E-commerce startup Zilingo raises $226M to digitize Asia’s fashion supply chain

If you’re looking for the next unicorn in Southeast Asia, Zilingo might just be it. The 3.5-year-old e-commerce company announced today that it has raised a Series D round worth $226 million to go after the opportunity to digitize Asia’s fashion supply chain.

This new round takes Zilingo to $308 million from investors since its 2015 launch. The Series D is provided by existing investors Sequoia India, Singapore sovereign fund Temasek, Germany’s Burda and Sofina, a European backer of Flipkart -owned fashion site Myntra. Joining the party for the first time is new investor EDBI, the corporate investment arm of Singapore’s Economic Development Board.

Zilingo isn’t commenting on a valuation for the round, but a source with knowledge of the deal told TechCrunch that it is ‘a rounding error’ away from $1 billion. We had heard in recent months that the startup was getting close to unicorn status, so that is likely to come sooner or later — particularly given that Zilingo has made it to Series D so rapidly.

Raising more than $300 million makes Zilingo one of Southeast Asia’s highest-capitalized startups, but its meteoric growth in the last year has come from expansion from consumer e-commerce into business-to-business services.

CEO Ankiti Bose — formerly with Sequoia India and McKinsey — and CTO Dhruv Kapoor first built a service that capitalized on Southeast Asia’s growing internet connectivity to bring small fashion vendors from the street markets of cities like Bangkok and Jakarta into the e-commerce fold. Zilingo still operates its consumer-facing online retail store, but its key move has been to go after b2b opportunities in the supply chain by digitizing its network to give retailers and brands gain access.

Revenue grew by 4X over the past year, with b2b responsible for 75 percent of that total, Bose told TechCrunch. She declined to provide raw figures but did say net income is in “the hundreds of millions” of U.S dollar. The company — which has over 400 staff — isn’t profitable yet, but CEO Bose said the b2b segment gives it “a clear pathway” to break-even by helping offset expensive e-commerce battles.

Ankiti Bose and Dhruv Kapoor founded Zilingo in 2015.

The supply chain’s ‘outdated tech’

Moving into the supply chain after building distribution makes sense, but Zilingo has long had its eye on services.

That business-focused push started with a suite of basic products to help Zilingo sellers manage their e-commerce business. Those initially included inventory management and sales tracking, but they have since graduated to deeper services like financing, sourcing and procurement, and a ‘style hunter’ for identifying upcoming fashion trends. Zilingo also widened its target from the long tail of small vendors operating in Southeast Asia, to bigger merchants and brands and even to the fashion industry in Europe, North America and beyond that seeks access to Asia’s producers, who are estimated to account for $1.4 trillion of the $3 billion global fashion manufacturing market.

Zilingo’s goal today is to provide any seller with the features, insight and network that brands such as Zara have built for themselves through years of work.

In Southeast Asia, that means helping small merchants, SMEs and larger retailers to source items for sale online through the Zilingo store. But in Europe and the U.S, where it doesn’t operate an outlet, Zilingo goes straight to the sellers themselves. That could mean retailers seeking wholesale opportunities from Asia or online influencers, such as Instagram personalities, keen to use their presence for e-commerce. Beyond just picking out items to sell, Zilingo wants to help them build their own private labels using its supply chain network.

That rest of the world plan has been on the cards since last year when Zilingo closed a $54 million Series C, but now the next stage of the journey is deeper integration with factories.

“If you think about these factories that make the products, the process isn’t optimized over there,” Bose said in an interview. “The guy or girl running factory likely has no technology, they don’t even use Excel. So we’re going to small and medium factories, increasing capacity utilization, helping to manage payroll, getting loans and other fintech services.”

Kapoor, her co-founder, adds that the fashion supply chain is “is marred by outdated tech.”

“It’s imperative for us to build products that introduce machine learning and data science effectively to SMEs while also being easy to use, get adopted and scale quickly. We’re re-wiring the entire supply chain with that lens so that we can add most value,” he added in a statement.

Zilingo encourages retailers and brands to develop their own private labels by tapping into the supply chain network it has built

AWS for the fashion supply chain

Bose said Zilingo’s early efforts have boosted factory efficiency by some 60 percent and made it possible to develop links to retailers while also enabling factories to develop their own private label colletions, rather than simply churning out unbranded or non-descript products.

