Twitter rolls out bigger images and cropping control on iOS and Android

Twitter just made a change to the way it displays images that has visual artists on the social network celebrating.

In March, Twitter rolled out a limited test of uncropped, larger images in users’ feeds. Now, it’s declared those tests a success and improved the image sharing experience for everybody.

On Twitter for Android or iOS, standard aspect ratio images (16:9 and 4:3) will now display in full without any cropping. Instead of gambling on how an image will show up in the timeline — and potentially ruining an otherwise great joke — images will look just like they did when you shot them.

Twitter’s new system will show anyone sharing an image a preview of what it will look like before it goes live in the timeline, resolving past concerns that Twitter’s algorithmic cropping was biased toward highlighting white faces.

“Today’s launch is a direct result of the feedback people shared with us last year that the way our algorithm cropped images wasn’t equitable,” Twitter spokesperson Lauren Alexander said. The new way of presenting images decreases the platform’s reliance on automatic, machine learning-based image cropping.

Super tall or wide images will still get a centered crop, but Twitter says it’s working to make that better too, along with other aspects of how visual media gets displayed in the timeline.

For visual artists like photographers and cartoonists who promote their work on Twitter, this is actually a pretty big deal. Not only will photos and other kinds of art score more real estate on the timeline, but artists can be sure that they’re putting their best tweet forward without awkward crops messing stuff up.

Twitter’s Chief Design Officer Dantley Davis celebrated by tweeting a requisite dramatic image of the Utah desert (Dead Horse Point — great spot!)

We regret to inform you that the brands are also aware of the changes.

The days of “open for a surprise” tweets might be numbered, but the long duck can finally have his day.

Founded by former Carousell and Fave execs, Rainforest gets $36M to consolidate Asia-Pacific Amazon Marketplace brands

A group photo of Rainforest’s team members Elita Subaja, J.J. Chai and Jerry Ng

From left to right: Rainforest business operations and strategy director Elita Subaja; co-founder and CEO J.J. Chai and brand manager Jerry Ng

Singapore-based Rainforest is one of the newest entrants in the wave of startups that “roll-up” small e-commerce brands. Launched in January by alumni from some of Southeast Asia’s top startups, including Carousell, OVO and Fave, Rainforest acquires Amazon marketplace sellers. This is similar to the Amazon-centric approach taken by Thrasio, Branded Group and Berlin Brands Group, three of the highest-profile e-commerce aggregators, but Rainforest is one of the first companies in the space to launch out of Asia and focus specifically on acquiring brands in the region. It is also laser-focused on home goods, personal care and pet items, with the goal of building the e-commerce version of conglomerate Newell Brands, whose portfolio includes Rubbermaid, Sharpie and Yankee Candle.

Rainforest announced today that it has raised seed funding of $36 million led by Nordstar with participation from Insignia Venture Partners. This includes equity financing of $6.5 million and a $30 million debt facility from an undisclosed American debt fund.

Co-founder and chief executive officer J.J. Chai, who previously held senior roles at Carousell and Airbnb, told TechCrunch that Rainforest raised debt financing (like many other e-commerce aggregators) because it is non-dilutive and will be used to acquire about eight to 12 brands sold through Amazon’s B2B service Fulfilled By Amazon (FBA). The startup’s other co-founders are chief financial officer Jason Tan, who held the same roles at OVO and Fave, and chief technology officer Per-Ola Röst, who previously founded Amazon analytics tool provider Seller Matrix and ran a FBA brand worth seven figures.

Rainforest’s portfolio currently includes three brands, which it acquired for about $1 million each. The company wants to wait until its portfolio is larger to disclose what brands it owns, but Chai said they include a mattress brand that is a best seller on Amazon, a cereal maker and a kitchenware brand. Focusing on specific verticals will allow Rainforest to streamline supply chains, product design and marketing as it scales up its brands.

Amazon’s total gross merchandise volume in 2020 was about $490 billion. According to Marketplace Pulse, $300 billion of that came from third-party sellers. Thrasio and Branded Group, which was started by Lazada co-founder and former CEO Pierre Poignant, also acquire Asian brands, but most e-commerce aggregators have so far focus on American, European or Latin American sellers (like Mexico City-based Valoreo, which also recently raised funding). Rainforest will look at sellers in the Asia-Pacific region, including China, Southeast Asia and Australia.

