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No pan-EU Huawei ban as Commission endorses 5G risk mitigation plan
The European Commission has endorsed a risk mitigation approach to managing 5G rollouts across the bloc — meaning there will be no pan-EU ban on Huawei. Rather it’s calling for Member States to coordinate and implement a package of “mitigating measures” in a 5G toolbox it announced last October and has endorsed today.
“Through the toolbox, the Member States are committing to move forward in a joint manner based on an objective assessment of identified risks and proportionate mitigating measures,” it writes in a press release.
It adds that Member States have agreed to “strengthen security requirements, to assess the risk profiles of suppliers, to apply relevant restrictions for suppliers considered to be high risk including necessary exclusions for key assets considered as critical and sensitive (such as the core network functions), and to have strategies in place to ensure the diversification of vendors”.
The move is another blow for the Trump administration — after the UK government announced yesterday that it would not be banning so-called “high risk” providers from supplying 5G networks.
Instead the UK said it will place restrictions on such suppliers — barring their kit from the “sensitive” ‘core’ of 5G networks, as well as from certain strategic sites (such as military locations), and placing a 35% cap on such kit supplying the access network.
However the US has been amping up pressure on the international community to shut the door entirely on the Chinese tech giant, claiming there’s inherent strategic risk in allowing Huawei to be involved in supplying such critical infrastructure — with the Trump administration seeking to demolish trust in Chinese-made technology.
Next-gen 5G is expected to support a new breed of responsive applications — such as self-driving cars and personalized telemedicine — where risks, should there be any network failure, are likely to scale too.
But the Commission take the view that such risks can be collectively managed.
The approach to 5G security continues to leave decisions on “specific security” measures as the responsibility of Member States. So there’s a possibility of individual countries making their own decisions to shut out Huawei. But in Europe the momentum appears to be against such moves.
“The collective work on the toolbox demonstrates a strong determination to jointly respond to the security challenges of 5G networks,” the EU writes. “This is essential for a successful and credible EU approach to 5G security and to ensure the continued openness of the internal market provided risk-based EU security requirements are respected.”
The next deadline for the 5G toolbox is April 2020, when the Commission expects Member States to have implemented the recommended measures. A joint report on their implementation will follow later this year.
Key actions being endorsed in the toolbox include:
- Strengthen security requirements for mobile network operators (e.g. strict access controls, rules on secure operation and monitoring, limitations on outsourcing of specific functions, etc.);
- Assess the risk profile of suppliers; as a consequence, apply relevant restrictions for suppliers considered to be high risk – including necessary exclusions to effectively mitigate risks – for key assets defined as critical and sensitive in the EU-wide coordinated risk assessment (e.g. core network functions, network management and orchestration functions, and access network functions);
- Ensure that each operator has an appropriate multi-vendor strategy to avoid or limit any major dependency on a single supplier (or suppliers with a similar risk profile), ensure an adequate balance of suppliers at national level and avoid dependency on suppliers considered to be high risk; this also requires avoiding any situations of lock-in with a single supplier, including by promoting greater interoperability of equipment;
The Commission also recommends that Member States should contribute towards increasing diversification and sustainability in the 5G supply chain and co-ordinate on standardization around security objectives and on developing EU-wide certification schemes.
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Samsung invests $500M to set up a smartphone display plant in India
Samsung, which once led India’s smartphone market, is investing $500 million in its India operations to set up a manufacturing plant at the outskirts of New Delhi to produce displays.
The company disclosed the investment and its plan in a filing to the local regulator earlier this month. The South Korean giant said the plant would produce displays for smartphones as well as a wide-range of other electronics devices.
In the filing, the company disclosed that it has allocated some land area from its existing factory in Noida for the new plant.
In 2018, Samsung opened a factory in Noida that it claimed was the world’s largest mobile manufacturing plant. For that factory, the company had committed to spend about $700 million.
The new plant should help Samsung further increase its capacity to produce smartphone components locally and access a range of tax benefits that New Delhi offers.
Those benefits would come in handy to the company as it faces off Xiaomi, the Chinese smartphone vendor that put an end to Samsung’s lead in India.
Samsung is now the second largest smartphone player in India, which is the world’s second largest market with nearly 500 million smartphone users. The company in recent months has also lost market share to Chinese brand Realme, which is poised to take over the South Korean giant in the quarter that ended in December last year, according to some analysts.
TechCrunch has reached out to Samsung for comment.
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Taiwan’s entrepreneurs move forward after tense presidential election
Last Saturday, Taiwanese voters re-elected President Tsai Ing-wen to her second term after an election that split the country among generational and ideological lines. A crucial issue were the differences in how Tsai, a member of the Democratic Progressive Party (DPP), and her main opponent, Han Kuo-yu of the Kuomintang (KMT), approach Taiwan’s fraught relationship with China.
