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Fastly, the content delivery network, files for an IPO

Fastly, the content delivery network that’s raised $219 million in financing from investors (according to Crunchbase), is ready for its close up in the public markets.

The eight-year-old company is one of several businesses that improve the download time and delivery of different websites to internet browsers and it has just filed for an IPO.

Media companies like The New York Times use Fastly to cache their homepages, media and articles on Fastly’s servers so that when somebody wants to browse the Times online, Fastly’s servers can send it directly to the browser. In some cases, Fastly serves up to 90 percent of browser requests.

E-commerce companies like Stripe and Ticketmaster are also big users of the service. They appreciate Fastly because its network of servers enable faster load times — sometimes as quickly as 20 or 30 milliseconds, according to the company.

The company raised its last round of financing roughly nine months ago, a $40 million investment that Fastly said would be the last before a public offering.

Fastly raises another $40 million before an IPO

True to its word, the company is hoping public markets have the appetite to feast on yet another “unicorn” business.

While Fastly lacks the sizzle of companies like Zoom, Pinterest or Lyft, its technology enables a huge portion of the activities in which consumers engage online, and it could be a bellwether for competitors like Cloudflare, which recently raised $150 million and was also exploring a public listing.

The company’s public filing has a placeholder amount of $100 million, but given the amount of funding the company has received, it’s far more likely to seek closer to $1 billion when it finally prices its shares.

Fastly reported revenue of roughly $145 million in 2018, compared to $105 million in 2017, and its losses declined year on year to $29 million, down from $31 million in the year-ago period. So its losses are shrinking, its revenue is growing (albeit slowly) and its cost of revenues are rising from $46 million to around $65 million over the same period.

That’s not a great number for the company, but it’s offset by the amount of money that the company’s getting from its customers. Fastly breaks out that number in its dollar-based net expansion rate figure, which grew 132 percent in 2018.

It’s an encouraging number, but as the company notes in its prospectus, it’s got an increasing number of challenges from new and legacy vendors in the content delivery network space.

The market for cloud computing platforms, particularly enterprise-grade products, “is highly fragmented, competitive and constantly evolving,” the company said in its prospectus. “With the introduction of new technologies and market entrants, we expect that the competitive environment in which we compete will remain intense going forward. Legacy CDNs, such as Akamai, Limelight, EdgeCast (part of Verizon Digital Media), Level3, and Imperva, and small business-focused CDNs, such as Cloudflare, InStart, StackPath, and Section.io, offer products that compete with ours. We also compete with cloud providers who are starting to offer compute functionality at the edge like Amazon’s CloudFront, AWS Lambda, and Google Cloud Platform.”

Facebook plans to launch ‘GlobalCoin’ cryptocurrency in 2020

Mark Zuckerberg met governor of Bank of England last month to discuss decision

Facebook is planning to launch its own cryptocurrency in early 2020, allowing users to make digital payments in a dozen countries.

The currency, dubbed GlobalCoin, would enable Facebooks 2.4 billion monthly users to change dollars and other international currencies into its digital coins. The coins could then be used to buy things on the internet and in shops and other outlets, or to transfer money without needing a bank account.

Mark Zuckerberg, the founder and chief executive of Facebook, last month met the governor of the Bank of England, Mark Carney, to discuss the plans, according to the BBC.

Q&A

What is cryptocurrency?

A cryptocurrency is a form of digital asset that relies on a peer-to-peer network of users.

Sharing many of the features of traditional currencies, crypto assets can be used as a medium of exchange and a store of value for users.

Cryptocurrencies rely on so-called distributed ledger technology, which enables the authentication of transactions without them needing to be handled or guaranteed by a central authority. For that reason they are outside the control of governments and are unregulated by financial watchdogs.

If you own a crypto asset you control a secret digital key that you can use to prove to anyone on the network that a certain amount of that asset is yours.

If you spend it you tell the entire network that you have transferred ownership of it and use the same key to prove that you are telling the truth. Over time, the history of all those transactions becomes a lasting record of who owns what: that record is called the blockchain.

Bitcoin is the first and biggest cryptocurrency and has been on a wild ride since its creation in 2009, surging in value as investors piled in, drawing comparisons with the Tulip mania of the 17th century before it crashed in 2018. Sceptics warn that the lack of central control make crypto assets ideal for criminals and terrorists.