Chai said about 30% of Amazon’s third-party sellers are based in Asia, and he expects more e-commerce aggregators to launch in the region. “All the ingredients are there and I guess it’s just a matter of time when more people figure it out and solve this problem,” he said. “Everything we’ve seen has worked out, and of course the original creators noticed this trend, which is that there is an explosion of microbrands.”

Rainforest looks for home goods, personal care or pet product FBA sellers that are currently doing about $5 million to $10 million in sales per year, and making a minimum 15% profit margin. Most of its pipeline of potential deals are inbound inquiries. Rainforest can give brands a valuation within two days. If they are interested in the offer, due diligence usually takes about a month, and sellers get the first tranche of their payment in about 40 days.

The company plans to look at other marketplaces in the future, but is starting with Amazon because its analytics allows quicker valuations. Rainforest looks at the “Three R’s,” or product reviews, ratings and ranking, to see how well a seller is performing. It also wants brands that can expand beyond Amazon into other channels and have unique intellectual property with wide appeal. “We’re looking for products that can traverse global markets,” said Chai. “So, for example, no lawnmower covers, a very American kind of thing that’s maybe less relevant in this part of the world, because our intention is to take these brands to their next level potential.”

Many of the brands in Rainforest’s pipeline are run by sole proprietors who have gotten to the point where they need to hire a team to continue growing, but want to exit instead so they can move on to their next venture.

“Being able to create a physical goods brand and build a sizable business out of it is a relatively new phenomenon. It used to be that you needed a factory, big branding, R&D. The combination of online advertising, marketplaces and supply chains being disrupted has created an opportunity where individuals can create brands in the same way that the App Store allowed people to start distributing software,” said Chai. “Where we play into that trend is that there are a lot of microbrands and many will get stuck, so we can give the entrepreneurs a way to exit and bring a brand to its full potential.”

Una Brands launches with $40M to roll up brands on multiple Asia-Pacific e-commerce platforms

Una Brands' co-founders (from left to right): Tobias Heusch, Kiran Tanna and Kushal Patel

Una Brands’ co-founders (from left to right): Tobias Heusch, Kiran Tanna and Kushal Patel

One of the biggest funding trends of the past year is companies that consolidate small e-commerce brands. Many of the most notable startups in the space, like Thrasio, Berlin Brands Group and Branded Group, focus on consolidating Amazon Marketplace sellers. But the e-commerce landscape is more fragmented in the Asia-Pacific region, where sellers use platforms like Tokopedia, Lazada, Shopee, Rakuten or Ebay depending on where they are. That is where Una Brands comes in. Co-founder Kiren Tanna, former chief executive officer of Rocket Internet Asia, said the startup is “platform agnostic,” searching across marketplaces (and platforms like Shopify, Magento or WooCommerce) for potential acquisitions.

Una announced today that it has raised a $40 million equity and debt round. Investors include 500 Startups, Kingsway Capital, 468 Capital, Presight Capital, Global Founders Capital and Maximilian Bitner, the former CEO of Lazada who currently holds the same role at secondhand fashion platform Vestiaire Collective.

Una did not disclose the ratio of equity and debt in the round. Like many other e-commerce aggregators, including Thrasio, Una raised debt financing to buy brands because it is non-dilutive. The round will also be used to hire aggressively in order to evaluate brands in its pipeline. Una currently has teams in Singapore, Malaysia and Australia and plans to expand in Southeast Asia before entering Taiwan, Japan and South Korea.

Tanna, who also founded Foodpanda and ZEN Rooms, launched Una along with Adrian Johnston, Kushal Patel, Tobias Heusch and Srinivasan Shridharan. He estimates that there are more than 10 million third-party sellers spread across different platforms in the Asia-Pacific.

“Every single seller in Asia is looking at multiple platforms and not just Amazon,” Tanna told TechCrunch. “We saw a big gap in the market where e-commerce is growing very quickly, but players in the West are not able to look at every platform, so that is why we decided to focus on APAC, launch the business there and acquire sellers who are selling on multiple platforms.”

Una looks for brands with annual revenue between $300,000 to $20 million and is open to many categories, as long as they have strong SKUs and low seasonality (for example, it avoids fast fashion). Its offering prices range from about $600,000 to $3 million.

Tanna said Una will maintain acquisitions as individual brands “because what’s working, we don’t change it.” How it adds value is by doing things that are difficult for small brands to execute, especially those run by just one or two people, like expanding into more distribution channels and countries.

“For example, in Indonesia there are at least five or six important platforms that you should be on, and many times the sellers aren’t doing that, so that’s something we do,” Tanna explained. “The second is cross-border in Southeast Asia, which sellers often can’t do themselves because of regulations around customs, import restrictions and duties. That’s something our team has experience in and want to bring to all brands.”