Despite the highly polarizing run-up to the election, however, both the DPP and KMT have taken measures to foster entrepreneurship in Taiwan. Now that Tsai has won, many investors don’t expect a dramatic impact, but instead are keeping an eye on how policies put in motion by both parties will play out. They are also looking for political allies who understand the startup ecosystem in Taiwan, which is often overshadowed by large hardware OEMs and semiconductor companies.
Policy
Joseph Huang, an investment partner at Infinity Ventures, has worked with both the DPP and KMT as limited partners, and says “from our side, they are always asking for how to create more awareness of Taiwan startups, how do we help them with institutions, how do we help them more?”
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Former Google Pay execs raise $13.2M to build neo-banking platform for millennials in India
Two co-founders of Google Pay in India are building a neo-banking platform in the country — and they have already secured backing from three top VC funds.
Sujith Narayanan, a veteran payments executive who co-founded Google Pay in India (formerly known as Google Tez), said on Monday that his startup, epiFi, has raised $13.2 million in its Seed financial round led by Sequoia India and Ribbit Capital. The round valued epiFi at about $50 million.
David Velez, the founder of Brazil-based neo-banking giant Nubank, Kunal Shah, who is building his second payments startup CRED in India, and VC fund Hillhouse Capital also participated in the round.
The eight-month-old startup is working on a neo-banking platform that will focus on serving millennials in India, said Narayanan, in an interview with TechCrunch.
“When we were building Google Tez, we realized that a consumer’s financial journey extends beyond digital payments. They want insurance, lending, investment opportunities and multiple products,” he explained.
The idea, in part, is to also help users better understand how they are spending money, and guide them to make better investments and increase their savings, he said.
At this moment, it is unclear what the convergence of all of these features would look like. But Narayanan said epiFi will release an app in a few months.
Working with Narayanan on epiFi is Sumit Gwalani, who serves as the startup’s co-founder and chief product and technology officer. Gwalani previously worked as a director of product management at Google India and helped conceptualize Google Tez. In a joint interview, Gwalani said the startup currently has about two-dozen employees, some of whom have joined from Netflix, Flipkart, and PayPal.
Shailesh Lakhani, Managing Director of Sequoia Capital India, said some of the fundamental consumer banking products such as savings accounts haven’t seen true innovation in many years. “Their vision to reimagine consumer banking, by providing a modern banking product with epiFi, has the potential to bring a step function change in experience for digitally savvy consumers,” he said.
Cash dominates transactions in India today. But New Delhi’s move to invalidate most paper bills in circulation in late 2016 pushed tens of millions of Indians to explore payments app for the first time.
In recent years, scores of startups and Silicon Valley firms have stepped to help Indians pay digitally and secure a range of financial services. And all signs suggest that a significant number of people are now comfortable with mobile payments: More than 100 million users together made over 1 billion digital payments transaction in October last year — a milestone the nation has sustained in the months since.
A handful of startups are also attempting to address some of the challenges that small and medium sized businesses face. Bangalore-based Open, NiYo, and RazorPay provide a range of features such as corporate credit cards, a single dashboard to manage transactions and the ability to automate recurring payouts that traditional banks don’t currently offer. These platforms are also known as neo-bank or challenger banks or alternative banks. Interestingly, most neo-banking platforms in South Asia today serve startups and businesses — not individuals.
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PayU acquires controlling stake in Indian credit business PaySense, to merge it with LazyPay
PayU is acquiring a controlling stake in fintech startup PaySense at a valuation of $185 million and plans to merge it with its credit business LazyPay as the nation’s largest payments processor aggressively expands its financial services offering.
The Prosus-owned payments giant said on Friday that it will pump $200 million — $65 million of which is being immediately invested — into the new enterprise in the form of equity capital over the next two years. PaySense, which employs about 240 people, has served more than 5.5 million consumers to date, a top executive said.
Prior to today’s announcement, PaySense had raised about $25.6 million from Nexus Venture Partners, and Jungle Ventures, among others. PayU became an investor in the five-year-old startup’s Series B financing round in 2018. Regulatory filings show that PaySense was valued at about $48.7 million then.
The merger will help PayU solidify its presence in the credit business and become one of the largest players, said Siddhartha Jajodia, global head of Credit at PayU, in an interview with TechCrunch. “It’s the largest merger of its kind in India,” he said. The combined entity is valued at $300 million, he said.
