million Series A at $2 million in ARR.

Such an influx of capital and interest has upended many structures and long-held norms about how startups are funded. Venture funds continue to grow and must write larger checks, but ever-higher valuations force many firms to hunt for opportunities earlier. The VC alphabet soup has been spilled, making A rounds look like Bs used to, and the Bs seem like the Cs of old.

Which begs an interesting question: Is the seed round the new Series A?

We don’t think so.

Seed rounds have certainly grown — averaging about $3 million nowadays from around $1 million to $2 million previously — but otherwise, seed investments are the same as before and remain very different from Series As.

Hyundai completes deal for controlling interest in Boston Dynamics

Hyundai this morning announced that it has completed its acquisition of Boston Dynamics. The deal, which values the innovative robotics company at $1.1 billion, was announced in late-2020. The companies have not disclosed any future financial details.

The South Korean automotive giant now owns a controlling interest in Boston Dynamics, previously belonging to SoftBank. The Japanese investment company was effectively a transitional owner, purchasing Boston Dynamics from Google, which owned the company for just over three years.

While its time with Softbank wasn’t much longer than its stint under Google/Alphabet X, Boston Dynamics saw the commercialization of its first two products since launching nearly 30 years ago. The company brought its quadrupedal robot Spot to market and this year announced the (still upcoming) launch of Stretch, an updated version of its warehouse robot, Handle.

In a recent appearance at TechCrunch’s Mobility event, Hyundai’s Ernestine Fu discussed the planned acquisition of an 80% controlling interest in the company. Fu noted that Hyundai’s New Horizon Studios, which has previewed multiple “walking” car concepts that look poised to build on decades of Boston Dynamics research.

“With New Horizon Studios, the mandate is reimagining what you can do when you combine robotics with traditional wheeled locomotion, like walking robots and walking vehicles,” Fu told TechCrunch. “Obviously the technology that [Boston Dynamics] has put together plays a key role in enabling those sorts of concepts to come to life.”

As it has changed hands over the years, Boston Dynamics has long insisted on maintaining its own research wing, which has given us less commercial technology, like the humanoid robot, Atlas. How this will function under the umbrella of Hyundai remains to be seen, though the company does seem to have a vested interest in maintaining a forward-looking approach.

“We and Hyundai share a view of the transformational power of mobility and look forward to working together to accelerate our plans to enable the world with cutting edge automation, and to continue to solve the world’s hardest robotics challenges for our customers,” Boston Dynamics CEO Rob Playter said when the deal was announced.

 

Music licensing marketplace Songtradr raises $50M

Music licensing marketplace Songtradr this morning announced a $50 million Series D. The oversubscribed round – which features Regal, Aware Super, Perennial, Argo and Greencape – follows a $30 million raise last August, bringing the Los Angeles company’s total funding to north of $100 million.

The platform licenses music to high profile names for advertising, films, TV, gaming and the like, including Disney, Netflix, Apple, Coca-Cola, Amazon and Google. It hosts songs from some 600,000 musicians/songwriters/rights holders.

The service hasn’t had any issue spending its funding to date. Earlier this month, it announced the acquisition of creative agency MassiveMusic. Other acquisitions made in the past year include Cuesongs, Song Zu, Pretzel and Tunefind.

The company says the new funding will go toward even more M&As, new products and an increase in global headcount. The company is headquartered in L.A., but also has offices in Europe and the Asia-Pacific region.

Image Credits: Songtradr

“Songtradr is rapidly accelerating as we continue to develop our tech-enabled B2B music ecosystem and integrate our new acquisitions,” CEO Paul Wiltshire said in a press release. “Attracting such a blue-chip investor base into this round further endorses our vision of the future music industry in this rapidly evolving digital world, providing a strong foundation for the future.”

Wiltshire adds that the company saw a 100% y-o-y revenue growth for 2020.

Buy now, pay later startup Kredivo doubles its debt facility from Victory Park Capital to $200M

Kredivo announced today it has secured another $100 million debt facility from Victory Park Capital (VPC). This doubles the Indonesian digital lending and credit platform’s total warehouse financing facility from VPC to $200 million. The first round was closed in July 2020.

Kredivo is operated by Singapore-based fintech FinAccel. This is the largest loan facility it has raised so far, and is VPC’s biggeast debt commitment to a fintech company outside of the United States and Europe, as well as its only investment in Southeast Asia. Kredivo will use the debt facility to help achieve its goal of serving 10 million customers in Indonesia.