The number of crypto assets available has grown rapidly, including from several major companies. JP Morgan has built its own cryptocurrencies, while trading in traditional financial assets that track the value of cryptocurrencies such as derivatives and contracts for difference have also become available. Richard Partington

Zuckerberg has also discussed the proposal, known as Project Libra, with US Treasury officials and is in talks with money transfer firms, including Western Union, to develop cheap, safe ways for people to send and receive money. A report last year said Facebook is working on a cryptocurrency that would let users transfer money using WhatsApp, its encrypted mobile-messaging app.

Payments is one of the areas where we have an opportunity to make it a lot easier, Zuckerberg told the companys developer conference last month. I believe it should be as easy to send money to someone as it is to send a photo.

In order to try to stabilise the digital currency the company is looking to peg its value to a basket of established currencies, including the US dollar, the euro and the Japanese yen.

Facebook is also looking at paying users fractions of a coin for activities such as viewing ads and interacting with content related to online shopping, similar to loyalty schemes run by retailers.

However, experts believe that regulatory issues and Facebooks poor track record on data privacy and protection are likely to prove to be the biggest hurdles to making the currency a success.

Facebook is not regulated in the same way as banks are, and the cryptocurrency industry is, by definition almost, unregulated, said Rebecca Harding, chief executive of banking trade data analytics firm Coriolis Technologies.

In the UK, for example, there are no formal laws that govern this market because cryptocurrencies are not legal tender. Facebook has also had issues with protecting user data in the past few years and this may well be an issue for it as it tries to provide guarantees to users that their financial information is safe.

Following an Observer investigation last year, it emerged that the data of up to 87 million Facebook users had been used improperly by Cambridge Analytica to target ads for Donald Trump in the 2016 US presidential election.

Earlier this month the US Senate committee on banking wrote an open letter to Zuckerberg asking how the currency would work, what consumer protection would be offered and how data would be secured.

It has also emerged that Zuckerberg held talks with the billionaire Winklevoss twins, Cameron and Tyler, whose bitter legal battle over the origins of Facebook was chronicled in the film The Social Network. The twins, who went to Harvard with Zuckerberg and later sued him for stealing their idea for a social network, founded the cryptocurrency exchange, Gemini, in 2014.

In the highly unregulated world of cryptocurrencies Gemini is notable as being one of the first two companies to win regulatory approval to launch a digital currency pegged to the US dollar, the Gemini dollar.

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It emerged last month that Facebook is looking for $1bn (790m) in funding to support the project, and has held talks with payments giants including Visa and Mastercard.

Facebook has been long expected to make a move in financial services, having hired the former PayPal president David Marcus to run its messaging app in 2014. Marcus, a board member of crypto exchange Coinbase, runs Facebooks blockchain initiatives, the technology on which cryptocurrencies run.

In February JP Morgan became the first major US bank to create its own cryptocurrency, JPM Coin, as a way for its clients to settle payments.

Luxury consignment e-tailer The RealReal to enter the unicorn club with new funding

The RealReal, an online retailer for authenticated luxury consignment, has authorized the sale of up to $70 million in new shares, per a Delaware stock authorization filing discovered by the Prime Unicorn Index. If the company raises the entire amount, it would reach a valuation of $1.06 billion, cementing its status as the newest e-commerce unicorn.

The filing doesn’t guarantee The RealReal will sell the full amount of authorized shares. The company declined to comment on its fundraising plans.

The RealReal is led by founder and chief executive officer Julie Wainwright (pictured), the former CEO of Pets.com, a company now synonymous with the dot-com bust. It has raised quite a bit of capital to date — a total of $288 million from venture capital and private equity backers, including Great Hill Partners, Sandbridge Capital, PWP Growth Equity, Industry Ventures, Greycroft Partners and Canaan Partners. Most recently, The RealReal closed a Series G financing of $115 million in July 2018 that valued the business at $745 million, per PitchBook.

The RealReal has recently expanded its brick-and-mortar footprint and added additional e-commerce fulfillment centers as demand increased for its supply of second-hand luxury items. Founded in 2011, the company operates eight luxury consignment offices, where customers can receive free valuations of their luxury items. The RealReal is headquartered in San Francisco.

In a conversation with TechCrunch in 2017, Wainwright confirmed the company’s intent to go public at some point. With this upcoming round, The RealReal would be well placed for a 2020 initial public offering.

“That’s the goal,” Wainwright said during the interview. “We really aren’t in the mood to sell the business, we’re in the mood to go public at some point in the future.”