Amazon FBA roll-up players have the advantage of Amazon Marketplace analytics that allow them to quickly measure the performance of brands in their pipeline of potential acquisitions. Since it deals with different marketplaces and platforms, Una works with much more fragmented sources of data for revenue, costs, rankings and customer reviews. To scale up, the company is currently building technology to automate its valuation process and will also have local teams in each of its markets. Despite working with multiple e-commerce platforms, Tanna said Una is able to complete a deal within five weeks, with an offer usually happening within two or three days.

In countries where Amazon is the dominant e-commerce player, like the United States, many entrepreneurs launch FBA brands with the goal of flipping them for a profit within a few years, a trend that Thrasio and other Amazon roll-up startups are tapping into. But that concept is less common in Una’s markets, so it offers different team deals to appeal to potential sellers. Though Una acquires 100% of brands, it also does profit-sharing models with sellers, so they get a lump sum payment for the majority of their business first, then collect more money as Una scales up the brand. Tanna said Una usually continues working with sellers on a consulting basis for about three to six months after a sale.

“Something that Amazon players know very well is that they can find a product, sell it for four to five years, and then ideally make a multi-million deal exit and build another product or go on holiday,” said Tanna. “That’s something Asian sellers are not as familiar with, so we see this as an education phase to explain how the process works, and why it makes sense to sell to us.”

China expresses concern over its absence in India’s 5G trials

China expressed concern on Wednesday over India’s move to not grant any Chinese firm permission to participate in 5G trials in the world’s second largest internet market as the two neighboring nations struggle to navigate business ties amid their geo-political tensions.

India’s Department of Telecommunications earlier this week approved over a dozen firm’s applications to conduct a six-month trial to test the use and application of 5G technology in the country.

Among those who have received the approval include international giants such as Ericsson, Nokia, and Samsung that will collaborate with Indian telecom operators Jio Platforms, Airtel, Vodafone Idea, and MTNL for the trial.

Huawei, ZTE and other Chinese companies, that have been operating in India for several years, haven’t received the approval from the Indian government to participate in the upcoming trial. The Indian ministry said earlier this week that it granted permission to those firms that had been picked by the telecom operators.

Wang Xiaojian, the spokesperson of Chinese Embassy in India, said in a statement on Wednesday that the nation expresses “concern and regret that Chinese telecommunications companies have not been permitted to conduct 5G trials with Indian Telecom Service Providers in India.”

“Relevant Chinese companies have been operating in India for years, providing mass job opportunities and making contribution to India’s infrastructure construction in telecommunications. To exclude Chinese telecommunications companies from the trials will not only harm their legitimate rights and interests, but also hinder the improvement of the Indian business environment, which is not conducive to the innovation and development of related Indian industries,” added Xiaojian.

Last year, Airtel (India’s second-largest telecom operator) had said that it was open to collaborating with global technology firms, including those from China, for components. “Huawei, over the last 10 or 12 years, has become extremely good with their products to a point where I can safely today say their products at least in 3G, 4G that we have experienced is significantly superior to Ericsson and Nokia without a doubt. And I use all three of them,” Sunil Mittal, the founder of Airtel, said at a conference last year.

In the same panel, then U.S. commerce secretary Wilbur Ross had urged India and other allies of the U.S. to avoid Huawei.

The geo-political tension between India and China escalated last year with skirmishes at the shared border. India, which early last year amended a rule to make it difficult for Chinese firms to invest in Indian companies, has since banned over 200 apps including TikTok, UC Browser and PUBG Mobile that have ties with China over national security concerns.

India’s move earlier this week follows similar decisions taken by the U.S., U.K. and Australia, all of which have expressed concerns about Huawei and ZTE and their ties with the Chinese government.

“The Chinese side hopes that India could do more to enhance mutual trust and cooperation between the two countries, and provide an open, fair, just, and non-discriminatory investment and business environment for market entities from all countries, including China, to operate and invest in India,” wrote Xiaojian.

Last year, China had expressed “serious concerns” and “firmly opposed” India’s charges that Chinese apps posed national security concerns. The Chinese Embassy had alleged that by banning apps with links to China, New Delhi was engaging in “discriminatory practices” that “violated WTO rules.”

Uber’s mixed Q1 earnings portray an evolving business

Today, Uber followed Lyft in reporting its Q1 2021 earnings this week. And like its rival, its results take a little bit of work to understand. So, this afternoon, we’re going to parse them as a pair so that we both understand what’s going on at the ride-hailing and food-delivery giant.