A large part of that work with factories is consultancy-based, and Zilingo has hired supply chain experts to help provide quality guidance and perspective alongside the software tools it offers, Bose said.

She compares it, in many ways, to how Amazon conceived AWS. After it built tech to fix its own problems internally, it commercialized the services for third parties. So Zilingo started out offering a consumer-facing e-commerce platform but it is making its sourcing networks open to anyone at a cost — almost like supply chain on an API.

That gives its business a two, if not three, sided focus which spans selling to consumers in Southeast Asia through Zilingo.com — which is present in Thailand, Singapore, Malaysia and Indonesia with the Philippines and Australia coming soon — reaching overseas retailers through Zilingo Asia Mall, and developing the b2b play.

In Southeast Asia, its home market, Zilingo doesn’t pressure its merchants to sell on its platform exclusively — “we don’t mind if they go to Instagram, Lazada, Tokopedia and Shopee,” Bose said — but in the U.S. it doesn’t have a go-to consumer outlet. It’s possible that might change with the company considering potential partnerships, although it seems unlikely it will launch its own consumer play.

Zilingo was once destined to compete with the big players like Lazada, which is owned by Alibaba, Shopee, which is operated by NYSE-listed Sea, and Tokopedia, the $7 billion company that’s part of SoftBank’s Vision Fund, but its supply chain focus has shifted its position to that of enabler.

That’s helped it avoid tricky times for specialist e-commerce services, which battle tough competition, pricing wars and challenging dynamics, and instead become one of Southeast Asia’s highest-capitalized startups. The company’s U.S. plan is ambitious, and it is taking longer than expected to get off the ground, but that makes it a startup that is worth keeping an eye on in 2019. It’s also an example that the startup journey is not defined since, in some cases, the biggest opportunities aren’t presented immediately.

PerimeterX secures $43M to protect web apps from bot attacks

We know by now that modern website attacks are typically automated, as armies of bots knock on doors until they inevitably find vulnerabilities and take advantage. PerimeterX, a San Francisco startup wants to protect sites from these automated assaults. Today, it announced a $43 million Series C.

The round was led by Scale Venture Partners . New investor Adams Street Partners joined existing investors Canaan Partners, Vertex Ventures and Data Collective in the round. Ariel Tseitlin, a partner at Scale will be joining the company’s board under the terms of the deal. Today’s investment brings the total raised to over $77 million, according to Crunchbase data.

Omri Iluz, co-founder and CEO at PerimeterX says bots have become the preferred way of hackers to attack websites and mobile apps, and his company has developed a way to defend against that kind of approach. It uses an approach called behavioral fingerprinting to blunt these automated attacks.

“Once we gain visibility into the behavior of the user, we are able to discern between normal behavior and an anomalous behavior that looks like it’s coming from an automated tool,” he said. The solution looks at attributes like mouse movements and swipes. It also analyze the hardware to understand the graphics driver and audio driver of whatever device the bot is purporting to be.

To achieve this kind of identification requires massive amounts of data and PerimeterX uses machine learning to help understand normal behavior and shut down anomalous behavior in an automated fashion.

The company was founded in 2014 and currently has 140 employees. Ariel Tseitlin from Scale Venture Partners, whose firm is leading the round, says as companies reach this level of maturity, the Series C money tends to go into sales and marketing to push the revenue pedal and scale the company.

“While there is a lot of opportunity in R&D, generally at this stage most of the dollars are going for sales and marketing, so hiring more salespeople, hiring more marketers more sales ops.
That’s where a big part of the expansion comes from, and that tends to be pretty closely correlated to revenue growth, and pretty closely correlated to just greater growth in general,” he explained

We wrote about Signal Sciences’ funding last week, a company that also works to protect web apps using a firewall approach. Iluz says that the two companies often work together in the same customers, rather than competing because they attack the problem differently.

Xiaomi-backed electric toothbrush Soocas raises $30 million Series C

China’s Soocas continues to jostle with global toothbrush giants as it raises 200 million yuan ($30 million) in a series C funding round. The Shenzhen-based oral care manufacturer has secured the new capital from lead investor Vision Knight Capital, with Kinzon Capital, Greenwoods Investment, Yunmu Capital and Cathay Capital also participating in the round.