The RealReal competes with fellow second-hand e-tailers ThredUp and Poshmark . The latter is gearing up for a fall IPO, according to The Wall Street Journal. The online marketplace has tapped Morgan Stanley and Goldman Sachs to lead its offering after closing in on $150 million in revenue in 2018. ThredUp, another major player in the fashion retail market, hasn’t raised capital since 2015, but did begin opening physical stores in 2017 as part of its greater effort to compete with fellow venture-backed second-hand e-tailers.

The RealReal would also be the latest in a series of high-profile female-founded companies to gain unicorn status. Glossier tripled its valuation to $1.2 billion with a $100 million round earlier this year, followed by Rent the Runway, which attracted a $125 million investment at a $1 billion valuation, to name a few.

Africa Roundup: Jumia files for IPO, OneFi acquires Amplify, FlexClub expands in Mexico

Less than a decade ago IPOs, acquisitions and global expansion by African startups were more possibility than reality. March saw all three from the continent’s tech scene.

Pan-African e-commerce company Jumia filed for an IPO on the New York Stock Exchange, per SEC documents and confirmation from chief executive Sacha Poignonnec.

In an updated filing, (since the March 12 original) Jumia indicated it will offer 13,500,000 ADR shares, for an offering price of $13 to $16 per share to trade under the ticker symbol “JMIA.” The IPO could raise up to $216 million for Jumia.

Since our first story (and reflected in the latest SEC docs), Mastercard Europe agreed upfront to buy $50 million in Jumia ordinary shares.

With a smooth filing process, Jumia will become the first African startup to list on a major global exchange. The company is incorporated in Germany, but maintains its headquarters in Nigeria, and operates exclusively in Africa, with 4,000 employees on the continent.

The pending IPO creates another milestone for Jumia. The venture became the first African startup unicorn in 2016, achieving a $1 billion valuation after a funding round that included Goldman Sachs, AXA and MTN.

Founded in Lagos in 2012 with Rocket Internet backing, Jumia now operates multiple online verticals in 14 African countries. Goods and services lines include Jumia Food (an online takeout service), Jumia Flights (for travel bookings) and Jumia Deals (for classifieds). Jumia processed more than 13 million packages in 2018, according to company data. The company has started to generate annual revenues over $100 million, but like many burn-rate startups, has done so while racking up big losses.

There’ll be a lot more to cover, analyze and debate pre and post Jumia’s NYSE bell toll — which could happen in coming weeks or months. For example, can Jumia generate a profit; is it really an African startup; will Jumia become an acquisition target for a big outside name or an acquirer of smaller startups in African e-commerce? Stay tuned for continuing TechCrunch coverage.

On the acquisition front, Lagos-based online lending startup OneFi bought Nigerian payment solutions company Amplify for an undisclosed amount.

OneFi is taking over Amplify’s IP, team and client network of more than 1,000 merchants to which Amplify provides payment processing services, OneFi CEO Chijioke Dozie told TechCrunch.

The purchase of Amplify caps off a busy period for OneFi. Over the last seven months the Nigerian venture secured a $5 million lending facility from Lendable, announced a payment partnership with Visa and became one of the first (known) African startups to receive a global credit rating. OneFi is also dropping the name of its signature product, Paylater, and will simply go by OneFi (for now).

Collectively, these moves represent a pivot for OneFi away from operating primarily as a digital lender, toward becoming an online consumer finance platform.

“We’re not a bank but we’re offering more banking services…Customers are now coming to us not just for loans but for cheaper funds transfer, more convenient bill payment, and to know their credit scores,” said Dozie.

OneFi will add payment options for clients on social media apps, including WhatsApp, this quarter — something in which Amplify already holds a specialization and client base. Through its Visa partnership, OneFi will also offer clients virtual Visa wallets on mobile phones and start providing QR code payment options at supermarkets, on public transit and across other POS points in Nigeria.

On the back of the acquisition, OneFi is in the process of raising a round and will look to expand internationally, considering Senegal, Côte d’Ivoire, DRC, Ghana and Egypt and Europe for Diaspora markets.

On African startups expanding globally, FlexClub — a South African venture that matches investors and drivers to cars for ride-hailing services — announced it will expand in Mexico in a partnership with Uber after closing a $1.2 million seed round led by CRE Venture Capital.

The move comes as Africa’s tech-transit space continues to produce unique mobility solutions shaped around local needs.

FlexClub touts itself as a “gig economy investment platform” that is creating new asset classes in emerging markets, according to chief executive and co-founder Tinashe Ruzane.