Let’s start with the big numbers: Uber’s revenue missed sharply, while its profitability beat expectations.

Let’s start with the big numbers: Uber’s revenue missed sharply, while its profitability beat expectations. In numerical terms, Uber reported $2.9 billion in revenue for the three-month period, sharply under the $3.28 billion investors had expected. However, while the street had anticipated that the company would post a $0.54 loss per share, Uber’s GAAP results actually came to a far more modest $0.06 per-share loss.

How did investors vet Uber’s performance? The company’s stock is off around 4% in after-hours trading.

Surprised by the revenue miss? Shocked by the profit beat? Startled by the sharp drop in the value of Uber’s stock? Let’s unpack the numbers.

Uber’s quarter

A number of things impacted Uber’s quarter. The first, of course, was COVID-19. The pandemic shows up in a host of ways across Uber’s results, but most critically it continued to negatively impact Uber’s ride business and positively impact its delivery business.

Turning to numbers, here’s the company’s gross bookings data, which includes both segments:

Image Credits: Uber

A few things to note. First, Uber’s total platform spend went up in aggregate on a year-over-year basis. That’s good. And as we look at the year-over-year changes, that delivery’s growth compared to the year-ago period was nearly legendary. (Postmates is in there, so take that into account.) The ride-hailing business’s decline feels somewhat modest in comparison. And we’d note that Uber’s freight efforts are very nearly material.

SpaceX successfully launches and lands its Starship prototype rocket

SpaceX flew the 15th prototype of its Starship fully reusable next-generation rocket today, with a test flight that included a successful climb to around 30,000 feet, as well as a controlled flip, descent and soft landing upright as planned. A very small fire appeared to break out at the base of the rocket shortly after landing but it was contained. The craft was powered by three Raptor rocket engines, which shut down in sequence prior to the vehicle reaching apogee (it’s highest point, around 10km).

This is a big milestone for SpaceX, which has flown prototypes before, but which hasn’t yet seen a test conclude with the test vehicle intact. Prototypes SN8 and SN9 were destroyed while trying to land, while SN10 exploded shortly after landing. It’s last test launch, SN11, ended in an explosion and total loss of the rocket just before touchdown.

SpaceX CEO Elon Musk confirmed the good touchdown of 150-foot SN15 just after the launch livestream concluded. This is a key step in development of the Starship’s orbital capabilities, which will require the vehicle to perform this landing maneuver after it’s launched to space atop a Super Heavy booster rocket (also in development) and makes the return trip from orbit.

SN15 also features a number of “vehicle improvements across structures, avionics and software” that includes “engines that will allow more speed and efficiency throughout production and flight: specifically, a new enhanced avionics suite, updated propellant architecture in the aft skirt, and a new Raptor engine design and configuration,” SpaceX said on its website.

SpaceX aims to use Starship for future lunar and Mars launches and landings.

The Federal Aviation Administration last week gave authorization for SpaceX to conduct its next three test flights of its Starship program, including Wednesday’s flight. The next two will be the flights of SN16 and SN17 Starships.

SpaceX successfully launches and lands its Starship prototype rocket

SpaceX flew the 15th prototype of its Starship fully reusable next-generation rocket today, with a test flight that included a successful climb to around 30,000 feet, as well as a controlled flip, descent and soft landing upright as planned. A very small fire appeared to break out at the base of the rocket shortly after landing but it was contained. The craft was powered by three Raptor rocket engines, which shut down in sequence prior to the vehicle reaching apogee (it’s highest point, around 10km).

This is a big milestone for SpaceX, which has flown prototypes before, but which hasn’t yet seen a test conclude with the test vehicle intact. Prototypes SN8 and SN9 were destroyed while trying to land, while SN10 exploded shortly after landing. It’s last test launch, SN11, ended in an explosion and total loss of the rocket just before touchdown.

SpaceX CEO Elon Musk confirmed the good touchdown of 150-foot SN15 just after the launch livestream concluded. This is a key step in development of the Starship’s orbital capabilities, which will require the vehicle to perform this landing maneuver after it’s launched to space atop a Super Heavy booster rocket (also in development) and makes the return trip from orbit.

SN15 also features a number of “vehicle improvements across structures, avionics and software” that includes “engines that will allow more speed and efficiency throughout production and flight: specifically, a new enhanced avionics suite, updated propellant architecture in the aft skirt, and a new Raptor engine design and configuration,” SpaceX said on its website.