PaySense enables consumers to secure long-term credit for financing their new vehicle purchases and other expenses. Some of its offerings overlap with those of LazyPay, which primarily focuses on providing short-term credit to consumers to facilitate orders on food delivery platforms, e-commerce websites and other services. Its credit ranges between $210 and $7,030.
Cumulatively, the two services have disbursed more than $280 million in credit to consumers, said Jajodia. He aims to take this to “a couple of billion dollars” in the next five years.
PaySense’s Prashanth Ranganathan and PayU’s Siddhartha Jajodia pose for a picture
As part of the deal, PaySense and LazyPay will build a common and shared technology infrastructure. But at least for the immediate future, LazyPay and PaySense will continue to be offered as separate services to consumers, explained Prashanth Ranganathan, founder and chief executive of PaySense, in an interview with TechCrunch.
“Over time, as the businesses get closer, we will make a call if a consolidation of brands is required. But for now, we will let consumers direct us,” added Ranganathan, who will serve as the chief executive of the combined entity.
There are about a billion debit cards in circulation in India today, but only about 20 million people have a credit card. (The official government figures show that about 50 million credit cards are active in India, but many individuals tend to have more than one card.)
This has meant that most Indians don’t have a traditional credit score, so they can’t secure loans and a range of other financial services from banks. Scores of startups in India today are attempting to address this opportunity by using other signals and alternative data of users — such as the kind of a smartphone a person has — to evaluate whether they are worthy of being granted some credit.
Digital lending is a $1 trillion opportunity (PDF) over the next four and a half years in India, according to estimates from Boston Consulting Group.
PayU’s Jajodia said PaySense and LazyPay will likely explore building new offerings, such as credit for small and medium businesses. He did not rule out the possibility of getting stakes in more fintech startups in the future. PayU has already invested north of half a billion dollars in its India business. Last year, it acquired Wibmo for $70 million.
“At PayU, our ambition is to build financial services using data and technology. Our first two legs have been payments [processing] and credit. We will continue to scale both of these businesses. Even this acquisition was about getting new capabilities and a strong management team. If we find more companies with some unique assets, we may look at them,” he said.
PayU leads the payments processing market in India. It competes with Bangalore-based RazorPay. In recent years, RazorPay has expanded to serve small businesses and enterprises. In November, it launched corporate credit cards and other services to strengthen its neo banking play.
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India’s Reliance Jio rolls out Wi-Fi calling feature
Two of the top three telecom operators in India are beginning to address one of the biggest challenges hundreds of millions of their subscribers face in the country each day: poor call quality and abrupt voice drops.
Reliance Jio, India’s second largest telecom operator, announced today that it now supports voice and video calling functionality over Wi-Fi networks. The 4G-only network said it has started to roll out the feature to all of its subscribers in India and expects to reach all of its 360 million consumers by next week.
The rollout of calls over Wi-Fi functionality on Jio comes weeks after Airtel, India’s third largest telecom operator with more than 260 million subscribers, began to support this feature in select places in the country. Neither of the operators are levying any additional fee for this feature and say that their subscribers can place phone calls over Wi-Fi across the networks.
Wi-Fi calling is a popular feature that enables users to latch onto their wireless internet connection to make phone calls. These calls tend to be of much better quality than those that rely on traditional telecom infrastructure. In the U.S., T-Mobile, Verizon (which owns TechCrunch) and AT&T began to offer this feature in late 2015 and early 2016.
In many markets such as India, calls over internet began to gain traction four to five years ago after services such as WhatsApp enabled such functionality. In the years since, telecom operators have also rolled out support for calls over LTE networks.
Airtel currently supports Wi-Fi calling in select circles — such as Mumbai, Kolkata, Andhra Pradesh, Karnataka and Tamil Nadu — and requires its users to be a subscriber of Airtel broadband service. It also works only on a handful of smartphone models.
Reliance Jio, on the other hand, supports more than 150 smartphone models, including several recent iPhone generations and a wide range of mid-tier and high-end Android smartphones. A Reliance Jio spokesperson told TechCrunch that Jio’s Wi-Fi calling functionality works on any Wi-Fi network.
Akash Ambani, director of Jio, said Reliance Jio consumers already use more than 900 minutes of voice calling every month. “The launch of Jio Wi-Fi Calling will further enhance every Jio consumer’s voice-calling experience, which is already a benchmark for the industry with India’s-first all VoLTE network,” he said in a statement.
Vodafone, which at the last count (PDF) was ahead of Reliance Jio by a few million subscribers, is yet to offer this functionality. The announcement follows price hikes by all the top three telecom networks in India.