That asset class, for now, is ride-hail vehicles. FlexClub allows investors to go on the site and purchase a car (ultimately managed and serviced by FlexClub). The startup then connects that car to an Uber driver who uses earnings to pay a weekly rental charge.

Those fees generate monthly fixed-rate interest income for the investor. The driver has the option of buying the car after 12 months, with a descending purchase price over time.

FlexClub’s platform manages the investment, rental income and disbursement of funds across all parties. The startup also handles insurance, maintenance and upkeep of the cars.

Ruzane envisions this as a model to finance multiple asset classes in emerging markets — where lending options are fewer for individuals who may not have credit histories.

“Our goal is to make this completely passive… where investors can invest in different kinds of assets on our platform, login to a dash, and see this is how my five cars in South Africa are doing, my vans in Mexico, my motorbikes in Indonesia — with a diversified portfolio around the world,” he explained.

FlexClub will begin work matching investors to cars and Uber drivers in Mexico in April. The startup sees opportunities to move into other mobility classes, such as Africa’s ride-hail motorcycle taxi and three-wheel tuk-tuk market, CEO Tinashe Ruzane told TechCrunch in this feature.

And finally, francophone Africa will see a boost in funds and support for startups. The Dakar Network Angels group launched last month, making its first investment to cleantech venture Coliba — an Ivorian startup that uses a mobile app to coordinate waste recycling

The deal is part of Dakar Network Angels’ mission of convening experts and capital to bridge the resource gap for startups in French-speaking Africa — or 24 of the continent’s 54 countries.

The organization — which goes by DNA for short — will offer seed fund investments of between $25,000 to $100,000 to early-stage ventures with high growth potential. These rounds will come with the entrepreneurial guidance of DNA’s angel network.

Launched in Senegal, the organization’s founder Marieme Diop — a VC investor at Orange Digital Ventures — named the goal of bridging VC disparities between francophone and non-francophone Africa as the primary driver for DNA. She pointed to funding data by Partech, indicating that 76 percent of investment to African startups goes to three English-speaking countries — Nigeria, Kenya and South Africa.

To gain consideration for DNA investment, startups must gain referral by a member. DNA will take a minority stake (less than 10 percent) in ventures that receive seed funds and provide program mentorship until exits, Diop told TechCrunch.

To become an angel, members must commit to investing a minimum of $10,000 a year (for those coming on as individuals), $20,000 (for corporates) and be on hand to support the portfolio startups, according to DNA’s Corporate Membership Charter.

More Africa Related Stories @TechCrunch

African Tech Around The Net

African e-commerce startup Jumias shares open at $14.50 in NYSE IPO

Pan-African e-commerce company Jumia listed on the New York Stock Exchange today, with shares beginning trading at $14.50 under ticker symbol JMIA. This comes four weeks after CEO Sacha Poignonnec confirmed the IPO to TechCrunch and Jumia filed SEC documents.

With the public offering, Jumia becomes the first startup from Africa to list on a major global exchange.

In an updated SEC filing, Jumia indicated it is offering 13,500,000 ADR shares for an opening price spread of $13 to $16 per share, representing 17.6 percent of all company shares. The IPO could raise up to $216 million for the internet venture.

Since the original announcement (and reflected in the latest SEC docs), Mastercard Europe pre-purchased $50 million in Jumia ordinary shares.

The IPO creates another milestone for Jumia. The company in 2016 became the first African startup unicorn, achieving a $1 billion valuation after a funding round that included Goldman Sachs, AXA and MTN.

There’s a lot to break down on Jumia’s going public. The company is often dubbed the “Amazon of Africa,” and like Amazon, Jumia comes with its own mixed buzz. Jumia’s SEC F-1 prospectus offers us more insight into the venture, and perhaps any startup from Africa, thus far.

About Jumia

Founded in Lagos in 2012 with Rocket Internet backing, Jumia now operates multiple online verticals in 14 African countries. Goods and services lines include Jumia Food (an online takeout service), Jumia Flights (for travel bookings) and Jumia Deals (for classifieds). Jumia processed more than 13 million packages in 2018, according to company data.

Jumia’s original co-founders included Nigerian tech entrepreneurs Tunde Kehinde and Raphael Afaedor, but both departed in 2015 to form other startups in fintech and logistics.