SpaceX aims to use Starship for future lunar and Mars launches and landings.

The Federal Aviation Administration last week gave authorization for SpaceX to conduct its next three test flights of its Starship program, including Wednesday’s flight. The next two will be the flights of SN16 and SN17 Starships.

Toyota AI Ventures and May Mobility will talk the future of the transportation industry on Extra Crunch Live

Besides a passion for progress in the mobility space, what do Toyota AI Ventures’ Jim Adler, May Mobility’s Nina Grooms Lee and May’s Edwin Olson have in common?

All three of them are joining us on an upcoming episode of Extra Crunch Live. The show goes down on May 12 at 3pm ET/noon PT. Register here for free!

May Mobility is one the most exciting companies to enter the transportation space in the past decade. The autonomous shuttle company has a fleet of autonomous low-speed shuttles spread out between Detroit, Grand Rapids and Providence. Recently, May launched a Lexus-based autonomous shuttle. The company has raised $83.6 million in funding, including a $50 million Series B led by Toyota Motor Corp.

Which brings us this episode of Extra Crunch Live.

Toyota AI Ventures Founding Managing Director Jim Adler will sit down with May Mobility Chief Product Officer Nina Grooms Lee and May co-founder and CEO Edwin Olson to discuss how that Series B deal came about. We’ll talk about what made May stand out to Toyota, and vice versa, and how the teams have worked together since.

We’ll also talk about what to expect out of the ever-changing and growing mobility industry. Register here for free!

As per usual, Grooms Lee, Olson and Adler will lead the Pitch Deck Teardown, giving their live feedback on pitch decks submitted by the audience. Not only can you learn what works, and what doesn’t, in a pitch deck, but you can actually send us your deck to be featured in the episode. If that sounds like your jam, hit up this link.

Extra Crunch Live goes down every Wednesday at 3pm ET/noon PT and is accessible to anyone and everyone. However, on-demand access to the content is reserved exclusively for Extra Crunch members. If you’re not yet a member, what are you waiting for?

The Daily Crunch: Peloton share price falls 14% after product recall and data breach; CEO apologizes

To get a roundup of TechCrunch’s biggest and most important stories delivered to your inbox every day at 3 p.m. PDT, subscribe here

Hello friends and welcome to Daily Crunch, bringing you the most important startup, tech and venture capital news in a single package.

Today’s entry marks the third time the new crew and I have put this note together for you. Frankly, it’s been a blast. We also want to improve the missive over time. So! Shoot me a note directly with your feedback.

Turning to today: I got to help write a long-form piece digging into what drove 2020’s disappointing startup fundraising gender equality numbers. With that in mind, let’s get into the rest of the news. — Alex

Peloton treads backward

Leading the site today was news that former unicorn and now public company Peloton admitted that its treadmill products are dangerous. The company is recalling them. And TechCrunch broke the news that the company has a pretty serious cybersecurity leak. Big ups to Zack for leading our reporting there.

Investors were incensed about the recall. For both its cost, I reckon, but also because the company was arguing in public that consumer safeguard groups were wrong just weeks ago. Imagine if you were an investor, content that Peloton knew better. And then it wound up not knowing better. And now your shares are off 13% to 14% in a single day. (Brian has been great on this story, in case you’re looking for someone new to follow on Twitter. If that’s you, could I also interest you in a 45-minute Power Zone Endurance ride? I’ll be doing one with Matt later. Feel free to join.)

On a more serious note, Peloton faces a grip of competition from Tonal (read our EC-1 here), to Mirror (which exited last year), all the way back to the recently funded Ergatta, which wants you to row at home. With smart tech! All that’s to say that there are lots of startups and venture capital bets aiming at Peloton, and this was a very, very bad day for Big Bike.

Let’s talk about some seed deals

But enough about public companies and their inability to make safe products. Let’s get into some recent venture capital deals that you need to know about. Here are my favorites from the day, and one that I wrote:

Closing up, a note on the amount of money that is still sloshing around the venture capital world. Early Zoom investor Emergence Capital is out with two new funds worth nearly $1 billion. The main vehicle is a sixth early-stage fund worth $575 million. Looking back in time, the company’s fifth fund was worth $435 million. Its fourth was worth just $335 million, Connie reports.

Inflation! Venture style, I suppose. Also having been to dinner at an Emergence partner’s house in a better part of San Francisco than the one I used to live in, I can confirm that some of the company’s funds have done well for both it and its backers. That or he was already rich.