Other notable startups that have received debt financing from VPC include Razor Group, factory 14, Konfio and Elevate.

Kredivo has more than three million customers and offers two main types of lending products: zero interest 30-day ‘buy now, pay later’ financing for e-commerce and offline purchases, and three-, six- and 12-month installment loans with an interest rate of 2.6% a month, or a maximum annual rate of 53.36%. Kredivo chief executive officer Akshay Garg told TechCrunch that its ‘buy now, pay later’ services are typically used for small-value online purchases, while installment loans are used to finance bigger transactions, like laptops, home renovation or medical care.

While ‘buy now, pay later’ services like Klarna, Afterpay or Affirm offer convenience to customers in the United States or Europe, in emerging markets it also serves as a tool to build credit, especially in countries that have low credit card penetration, Garg said.

“Credit is one of the largest and most complex areas of the financial services ecosystem and the fact is that Indonesia is deeply underserved on that equation,” he said. Most banks only provide secured lending, like home or car loans, and unsecured lending is rare. Garg said there are only eight million credit card holders in Indonesia, which has a population of 270.6 million, and that number has not changed in 13 years.

One of the reasons for Indonesia’s very low credit card penetration rate is because banks are reluctant to give unsecured loans, especially to younger customers.

“What we’re solving is less a convenience problem and more an access problem. We’re putting unsecured credit, or the ability to buy on credit, in the hands of urban millennials for the first time, simply because banks are just not providing them access to credit cards,” said Garg.

He added that Kredivo’s effective risk-scoring model allows to charge low interest rates, and its non-performing loan ratio is in the low single-digits, despite the economic impact of COVID-19, which Garg described as a “trial by fire.”

Like credit cards from banks, Kredivo also reports customers’ loan histories to Indonesia’s credit bureaus, so they can build credit scores. “What we’re doing is a building Indonesia’s first real digital credit bureau from the ground up, and I think our risk metrics show that this is not just for the sake of some funky innovation, but something that is delivering real performance,” Garg said.

In a statement, VPC partner Gordon Watson said, “We have been impressed with the resilience and growth of the business and look forward to deepening our partnership with Kredivo. The company presents a unique combination of growth, scale, risk management and financial inclusion in one of the most exciting emerging markets in the world.”

WaitWhat raises $12M to double down on what comes after podcasts

As podcasting continues to gain ground among mainstream consumers as a digital media platform alongside music, video, and the printed word, a startup that made a name for itself through building content for the medium has closed a round of funding to help it explore what comes next.

WaitWhat, co-founded by two of the people who helped conceive of and build the TED digital media empire, has closed a round of $12 million, in a round led by Raga Partners, with Laurene Powell Jobs’ firm Emerson Collective, Lupa Systems, Capital One Ventures, Maywic Select Investments, GingerBread Capital, Burda Principal Investments, Cue Ball Capital, and Reid Hoffman also participating.

WaitWhat says it plans to use the money to continue producing content in formats that have already proven very successful for it so far — to date, it has seen 70 million downloads of its work, which includes the podcasts Masters of Scale from Reid Hoffman, Meditative Story, Spark & Fire, and Should this Exist? — as well as invest in its tech and R&D and efforts to break new ground for new kinds of formats.

The company may be best known for its podcast production, but it describes itself as a “media invention company” and June Cohen, who co-founded the company with Deron Triff, want to double down on the invention part of that description, going past podcasting to explore other ways of interacting with users.

“We’re working on an innovative content format for physical well-being that lives inside of workouts, but will come at the experience through storytelling,” the pair said in an email (which we had to move to after our phone conversation, while they were on the road in a car, broke up. Maybe in-car calls need to be disrupted soon, too). “After physical well-being, we see intergenerational experiences (parent/child) as another interesting white space that plays into habit and human potential, and are in the early stages of developing a television series to explore this arena.”

An existing iteration on the podcast theme — a entrepreneur training course that it has developed in connection with its Masters of Scale podcast, has been downloaded 10,000 times in its first 8 weeks on the market. And Meditative Story, which focuses on mindfulness, is being downloaded 750,000 times each month. In this they have focused on an important aspect of any digital service: “As with the podcast format, it’s all about habit,” they said.

But it is more than that: at a time when podcasting may still be somewhat nascent as a business model, while at the same time at the risk of starting to be too formulaic, the company’s catching attention for exploring ways to address both of those issues.