The new proceeds arrived less than a year after Soocas, one of Xiaomi’s home appliance portfolio startups, snapped up close to 100 million yuan in a Series B round last March. Best known for its budget smartphones, Xiaomi has a grand plan to construct an Internet of Things empire that encompasses smart TVs to electric toothbrushes, and it has been gearing up by shelling out strategic investments for consumer goods makers such as Soocas.

Founded in 2015, Soocas’s rise reflects a growing demand for personal care accessories as people’s disposable income increases. Electric toothbrushes are a relatively new concept to most Chinese consumers but the category is picking up steam fast. According to data compiled by Alibaba’s advertising service Alimama, gross merchandise volume sales of electric toothbrushes grew 97 percent between 2015 and 2017. Multinational brands still dominate the oral care space in China, with Procter & Gamble, Colgate and Hawley & Hazel Chemical occupying the top three spots as of 2017, a report from Euromonitor International shows, but local players are rapidly catching up.

Soocas faces some serious competition from its Chinese peers Usmile and Roaman. Like Soocas, the two rivals have also placed their offices in southern China for proximity to the region’s robust supply chain resources. Part of Soocas’s strength comes from its tie-up with Xiaomi, which gives its portfolio companies access to a massive online and offline distribution network worldwide. That comes at a cost, however, as Xiaomi is known to impose razor-thin margins on the companies it backs and controls.

According to a statement from Soocas’s founder Meng Fandi, the company has achieved profitability since its launch and has seen its margin increase over the years. It plans to spend its fresh proceeds on marketing in a race to lure China’s increasingly sophisticated young consumers with toothbrushes and its new lines of hair dryers, nasal trimmers and other tools that make you squeaky-clean.

Ambitious Singapore startup Delegate wants to bring its event booking platform to the US

It’s not often that you hear about a startup from Singapore with ambitions to expand to the U.S, but that’s exactly the goal for event booking service Delegate.

Founded in August 2015, the company aims to be a one-stop shop for booking an event, that covers corporate and professional functions, celebrations like weddings and more personal events such as birthdays or get-togethers.

Beyond the essential step of securing a venue, Delegate’s platform covers a range of different needs that include: food and beverage, photography and videography, flowers and decor, entertainment such as bands, invitation and gifts, event staff, production equipment and transport.

“We saw a huge gap in the market,” co-founders Melissa Lou and Jacqueline Ye, who both worked in the event industry prior to starting Delegate, told TechCrunch in a recent interview. “There was no one resource for finding events and resources.”

The Delegate platform covers venue booking, catering, staffing, entertainment and more.

But, beyond being a booking platform for consumers, Delegate has a smart hook that attracts those on venue and event hosting side. In addition to helping them generate bookings via its sites, Delegate offers a subscription ‘Pro’ product that helps them manage daily operations, generate leads, collect bookings and handle collaborations with others in their supply chain.

There’s also an element of granularity with the consumer side of the business. Delegate has set up options to make the myriads of suppliers, venues and more navigable for less experienced customers. That includes a ‘deals’ section for, well, deals and an inspiration board for the planning process which is itself inspired by Pinterest’s visual approach.

Coming soon, the company hopes to add payment plans to help make it easier to pay for major events, as well as a new offering focused squarely on business users and API integrations for third-party services.

Lou and Ye started the business nearly four years ago with around 100 vendors thanks to their personal and business networks. Today, it claims 1,700 vendors and 70,000 users across Singapore and Hong Kong, its first expansion market.

Delegate co-founders Jacqueline Ye and Melissa Lou (left and right) want to expand their service to the U.S. market.

Already present in two of Asia’s top event locations, where average spend is among the highest for the region. But since those countries are limited in size — Singapore’s population is just shy of six million, Hong Kong’s is around seven million, it makes sense that Delegate is now looking for its next moves. Lou and Ye said they plan to launch the service in “key cities” in Australia and the U.S. to tap what they see as lucrative markets, while Korea and Taiwan are also on the radar closer to home in Asia.

“We see these markets as a good fit for us,” Lou explained. “They have a fair share of corporate events already and, in particular, Australia is a good country because we have a good network there.”