Advice and analysis from Extra Crunch

One CMO’s honest take on the modern chief marketing role

Every C-level executive faces unique challenges, but the chief marketing officer may be the most vulnerable.

Marketing is more art than science, which means everyone from the CEO to the person who waters the office plants can have an opinion about a PR blitz or the latest white paper.

That pressure takes a toll. According to management consultants Korn Ferry, the average tenure of a CMO is 3.5 years, the shortest of all C-suite roles.

In an exposé drawn from his own experience, Daniel Incandela, chief marketing officer of Terminus, shares his thoughts about what startups really expect from their lead storytellers. If you’re looking for a senior marketing role or know someone who is, read and share.

4 strategies for building a digital health unicorn

Two startups in Merck Global Health Innovation Fund’s portfolio — Preventice Holdings and Livongo — exited as unicorns last year.

“And we are expecting two more unicorn exits in 2021,” says GHI Fund President Bill Taranto.

Growing a health tech startup into a billion-dollar company isn’t easy, but it is somewhat straightforward, he says. For example, a CFO should be one of a digital health company’s first employees:

“Hiring just a bookkeeper or an accountant will create headaches for you later as you look to raise capital and support business development.”

(Extra Crunch is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Apple goes Google, naturally

At this point you’ve either decided to tune into the Apple-Epic spat, or you have decided not to. If you have, here’s some more on the matter. If you aren’t into it, we can move on.

But not from Apple, which is following Google into trying to juice more ad dollars from its existing properties and expanding the ad density of its app store search feature. Here’s Sarah:

Apple is introducing a new way for developers to advertise on the App Store. Previously, developers could promote their apps after users initiated a search on the App Store by targeting specific keywords. For example, if you typed in “taxi,” you might then see an ad by Uber in the top slot above the search results. The new ad slot, however, will reach users before they search.

If this is what Apple is doing to its products now, imagine what comes next. Happily I don’t like apps, so I will largely avoid these ads.

Turning to the rest of Big Tech, we’ve seen better-than-expected earnings from Lyft this week, with Uber set to report after the bell today. Kirsten and I are cooking up something longer on both sets of results soon.

Also in the Big Tech bucket are a new clone from Facebook, this time of Nextdoor, Twitter trying to get you to post better tweets, and a new cloud framework that Ron reports is getting a nod of approval from Microsoft and Google and IBM.

Finally, the Equity crew spoke to two CFOs about the efficacy and morality of going public earlier. Honestly, it was a blast.

Chime has agreed to stop using the word “bank,” after a California regulator pushed back

Chime can apparently call itself the “fastest-growing fintech in the U.S.” but it has agreed to stop referring to itself as a “bank,” per a new report out of American Banker.

Evidently, the eight-year-old, San Francisco-based outfit was the target of an investigation by the California Department of Financial Protection and Innovation after Chime used “chimebank” in its website address, as well as used “bank” and “banking” elsewhere in its advertisements, according to the agency in a settlement agreement.

As noted by AB, Chime made the decision to settle ahead of a deadline imposed by the regulatory body.

The development shouldn’t surprise anyone familiar with banking laws. No outfit can represent itself as a bank or credit union unless it’s licensed to engage in the business of banking. The commission that pushed back on the startup issues such licenses and regulates state-chartered banks in the state of California through the Department of Financial Protection and Innovation and said in the settlement that “at all relevant times herein, Chime was not licensed to operate as a bank in California or in any other jurisdiction, nor was it exempt from such licensure.”

Chime has at times attempted to draw a distinction between itself and a bank. When the company raised its most recent round of funding — a $485 million Series F round last September that valued the business at $14.5 billion — CEO Chris Britt told CNBC: “We’re more like a consumer software company than a bank . . . It’s more a transaction-based, processing-based business model that is highly predictable, highly recurring and highly profitable.”

Still, Chime, like many newer fintech companies, has seemingly embraced the term “neobank” and “challenger bank” and perhaps it’s no wonder. It’s certainly easier to convey to consumers what it is selling, which is banking services that include — in this case —  debit cards, spending accounts, and savings accounts, all offered through users’ mobile phones.

Given the settlement, expect to see more startups like Chime make clearer that in most cases, they do not have a bank charter and instead are being provided services by banks that do. In Chime’s case, for example, it now makes more plain on its website that it is a “financial technology company” and “not a bank” and that its services are being provided by the The Bancorp Bank and Stride Bank, which are both FDIC members.