Starting in Nigeria, the company created many of the components for its digital sales operations. This includes its JumiaPay payment platform and a delivery service of trucks and motorbikes that have become ubiquitous with the Lagos landscape. Jumia has extended this infrastructure as an e-commerce fulfillment product called Jumia Services.

Jumia has also opened itself up to Africa’s traders by allowing local merchants to harness Jumia to sell online. The company has more than 80,000 active sellers on the platform using the company’s payment, delivery and data-analytics services, Jumia Nigeria CEO Juliet Anammah told TechCrunch previously.

The most popular goods on Jumia’s shopping site include smartphones, washing machines, fashion items, women’s hair care products and 32-inch TVs, according to Anammah.

Jumia an African startup?

Like Amazon, Jumia brings its own mix of supporters and critics. On the critical side, there are questions of whether it’s actually an African startup. The parent for Jumia Group is incorporated in Germany and current CEOs Jeremy Hodara and Sacha Poignonnec are French.

On the flipside, original Jumia co-founders (Kehinde and Afaedor) are African. The company is headquartered (and also incorporated) in Africa (Lagos), operates exclusively in Africa, pays taxes on the continent, employs 5,128 people in Africa (page 125 of K-1) and the CEO of its largest country operation (Nigeria) Juliet Anammah is Nigerian.

The Africa authenticity debate often shifts into questions of a Jumia diversity deficit, which is of course important from Silicon Valley to Nairobi. The company’s senior management and board is a mix of Africans and expats. Golden State Warriors basketball player and tech investor Andre Iguodala joined Jumia’s board this spring with a priority on “diversity and making sure the African culture is in the company,” he told TechCrunch.

Can Jumia turn a profit?

The Jumia authenticity and diversity debates will no doubt roll on. But the biggest question — the driver behind the VC, the IPO, the founders and the people buying Jumia’s shares — is whether the startup can generate profits and ROI.

Obviously some of the world’s top venture investors, such as Jumia backers Goldman, AXA and Mastercard, think so. But for Jumia skeptics, there are the big losses. The company has generated years and years of losses, including negative EBITDA of €172 million in 2018 compared to revenues of €139 that same year.

To be fair to Jumia, most startups (e-commerce startups in particular) rack up losses for years before getting into the black. And operating in a greenfield sector in Africa — where it had to create much of the surrounding infrastructure to do B2C online sales — has presented higher costs for Jumia than e-commerce startups elsewhere.

On the prospects for Jumia’s profitability, two things to watch will be Jumia’s fulfillment expenses and a shift to more revenue from its non-goods-delivery services, which offer lower unit costs and higher-margins. Per Jumia’s SEC F-1 index (see above), freight and shipping make up more than half of its fulfillment expenses.

So Jumia has not turned a profit, but its revenues have increased steadily, up 11 percent to €93.8 million (roughly $106.2 million) in 2017 and up again to €130 million (or $147 million) in 2018. If the company boosts customer acquisition and lowers fulfillment costs — which could come from more internet services revenue and platform investment with IPO capital — it could close the gap between revenues and losses. This reflects the equation for most e-commerce startups. With the IPO, Jumia will have to publish its first full public financials in 2019, which will provide a better picture of profitability prospects.

Jumia’s IPO and African e-commerce?

There is, of course, a bigger play in Jumia’s IPO. One connected to global e-commerce and the future of online retail in Africa.

Jumia going public comes as Africa’s e-commerce landscape has seen its share of ups and downs, notably several failures in DealDey shutting down and the distressed acquisition of Nigerian e-commerce hopeful Konga.com.

As for the big global names, Alibaba has talked about Africa expansion, but for the moment has not entered in full.

Amazon offers limited e-commerce sales on the continent, but more notably, has started offering AWS services in Africa.

And this week, DHL came on the scene, launching its Africa eShop platform with 200 global retailers on board, in partnership with MallforAfrica’s Link Commerce fulfillment service.

Competition to capture Africa’s digitizing consumer markets — expected to spend $2 billion online by 2025, according to McKinsey — could get fierce, with more global entries, acquisitions and competition on fulfillment services all part of the mix.

And finally, the outcome of Jumia’s IPO carries weight even for its competitors. “Many things, like business decisions and VC investments across Africa’s e-commerce sector are on hold,” an African e-commerce exec told TechCrunch on background.

“Everyone’s waiting to see what happens with Jumia’s IPO and how they perform,” the exec said.

So the share price connected to NYSE ticker sign JMIA could reflect not just investor confidence in Jumia, but investor confidence in African e-commerce overall.

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