Entering the U.S. might sound implausible to some, but already soft launches of the platform in LA and Austin have drawn interest from over 100 vendors, the Delegate co-founders said. That’s without any major marketing push to either businesses or consumers, and it gives the company optimism. Already the U.S. is a listed location on their service but, for now, there are less than a dozen vendors and there’s no specific location.

Beyond early outreach, the company has raised funds for expansion. Last month, Delegate announced a $1 million pre-Series A round from an undisclosed family office (with apparent links to the event industry) and angel investors who founded Zopim, the Singapore-based startup that sold to Zendesk for around $30 million in 2014.

That network and Saas expertise is likely to help with those ambitious global expansion plans, although Lou and Ye said they aren’t planning to raise their Series A just yet. They say they plan to stretch their runway and keep their costs lean, a practice the founders say they have stuck to since bootstrapping without outside funding for the first year of the business. It’s unlikely bet for most startups in Southeast Asia, but if Delegate can gain even just a small foothold in the U.S, it would be a massive validation of its business model and niche, and no doubt precipitate that larger Series A round.

Startups Weekly: Spotify gets acquisitive and Instacart screws up

Did anyone else listen to season one of StartUp, Alex Blumberg’s OG Gimlet podcast? I did, and I felt like a proud mom this week reading stories of the major, first-of-its-kind Spotify acquisition of his podcast production company, Gimlet. Spotify also bought Anchor, a podcast monetization platform, signaling a new era for the podcasting industry.

On top of that, Himalaya, a free podcast app I’d never heard of until this week, raised a whopping $100 million in venture capital funding to “establish itself as a new force in the podcast distribution space,” per Variety.

The podcasting business definitely took center stage, but Lime and Bird made headlines, as usual, a new unicorn emerged in the mental health space and Instacart, it turns out, has been screwing its independent contractors.

As mentioned, Spotify, or shall we say Spodify, gobbled up Gimlet and Anchor. More on that here and a full analysis of the deal here. Key takeaway: it’s the dawn of podcasting; expect a whole lot more venture investment and M&A activity in the next few years.

This week’s biggest “yikes” moment was when reports emerged that Instacart was offsetting its wages with tips from customers. An independent contractor has filed a class-action lawsuit against the food delivery business, claiming it “intentionally and maliciously misappropriated gratuities in order to pay plaintiff’s wages even though Instacart maintained that 100 percent of customer tips went directly to shoppers.” TechCrunch’s Megan Rose Dickey has the full story here, as well as Instacart CEO’s apology here.

Slack confidentially filed to go public this week, its first public step toward either an IPO or a direct listing. If it chooses the latter, like Spotify did in 2018, it won’t issue any new shares. Instead, it will sell existing shares held by insiders, employees and investors, a move that will allow it to bypass a roadshow and some of Wall Street’s exorbitant IPO fees. Postmates confidentially filed, too. The 8-year-old company has tapped JPMorgan Chase and Bank of America to lead its upcoming float.

Reddit CEO Steve Huffman delivers remarks on “Redesigning Reddit” during the third day of Web Summit in Altice Arena on November 08, 2017 in Lisbon, Portugal. (Horacio Villalobos-Corbis/Contributor)

It was particularly tough to decide which deal was the most notable this week… But the winner is Reddit, the online platform for chit-chatting about niche topics — r/ProgMetal if you’re Crunchbase editor Alex Wilhelm . The company is raising up to $300 million at a $3 billion valuation, according to TechCrunch’s Josh Constine. Reddit has been around since 2005 and has raised a total of $250 million in equity funding. The forthcoming Series D round is said to be led by Chinese tech giant Tencent at a $2.7 billion pre-money valuation.

Runner up for deal of the week is Calm, the app that helps users reduce anxiety, sleep better and feel happier. The startup brought in an $88 million Series B at a $1 billion valuation. With 40 million downloads worldwide and more than one million paying subscribers, the company says it quadrupled revenue in 2018 from $20 million to $80 million and is now profitable — not a word you hear every day in Silicon Valley.