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As Indian startups raise record capital, losses are widening
Indian tech startups secured nearly $14 billion in 2019, more than they have raised in any other year. This is a major rebound since 2016, when startups in the nation had bagged just $4.3 billion.
But even as more VC funds — many with bigger checks — arrive in India, the financial performance of startups remains a cause for concern.
Whether it’s mobile payments or education learning apps, each startup today faces dozens of competitors in their category. Many of these sectors, such as social commerce and digital bookkeeping, are just beginning to see traction in India, which has resulted in investors backing a large number of similar players.
This has meant more marketing spends; to create awareness among consumers (or merchants) and stand out in a crowd, many firms are heavily marketing their services and offering lofty cashbacks to win users.
What is especially troublesome for startups is that there is no clear path for how they would ever generate big profits. Silicon Valley companies, for instance, have entered and expanded into India in recent years, investing billions of dollars in local operations, but yet, India has yet to make any substantial contribution to their bottom lines.
If that wasn’t challenging enough, many Indian startups compete directly with Silicon Valley giants, which while impressive, is an expensive endeavor.
How expensive? Here’s an exhaustive look at the financial performance of several notable startups and major firms in India as disclosed by them to local regulators in recent weeks. These are Financial Year 2019 figures, which ended on March 31, 2019. Some of the filings were provided to TechCrunch by business intelligence platform Tofler.
Flipkart
Flipkart, which sold a majority stake to Walmart for $16 billion last year, posted a consolidated revenue of $6.11 billion for the financial year that ended in March. Its revenue is up 42% since last year, and its loss, at $2.4 billion, represents a 64% improvement during the same period. The ecommerce giant this year has expanded into many new categories, including food retail.
BigBasket
BigBasket delivers groceries and perishables across India and became a unicorn this year after it raised a $150M Series F led by Mirae Asset-Naver Asia Growth Fund, the U.K.’s CDC Group and Alibaba. The startup posted revenue of $386 million, up from $221 million last year. Its loss, however, more than doubled to $80 million from $38 million during the same period.
Grofers
BigBasket rival Grofers, which raised $200 million in a financing round led by SoftBank Vision Fund, reported $62.6 million on revenue of $169 million. The company’s chief executive and co-founder, Albinder Dhindsa, has said that the startup is on track to sell goods worth $699 million by the end of FY 2020.
MilkBasket
Milkbasket, a micro-delivery startup that allows users to order daily supplies, reported revenue of $11.8 million, up from $4 million last year. During this period, its loss widened to $1.3 million, from $130,000 last year.
Lenskart
Lenskart is an omni-channel retailer for eyewear products. Earlier this month, it raised $275 million this month from SoftBank Vision Fund. It posted a revenue of $68 million — and its loss shrank from $16.5 million to $3.8 million in one year.
Rivigo
Rivigo, a five-year-old startup that is attempting to build a more reliable and safer logistics network, raised $65 million in July this year. Its revenue increased 42% to $143.8 million while its loss also increased to $83 million.
Delhivery
SoftBank-backed logistics firm Delhivery, which raised $413 million earlier this year from SoftBank and others, said its revenue has grown 58% to $237 million since FY18, while its loss has almost tripled to $249 million.
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India’s HomeLane raises $30M to expand its one-stop shop for interior design
HomeLane, a Bangalore-based startup that helps people manage home renovations and interior design, today announced it has raised $30 million in a new financing round as it looks to expand its proprietary technology.
The financing round, dubbed Series D, was led by Evolvence India Fund (EIF), Pidilite Group and FJ Labs. Existing investors Accel Partners, Sequoia Capital and JSW Ventures also participated in the round, which pushes the five-year-old startup’s all-time raise to $46 million.
HomeLane helps property owners furnish and install fixtures in their new apartments and houses. Interior designers need to be local to customers and supply chain partners need to have the capacity to ship to a location. So HomeLane has established 16 experience centers in seven Indian cities so consumers can touch and see materials and furniture.
The startup plans to use the fresh capital to broaden its technology infrastructure and expand to eight to 10 additional cities.
HomeLane competes with other online furniture sellers such as Livspace and Urban Ladder, as well as brick-and-mortar stores. Founders Rama Harinath and Srikanth Iyer say their startup differentiates by offering a one-stop shop — it sells everything from fitted kitchens and wardrobes to entertainment units and shoe racks — and by providing guaranteed on-time delivery and after-sale services to help homeowners finish projects.
The site allows property owners to upload floor plans, which are reviewed by interior designers who provide product suggestions, price quotes and 3D pictures of how furnishings and fixtures will look after they are installed. The startup, which has worked with more than 900 design experts to deliver over 6,000 projects, pays to the designers a fraction of the money it charges customers.