Its solution, in part, may be based on creative ways of presenting content to users, but also keeping a focus on strong material to use in those channels.

“Our aim is to build the most valuable independent portfolio of premium IP — one that’s designed around essential human needs and built with a contrarian strategy to scale,” the pair said in the email. “We see an outsized opportunity for alternative content that lives at the intersection of daily habit and fulfilling human potential. Our success is linked to how we build content ecosystems where habit and human potential come together.”

There is potentially a lot of money in making compelling podcasting content, of course, but for now a good chunk of that is coming in the form of M&A, specifically from companies like Spotify looking to buy much bigger audiences that it can coalesce around its own advertising and paid subscription efforts, or by buying into new tech for creating and organizing this kind of content.

WaitWhat presents an interesting variation on that theme, by building a startup around the idea of innovating within and beyond the podcast medium, which could catch the eye again of the same players who are watching and snapping up content companies today.

Something interesting in how Cohen and Triff have approached fundraising is that they say that they have done it in part to “secure diversity” at the startup. In part this is about hiring people from a mix of backgrounds but also about how it approaches management and how it endorses those with whom it works.

“We see our fundraising rounds as a tool for securing diversity,” they noted. “We know that’s not a typical viewpoint. But we have found ways to use our fund-raising rounds to leap us forward on diversity — in a few different ways.”

They note that in the seed round, they raised half of the funds from investors who identify as women. “We did this by raising from women first. Most people thought we were crazy. (“Just take the money there you find it!” was the advice we got) But it’s what we believed in, and it’s what we did,” they said.

Then in the Series A (we covered it here), “our lead investors had diverse funds, but they weren’t women-led. So we created a carve-out to create balance. And raised additional funds from women-led funds to balance us out.”

In this latest Series B, “we shifted our focus from total dollars to representation on the Board,” they said. “We actually wrote into our term sheet that WaitWhat will always maintain gender balance on the board. In this round, we shifted to a 5-person board, so what that means is that we won’t have less than 2 people who identify as women — or less than 2 people who identify as men. Our investors haven’t seen a company request this before — but they welcomed it, and shared that they wished more companies would ask.”

Far from annoying the men in the room, it seems to have gotten them even more on board with the idea of purpose existing alongside business interestes.

“Drawing on our background of investing in companies that have demonstrated the ability to build loyalty and community around high-quality content and experiences, we are big believers in WaitWhat’s approach to deliver durable and adaptive content, helping people become the best versions of themselves,” said Atul Joshi, founder and managing partner of Raga Partners, who led the investment for the firm. 

DataRails books $25M more to build better financial reporting tools for SMBs

As enterprise startups continue to target interesting gaps in the market, we’re seeing increasingly sophisticated tools getting built for small and medium businesses — traditionally a tricky segment to sell to, too small for large enterprise tools, and too advanced in their needs for consumer products. In the latest development of that trend, an Israeli startup called DataRails has raised $25 million to continue building out a platform that lets SMBs using Excel to run financial planning and analytics like their larger counterparts.

The funding closes out the company’s Series A at $43.5 million, after the company initially raised $18.5 million in April (some at the time reported this as its Series A, but it seems the round had yet to be completed). The full round includes Zeev Ventures, Vertex Ventures Israel, and Innovation Endeavors, with Vintage Investment Partners added in this most recent tranche. DataRails is not disclosing its valuation, except to note that it has doubled in the last four months, with hundreds of customers and on target to cross 1,000 this year, with a focus on the North American market. It has raised $55 million in total. 

The challenge that DataRails has identified is that on one hand, SMBs have started to adopt a lot more apps, including software delivered as a service, to help them manage their businesses — a trend that has been accelerated in the last year with the pandemic and the knock-on effect that has had for remote working and bringing more virtual elements to replace face-to-face interactions. Those apps can include Salesforce, NetSuite, Sage, SAP, QuickBooks, Zuora, Xero, ADP and more.

But on the other hand, those in the business who manage its finances and financial reporting are lacking the tools to look at the data from these different apps in a holistic way. While Excel is a default application for many of them, they are simply reading lots of individual spreadsheets rather than integrated data analytics based on the numbers.

DataRails has built a platform that can read the reported information, which typically already lives in Excel spreadsheets, and automatically translate it into a bigger picture view of the company.