Here’s your weekly reminder to send me tips, suggestions and more to [email protected] or @KateClarkTweets

I listened to the Bird CEO’s chat with Upfront Ventures’ Mark Suster last week and wrote down some key takeaways, including the challenges of seasonality and safety in the scooter business. I also wrote about an investigation by Consumer Reports that found electric scooters to be the cause of more than 1,500 accidents in the U.S. I’m also required to mention that e-scooter unicorn Lime finally closed its highly anticipated round at a $2.4 billion valuation. The news came just a few days after the company beefed up its executive team with a CTO and CMO hire.

Databricks raises $250M at a $2.75B valuation for its analytics platform
Retail technology platform Relex raises $200M from TCV
Raisin raises $114M for its pan-European marketplace for savings and investment products
Self-driving truck startup Ike raises $52M
Signal Sciences secures $35M to protect web apps
Ritual raises $25M for its subscription-based women’s daily vitamin
Little Spoon gets $7M for its organic baby food delivery service
By Humankind picks up $4M to rid your morning routine of single-use plastic

We don’t spend a ton of time talking about the growing, venture-funded, tech-enabled logistics sector, but one startup in the space garnered significant attention this week. Turvo poached three key Uber Freight employees, including two of the unit’s co-founders. What’s that mean for Uber Freight? Well, probably not a ton… Based on my conversation with Turvo’s newest employees, Uber Freight is a rocket ship waiting to take off.

Who knew that investing in female-focused brands could turn a profit for investors? Just kidding, I knew that and this week I have even more proof! This is L., a direct-to-consumer, subscription-based retailer of pads, tampons and condoms made with organic materials sold to P&G for $100 million. The company, founded by Talia Frenkel, launched out of Y Combinator in August 2015. According to PitchBook, it was backed by Halogen Ventures, 500 Startups, Fusion Fund and a few others.

Speaking of ladies getting stuff done, Bessemer Venture Partners promoted Talia Goldberg to partner this week, making the 28-year-old one of the youngest investing partners at the Silicon Valley venture fund. Plus, Palo Alto’s Eclipse Ventures, hot off the heels of a $500 million fundraise, added two general partners: former Flex CEO Mike McNamara and former Global Foundries CEO Sanjay Jha.

If you enjoy this newsletter, be sure to check out TechCrunch’s venture-focused podcast, Equity. In this week’s episode, available here, Crunchbase editor-in-chief Alex Wilhelm and I chat about the expanding podcast industry, Reddit’s big round and scooter accidents.

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One of Tesla’s biggest investors upped its stake by more than $30M

Baillie Gifford & Co., the second-biggest shareholder of Tesla stock, has increased its stake in the electric automaker and energy storage company.

A regulator filing posted Friday shows Baillie increased its stake in Tesla from 7.64 percent at the end of the third quarter to 7.71 percent at the end of the fourth quarter. That doesn’t sound like much, but it translates into Baillie purchasing nearly 109,000 Tesla shares in the fourth quarter. That pencils out to a ballpark of $32 million worth of shares, if based on Friday’s price alone. CNBC was the first to report the filing.

The U.K.-based investment management firm Baillie now owns 13.2 million shares of Tesla stock, according to the regulator filing. That translates to more than $4 billion worth of Tesla, based on the latest share price of $304.26.

Last month, Tesla reported it earned $139 million in the fourth quarter — its second consecutive quarterly profit.

The company managed to string together two profitable periods in a row thanks to sales of the Model 3 and despite several headwinds in the fourth quarter, including a non-cash charge of $54 million attributable to non-controlling interests, higher import duties on components from China, a price reduction for Model S and Model X in China and the introduction of a lower-priced mid-range version of Model 3.

Baillie Gifford is the largest outside shareholder of Tesla stock. CEO Elon Musk, Tesla’s largest shareholder, owns about 20 percent of the company.

Baillie appears to be increasingly interested in electric vehicles. In October, the company took a stake in Nio, the Chinese electric vehicle automaker that recently became a publicly traded company.

Baillie Gifford now owns an 11.44 percent stake in Nio, according to a regulatory filing. The company disclosed that it had purchased 85.3 million shares.

OakNorth raises $440 million from SoftBank and Clermont

British startup OakNorth has raised a $440 million funding round from SoftBank’s Vision Fund as well as the Clermont Group. The company is creating a digital bank and focuses on loans for small and medium enterprises and the technology behind those loans.

Today’s funding round is the biggest funding round in a European fintech company. OakNorth has raised $848 million in primary funding since its creation.