Iyer, who serves as the chief executive of HomeLane, claimed that the startup is inching closer to being EBIDTA profitable (which does not include taxes and a range of other expenses). That would be a notable turnaround for HomeLane, which reported a net loss of $4.1 million on revenue of $5.6 million in the financial year that ended in March 2018.
Prashanth Prakash, a partner at Accel India, said, “We are very happy with HomeLane’s current growth trajectory and are believers in the long-term growth prospects of the home improvement consumer segment in India.”
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TikTok’s national security scrutiny tightens as U.S. Navy reportedly bans popular social app
TikTok may be the fastest-growing social network in the history of the internet, but it is also quickly becoming the fastest-growing security threat and thorn in the side of U.S. China hawks.
The latest, according to a notice published by the U.S. Navy this past week and reported on by Reuters and the South China Morning Post, is that TikTok will no longer be allowed to be installed on service members’ devices, or they may face expulsion from the military service’s intranet.
It’s just the latest example of the challenges facing the extremely popular app. Recently, Congress led by Missouri senator Josh Hawley demanded a national security review of TikTok and its Sequoia-backed parent company ByteDance, along with other tech companies that may share data with foreign governments like China. Concerns over the leaking of confidential communications recently led the U.S. government to demand the unwinding of the acquisition of gay social network app Grindr from its Chinese owner Beijing Kunlun.
The intensity of criticism on both sides of the Pacific has made it increasingly challenging to manage tech companies across the divide. As I recently discussed here on TechCrunch, Shutterstock has actively made it harder and harder to find photos deemed controversial by the Chinese government on its stock photography platform, a play to avoid losing a critical source of revenue.
We saw similar challenges with Google and its Project Dragonfly China-focused search engine as well as with the NBA.
What’s interesting here though is that companies on both sides are struggling with policy on both sides. Chinese companies like ByteDance are increasingly being targeted and stricken out of the U.S. market, while American companies have long struggled to get a foothold in the Middle Kingdom. That might be a more equal playing field than it has been in the past, but it is certainly a less free market than it could be.
While the trade fight between China and the U.S. continues, the damage will continue to fall on companies that fail to draw within the lines set by policymakers in both countries. Whether any tech company can bridge that divide in the future unfortunately remains to be seen.
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Indian B2B food tech startup HungerBox raises $12M from Paytm and others
HungerBox, an Indian food tech startup that has courted 10 of the 11 largest companies in the country to use its services, today announced it has raised $12 million from Paytm and others as it looks to sign clients in Southeast Asia.
The three-year-old startup’s new financing round, a Series C, was funded by a consortium of Indian and international investors, including payments firm Paytm and NPTK, an Asian VC fund that invests in emerging firms. Existing investors Sabre Partners and Neoplux also participated in the round, which pushes the Bangalore-based startup’s to-date raise to $16.5 million.
HungerBox offers management services to companies and institutions to improve and run their in-house cafeterias and canteens. HungerBox also enables its clients to connect with food partners through an app and get real-time updates of their order.
The startup, which also provides these firms with a point-of-sale machine, helps them get better insight into the quality of food being catered to their employees, and enables scheduled delivery and tracking of orders to address the long queues, said Sandipan Mitra, co-founder and chief executive of HungerBox, in an interview with TechCrunch.
“We all talk about the food delivery to consumers, but not many are looking to improve the quality of food and how it is being catered to tens of millions of employees in the country each day,” he said. “It’s a challenge that has not been addressed well.”
It turns out, when a startup finally looked into the space, many quickly jumped to appreciate it. HungerBox has amassed more than 126 large businesses and institutions — with more than 100,000 workforce each, across 18 Indian cities, said Mitra. Food delivery startups Swiggy and Zomato have started to explore this space, too, in recent quarters.
HungerBox is processing 560,000 orders each day, a figure that is growing 10% every month, claimed Mitra. The startup’s solutions are today employed at more than 535 cafeterias for its clients that work in IT / technology, retail, healthcare, aviation, education, financial services and manufacturing, he said. He declined to reveal the name of the clients, citing confidential agreements.
Annual food sales on the HungerBox platform have exceeded $100 million, he said.
The startup, which employs 1,500 people, will use the fresh capital to fuel its expansion in 10 additional Indian cities and to markets in Southeast Asia, said Mitra.
In a statement, Madhur Deora, president of Paytm, said HungerBox has enabled Paytm to add new use cases for the company’s payments business and digitization of offline transactions.
“HungerBox is the market leader in the institutional food tech space and we will partner closely with them and bring the benefits of Paytm’s ecosystem to HungerBox,” he said.
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