For SMEs, Excel is such a central piece of software, yet such a pain point for its lack of extensibility and function, that this predicament was actually the germination of starting DataRails in the first place,

Didi Gurfinkel, the CEO who co-founded the company with Eyal Cohen (the CPO) said that DataRails’ initially set out to create a more general purpose product that could help analyze and visualize anything from Excel.

“We started the company with a vision to save the world from Excel spreadsheets,” he said, by taking them and helping to connect the data contained within them to a structured database. “The core of our technology knows how to take unstructured data and map that to a central database.” Before 2020, DataRails (which was founded in 2015) applied this to a variety of areas with a focus on banks, insurance companies, compliance and data integrity.

Over time, it could see a very specific application emerging, specifically for SMEs: providing a platform for FP&A (financial planning and analytics), which didn’t really have a solution to address it at the time. “So we enabled that to beat the market.”

“They’re already investing so much time and money in their software, but they still don’t have analytics and insight,” said Gurfinkel.

That turned out to be fortunate timing, since “digital transformation” and getting more out of one’s data was really starting to get traction in the world of business, specifically in the world of SMEs, and CFOs and other people who oversaw finances were already looking for something like this.

The typical DataRails customer might be as small as a business of 50 people, or as big as 1,000 employees, a size of business that is too small for enterprise solutions, “which can cost tens of thousands of dollars to implement and use,” added Cohen, among other challenges. But as with so many of the apps that are being built today to address those using Excel, the idea with DataRails is low-code or even more specifically no-code, which means “no IT in the loop,” he said.

“That’s why we are so successful,” he said. “We are crossing the barrier and making our solution easy to use.”

The company doesn’t have a huge number of competitors today, either, although companies like Cube (which also recently raised some money) are among them. And others like Stripe, while currently not focussing on FP&A, have most definitely been expanding the tools that it is providing to businesses as part of their bigger play to manage payments and subsequently other processes related to financial activity, so perhaps it, or others like it, might at some point become competitors in this space as well.

In the meantime, Gurfinkel said that other areas that DataRails is likely to expand to cover alongside FP&A are likely to include HR, inventory, and “planning for anything,” any process that you have running in Excel. Another interesting turn would be how and if DataRails decides to look beyond Excel at other spreadsheets, or bypass spreadsheets altogether.

The scope of the opportunity — in the U.S. alone there are more than 30 million small businesses — is what’s attracting the investment here.

“We’re thrilled to reinvest in DataRails and continue working with the team to help them navigate their recent explosive and rapid growth,” said Yanai Oron, General Partner at Vertex Ventures, in a statement. “With innovative yet accessible technology and a tremendous untapped market opportunity, DataRails is primed to scale and become the leading FP&A solution for SMEs everywhere.”

“Businesses are constantly about to start, in the midst of, or have just finished a round of financial reporting—it’s a never-ending cycle,” added Oren Zeev, founding partner at Zeev Ventures. “But with DataRails, FP&A can be simple, streamlined, and effective, and that’s a vision we’ll back again and again.”

Revolut revenue grew by 57% in 2020

Fintech startup Revolut has filed some financial results and is sharing details with the press. In 2020, the company reported $361 million in revenue (£261 million) — that’s a 57% increase compared to 2019 revenue of $229 million (£166 million).

Interestingly, those revenue figures have been adjusted to include fair value gains on cryptocurrency assets — it means that Revolut holds some crypto assets on its balance sheet. Revolut made $54 million (£39 million) in fair value gains on cryptocurrency assets.

Gross profit reached $170 million (£123 million) last year. At the same time, the company still reports operating losses. In particular, Q1 2020 was a particularly bad quarter with $76 million (£55 million) in adjusted operating loss.

In 2020, total non-adjusted operating loss reached $277 million (£200.6 million). Like many tech companies, administrative expenses are responsible for this loss. With a staff of 2,200 people, the company spent $367 million (£266 million) on administrative costs alone. But things seem to be improving as you can see:

Image Credits: Revolut

These trends aren’t that surprising as I reported that fintech startups spent most of 2020 focusing on profitability and improving their margins. At the end 2020, Revolut had 14.5 million personal customers and 500,000 companies using Revolut Business.

“As the extraordinary circumstances of 2020 drove the trend towards digital financial management we continued to innovate for customers to make their financial lives easier and accelerate daily use. We launched 24 new retail and business products, expanded into the US, Japan and Australia and launched banking services in Lithuania, all while significantly improving our profitability,” founder and CEO Nikolay Storonsky said in a statement. “We began 2021 with a more resilient and productive business that will enhance our trajectory towards rapid growth.”