With this funding round, the company plans to double down on what it already does. The company can issue fast and flexible loans to businesses and property developers in the U.K. OakNorth uses big data and machine learning to assess the risks and monitor its portfolio. The company has lent over $3.7 billion overall, and there hasn’t been a single default or late payment.

But that just part of OakNorth’s business. The company also licenses its platform to other institutions. Banks leverage OakNorth Analytical Intelligence platform for their own loan books, from origination to credit analysis and portfolio monitoring. Multiple banks already use it in the U.S., Europe and Asia.

While OakNorth doesn’t provide any current account, individuals and businesses can also open various savings accounts with OakNorth. OakNorth manages 34,000 savings accounts.

The company plans to expand to the U.S. as well. OakNorth doesn’t want to open a bank in the U.S. Instead, the company will focus on partnerships with American banks and loan origination for those banks.

Gong.io nabs $40M investment to enhance CRM with voice recognition

With traditional CRM tools, sales people add basic details about the companies to the database, then a few notes about their interactions. AI has helped automate some of that, but Gong.io wants to take it even further using voice recognition to capture every word of every interaction. Today, it got a $40M Series B investment.

The round was led by Battery Ventures with existing investors Norwest Venture Partners, Shlomo Kramer, Wing Venture Capital, NextWorld Capital and Cisco Investments also participating. Battery general partner Dharmesh Thakker will join the startup’s Board under the terms of the deal. Today’s investment brings the total raised so far to $68 million, according to the company.

$40 million is a hefty Series B, but investors see a tool that has the potential to have a material impact on sales, or at least give management a deeper understanding of why a deal succeeded or failed using artificial intelligence, specifically natural language processing.

Company co-founder and CEO Amit Bendov says the solution starts by monitoring all customer-facing conversation and giving feedback in a fully automated fashion. “Our solution uses AI to extract important bits out of the conversation to provide insights to customer-facing people about how they can get better at what they do, while providing insights to management about how staff is performing,” he explained. It takes it one step further by offering strategic input like how your competitors are trending or how are customers responding to your products.

Screenshot: Gong.io

Bendov says he started the company because he has had this experience at previous startups where he wants to know more about why he lost a sale, but there was no insight from looking at the data in the CRM database. “CRM could tell you what customers you have, how many sales you’re making, who is achieving quota or not, but never give me the information to rationalize and improve operations,” he said.

The company currently has 350 customers, a number that has more than tripled since the end of 2017 when it had 100. He says it’s not only that it’s adding new customers, existing ones are expanding, and he says that there is almost zero churn.

Today, Gong has 120 employees with headquarters in San Francisco and a 55-person R&D team in Israel. Bendov expects the number of employees to double over the next year with the new influx of money to keep up with the customer growth.

Musiio raises $1M to let digital music services use AI for curation

Musiio, a Singapore-based startup that uses AI to help digital music companies with discovery and creation, has pulled in a $1 million seed round.

The capital comes from Singapore’s Wavemaker Partners, U.S. investor Exponential Creativity Ventures and undisclosed angels. The deal represents the first outside round for Musiio, which was founded at the Entrepreneur First program in Singapore where CEO Hazel Savage, a former streaming exec, met CEO Aron Pettersson. It also makes Musiio the first venture capital-backed music AI startup in Southeast Asia and one of the most notable EF graduates from its Asian cohorts.

We first wrote about Musiio last April when it had raised SG$75,000 ($57,000) as part of its involvement in EF, the London-based accelerator that has big ambitions in Asia. Since then, it has increased its team to seven full-time staff.

The company is focused on reducing inefficiencies for music curation using artificial intelligence by augmenting the important work of human curators. In short, it aims to give those without the spending power of Spotify the opportunity to automate or partially automate a lot of the heavy lifting when it comes to scouring through music.

“Musiio won’t replace the need to have people listening to music,” Savage told TechCrunch last year. “But we can delete the inefficiencies.”

The Musiio team at its office in Singapore

The company’s first public client is Free Music Archive (FMA), a Creative Commons-like free music site developed by independent U.S. radio station WFMU. Musiio developed a curated playlist which raised the profile of a number of songs that had become ‘lost’ in the catalog. In particular, it helped one track double the number of plays it had received over eight years within just two days.