When you compare Q1 2020 to Q1 2021, things are radically different for the fintech company. Revenue increased by 130% year-over-year and gross profit grew by 300% between Q1 2020 and Q1 2021.

Revolut has been launching a ton of products to diversify its sources of revenue. It is increasingly becoming a financial super app with current accounts, debit cards, trading services, insurance products, premium subscriptions, cryptocurrency trading and more.

Interestingly, interchange revenue from card transactions represents a good chunk of the company’s revenue. In 2020, cards and interchange generated $131 million (£95 million) in revenue. Every time a Revolut customer makes a card purchase, the card scheme (Visa or Mastercard) gives back some fees to Revolut. It’s an incredibly small percentage-based fee, but it can add up when you generate millions of purchases.

Foreign exchange and wealth generated $111 million (£80 million) in revenue. That’s another big one. And finally, subscriptions, such as Revolut Plus, Revolut Premium and Revolut Metal, accounted for $104 million (£75 million) in revenue.

Those are three strong pillars that all contribute to the company’s bottom line. They all represent a bit less or a bit more than a third of the company’s overall revenue.

Image Credits: Revolut

While the company has expanded aggressively over the years, the U.K. is still by far its biggest market. In 2020, 88.4% of the company’s (non-adjusted) revenue was related to its activities in the U.K. The European Economic Area without the U.K. represented 10.2% of revenue. The U.S., Japan, Australia and other markets were nearly negligible.

Revolut has also raised a mega round of funding in 2020 — a $500 million Series D round that was extended to $580 million in total. I wouldn’t be surprised if the company launches an initial public offering within the next 12 months.

Facebook officially launches Live Audio Rooms and podcasts in the U.S.

In April, Facebook announced a series of planned investments in new audio products, including a Clubhouse live audio competitor as well as new support for podcasts. Today, Facebook is officially rolling these products with the launch of Live Audio Rooms in the U.S. on iOS, starting with public figures and select Facebook Groups, and the debut of an initial set of U.S. podcast partners.

The company tells us Live Audio Rooms will become available to any verified public figure or creator in the U.S. who’s in good standing with Facebook and is using either a profile or the new Facebook Pages experience on iOS. For Facebook Groups, the feature is launching with “dozens of groups,” we’re told.

Both products will become more broadly available in the weeks and months ahead, as more people, podcasts, and Groups are brought on board. Meanwhile, 100% of Facebook users in the U.S. will be able to listen to Live Audio Rooms and podcasts as of this week.

Image Credits: Facebook

Much like Clubhouse or similar audio apps, Facebook’s Live Audio Rooms offer a standard set of features.

The event’s hosts appear in rounded profile icons at the top of the screen, while the listeners appear in the bottom half of the screen, as smaller icons. The active speaker is indicated with a glowing ring. If verified, a check appears next to their name, as well.

There are also options for enabling live captions, a “raise hand” tool to request to speak, and tools to share the room with others on Facebook, through things like News Feed or Group posts.

Image Credits: Facebook

Facebook does things a little differently than others in some places. For instance, hosts are able to invite people to join them as a speaker in advance of the session, or they can choose listeners during the stream to join them. In each session, there can be up to 50 speakers and there’s no limit on the number of listeners, Facebook says.

During the session, users will be notified when friends or followers join the chat, too.

While listening, users can “Like” or react to the content as it streams using the “Thumbs Up” button at the bottom of the screen which connects you to Facebook’s set of emoji reactions. And with today’s official launch, listeners can also now show support to the public figure of the Live Audio Room by sending “Stars.” These Stars can be purchased during the conversation and used at any time, similar to how they work with other Facebook Live content.

By sending Stars, the listener is bumped up to the “Front Row,” a special section that highlights the people who sent the Stars. This allows the event’s hosts to easily recognize their supporters and even give them a shout out during the event, if they choose.

Image Credits: Facebook

Another new feature allows hosts to select a nonprofit or fundraiser to support during their conversation, and listeners and speakers can directly donate. A progress bar will show how much has been raised during the show.

Image Credits: Facebook

Meanwhile, for Facebook Groups, admins can control whether moderators, group members or other admins can create a Live Audio Room. Both members and visitors can listen to the rooms in public groups, but in private groups, the rooms are limited to Group members.