The FMA deal was really a proof of concept for Musiio, and Savage said that the company is getting close to announcing deals.

“Over the next month or two, there will be two or three commercial announcements,” Savage said this week. “We’re working with streaming companies and sync companies.”

Hatch, Rovio’s ‘Netflix for gaming’, picks up NTT Docomo as a strategic investor

Rovio’s efforts to diversify beyond its Angry Birds franchise is getting a little investment boost today. The company announced that Japan’s NTT Docomo is taking a stake in Hatch, a Rovio subsidiary that describes itself as the “Netflix of gaming”, providing subscribers with a rotating mix of freemium games from a mix of publishers, with the option of paying a single monthly fee for a wider mix.

Docomo and Rovio are not discussing the size or value of the stake, but a spokesperson for Rovio told TechCrunch that prior to this deal, Hatch was 80 percent owned by Rovio and 20 percent by Hatch personnel. He didn’t specify who had sold shares to Docomo in this latest transaction.

The deal will cover not just investment to expand the Hatch platform and number of games on offer — currently the selection numbers over 100 — but to bring Hatch specifically to the Japanese market.

This will include, starting next week (February 13), a soft launch of Hatch on Android devices in the country, as well as prominent placement of Hatch on Docomo’s Android TV service, sweetening the deal with three-month free trials of the Premium tier.

The Android TV offering is a key OTT play for Docomo. Known primarily as one of the country’s biggest mobile carriers (and, historically, a trail blazer in mobile services, setting the pace for how much was building in the world of mobile content globally in the earliest days of mobile phones), like other network service providers, Docomo has been hit hard by the huge wave of services that bypass carriers and strike billing deals directly with consumers.

Hatch will be one more feather in Docomo’s cap to try to lure more people to its service, which can be subscribed to and paid for by way of Docomo’s ‘d Account’, an iTunes-style platform that people can use regardless of which network carrier they contract with.

Like Netflix, Amazon and other OTT video streaming plays, the concept behind Hatch is to offer a mix of games from various publishers, as well as developing its own selection of games in house that it hopes will be popular enough to help differentiate the service from the rest of the field.

That is critical, because Hatch and Rovio are not the only ones vying for the title of “Netflix for gaming.” Other formidable hopefuls include AmazonMicrosoft, Apple, Google, and perhaps maybe even Netflix itself.

The current selection of games on Hatch include Monument Valley, Space Invaders Infinity Gene and Hitman GO, with a new game called Arkanoid Rising — “a bold new reimagining of the arcade classic produced in association with Japanese gaming legends TAITO” — coming in the spring, which will be “the first Hatch Original exclusive to the platform.”

Down the line, there will also be collaborations to develop eSports events and more titles, Rovio said.

The move is a natural one for Hatch, given gaming culture and how strong it is in Japan.

“Japan is the world’s third largest games market and where the video games industry as we know it was born. In this extremely competitive market we couldn’t be happier to work with a partner like Docomo to help take our vision of cloud gaming mainstream,” says Juhani Honkala, Hatch founder and CEO, in a statement. “Docomo’s leading contributions to 5G technology and infrastructure and commitment to amazing new 5G-enabled services make the company an ideal strategic partner in Japan, and we look forward to a long and fruitful collaboration.”

“We are excited to work together with Hatch, a great example of the new type of consumer services, which can bring out its potential towards the 5G era,” added Takanori Ashikawa, Director, Consumer Business Department of Docomo, in a separate statement. “Hatch’s vision for cloud gaming changes the way people play and discover games, and our shared goal to enrich the everyday lives of our customers makes Hatch an excellent strategic partner for the long term.”

Since its lacklustre public debut in September 2017, Rovio has been facing a lot of growth challenges,   in part because of strong competition in the gaming industry and the company’s over-reliance on a nearly ten-year-old franchise amid a bigger industry shift to new tastes in games — marked by the rise of streamed, multiplayer titles like Fortnite.

But while overall profits have continued to decline at the company, sales of some titles have actually grown, with Angry Birds 2 — now almost three years old — surprisingly seeing a surge of growth in 2018.

In that context, a different focus by way of Hatch, with a little financial help from NTT, could be the bet that helps catapult Rovio to a new level of the gaming playing field.