Facebook users are alerted to all the new Live Audio Rooms via the News Feed and Notifications, and can sign up to be reminded when a room they’re interested in goes Live. Live Audio Rooms will also be discoverable within Facebook Groups, where available.

Image Credits: Facebook

Among the initial set of early adopters for Facebook Live Audio Rooms are Grammy-nominated electronic music artist TOKiMONSTA; American football quarterback Russell Wilson; organizer, producer and independent journalist Rosa Clemente; streamer and digital entertainer Omareloff; and social entrepreneur Amanda Nguyen. Others planned for the near future include D SmokeKehlaniReggie Watts, and Lisa Morales Duke, to Dr. JessBobby BerkTina Knowles-LawsonJoe Budden (notably Spotify’s first big podcast star who it lost last year), and DeRay Mckesson.

Image Credits: Facebook

 

Facebook Groups trying the new format include Dance Accepts Everyone, Vegan Soul Food, Meditation Matters, Pow Wow Nation, OctoNation – The Largest Octopus Fan Club!, and Space Hipsters.

Image Credits: Facebook

Alongside the launch of Live Audio Rooms, Facebook is also beginning to roll out its planned podcast support with a few select creators. These include Joe Budden of The Joe Budden Podcast; “Jess Hilarious” of Carefully Reckless from The Black Effect Podcast Network and iHeartRadio; Keltie Knight, Becca Tobin, and Jac Vanek of The LadyGang; and Nicaila Matthews Okome of Side Hustle Pro. Facebook will open up to other podcasters this summer.

Image Credits: Facebook

To be clear, this new podcasts service is different from the recently launched music and podcasts player in partnership with Spotify, which lets users share content from Spotify to the social network. The new feature instead involves podcasts that are streamed via public RSS feeds directly on Facebook, not delivered by Spotify. However, the miniplayer for podcasts on Facebook will look like the miniplayer for the Spotify listening integration (also known as Project Boombox), and they will behave similarly. But they are not the same.

The new podcast listening experience lets users listen to podcasts as they browse Facebook, either in a miniplayer or fullscreen player with playback options, and even if the phone’s display is turned off. This makes Facebook, in a way, a native podcast streaming app because it allows people to listen to audio without needing another service — like Spotify or Apple Podcasts, for example.

Facebook had earlier said there are over 170 Facebook users who are connected to a Page for a podcast, demonstrating user interest in podcasts on its social network.

Image Credits: Facebook

With the launch of the Facebook Podcast service, the company is asking podcast creators to give it permission to cache their content on Facebook’s servers, which we’re told is being done to ensure the content doesn’t violate Facebook’s Community Standards. However, because the podcasts are still being streamed via RSS feeds, they will be represented in the metrics provided by a podcaster’s hosting provider.

Last week, Facebook emailed podcast page owners details on how to set up their show on Facebook, noting they can link their podcast’s RSS feed to automatically generate News Feed posts for their episodes. These are also featured on a “podcasts” tab on their Page. According to Facebook’s Podcast Terms of Service, creators are granting Facebook the right to create “derivative works,” which likely refers to an upcoming clips feature.

Facebook says later this summer, it will add the ability to create and share short clips from a podcast, along with other features, like captions. Longer-term, it will create social experiences around podcasts, as well. It’s also working with creators to develop and launch its new product, Soundbites, which are short-form, creative audio clips. This will launch later in 2021.

Image Credits: Facebook

Other audio products in the works include a central listening destination and background audio listening for videos.

Facebook says this new destination will be a place where all the different audio formats across Facebook are available, not just podcasts, and will help users find to new things and people to listen to. More details on this project will become available later this summer.

Prior to today, Facebook quietly tested Live Audio Rooms in Taiwan and internally with Facebook employees Those tests will continue. Last week, Facebook CEO Mark Zuckerberg hosted the first trial of the new service in the U.S., where he was joined by other Facebook execs and a few Facebook Gaming creators.

Zuckerberg has been bullish on the potential for audio across the social networking platform. He even appeared on Clubhouse a couple of times to discuss the topic ahead of announcing what is, essentially, Facebook’s own Clubhouse competitor.

“I think the areas where I’m most excited about it on Facebook are basically in the large number of communities and groups that exist,” Zuckerberg had told Platformer, at the time of the original announcement. “I think that you already have these communities that are organized around interests, and allowing people to come together and have rooms where they can talk is — I think it’d be a very useful thing,” he added.

Facebook expects to expand its audio products globally in the months ahead.