Grab raises more money — again

Southeast Asia’s highest-capitalized startup is sitting on even more money from investors today after ride-hailing Grab announced it has raised $300 million from Invesco.

The deal takes Singapore-based Grab $7.5 billion raised to date. The money is part of its ongoing — feels-like-everlasting — Series H round which was started last June via a $1 billion capital injection from Toyota.

The round swelled to $4.5 billion thanks to contributions from a range of partners throughout 2018 and early 2019, then Grab said in April that it would add a further $2 billion to reach a $6.5 billion close before this year is out. This investment from Invesco is the first piece of that newest tranche to be announced, but there’s plenty happening under the surface, including a potential investment from PayPal, Ant Financial and others in a spinout of Grab’s financial services.

Grab declined to comment on the status of its Series H, and how much it has raised for the round so far.

Getting back to today’s news and, despite a relatively dry-looking announcement, there is an interesting takeaway to be found here.

Yes, this isn’t a SoftBank Vision Fund sized round — that $1.5 billion deal closed earlier this year — and it lacks the strategic significance of investments from backers like Toyota, Booking.com or Microsoft, but it does represent a doubling down on Grab from Invesco.

The firm merged with emerging market-focused fund Oppenheimer back in May. Oppenheimer — which has close to $40 billion in assets under management for its developing market fund alone — was among the participants in an initial $2 billion raise for that Series H, and now the merged entity is coming back to increase its position.

That first deal (from Oppenheimer) was $403 million, Grab said, so this new addition takes its spend on Grab to over $700 million. It also comes at an interesting time for the firm, which is reported to have reorganized its management team following the completion of the merger.

Based on that clearing of the decks/realignment, the decision to double down on Grab is a positive validation for the ride-hailing company. While it might not be a household name to those outside financial markets, Grab president Ming Maa played up Invesco as “one of the smartest investors in developing markets” in a statement released alongside news of the investment.

Grab acquired Uber’s regional business last year to become Southeast Asia’s undisputed ride-hailing leader, but it perhaps didn’t reckon on its local rival Go-Jek mounting a bid to finally expand its service regionally.

Having built a strong presence in Indonesia — where it pioneered ‘super app’ concepts like services on-demand and payments in the context of ride-hailing — Go-Jek has since expanded into Vietnam, Thailand and Singapore, with the Philippines also in its sights. Those moves were fuelled by investment from the likes of Tencent, Google and Warburg Pincus . As it seeks to go further and deeper in those markets, Go-Jek is currently raising a round for growth that is expected to reach $2 billion, half of which it said it had secured in January.

That accumulation of cash seemed to spark a call to arms for Grab, which turned its Series H into a gargantuan rolling round after increasing the overall round target first to $5 billion and then to $6.5 billion.

Uber may have decided to leave Southeast Asia, but the ride-hailing industry in the region is still as fascinating as ever.

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India reportedly wants to build its own WhatsApp for government communications

India may have plans to follow France’s footsteps in building a chat app and requiring government employees to use it for official communications.

The New Delhi government is said to be pondering about the need to have homegrown email and chat apps, local news outlet Economic Times reported on Thursday.

The rationale behind the move is to cut reliance on foreign entities, the report said, a concern that has somehow manifested amid U.S.’s ongoing tussle with Huawei and China.

“We need to make our communication insular,” an unnamed top government official was quoted as saying by the paper. The person suggested that by putting Chinese giant Huawei on the entity list, the U.S. has “set alarm bells ringing in New Delhi.”

India has its own ongoing trade tension with the U.S. Donald Trump earlier this month removed the South Asian nation from a special trade program after India did not assure him that it will “provide equitable and reasonable access to its markets.” India called the move “unfortunate”, and weeks later, increased tariffs on some U.S. exports.

The move to step away from foreign communication apps, if it comes to fruition, won’t be the first time a nation has attempted to cautiously restrict usage of popular messaging apps run by foreign players in government offices.

France launched an encrypted chat app — called Tchap — for use in government offices earlier this year. Only those employed by the French government offices can sign up to use the service, though the nation has open sourced the app’s code for the world to see and audit.

Of course, a security flaw in Tchap came into light within the first 24 hours of its release. Security is a real challenge that the government would have to tackle and it might not have the best resources — talent, budget, and expertise — to deal with it.

China, which has restricted many foreign companies from operating in the nation, also maintains customized versions of popular operating systems for use in government offices. So does North Korea.

It won’t be an unprecedented step for India, either. The nation has been trying to build and scale its own Linux-based desktop operating system called BOSS for several years with little success as most government agencies continue to use Microsoft’s Windows operating system.

Even as India has emerged as the third-largest startup hub in the world, the country has failed to build local alternatives for many popular services. Facebook’s WhatsApp has become ubiquitous for communication in India, while Google’s Android and Microsoft’s Windows power most smartphones and computers in the nation.

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Pinduoduo cements position as China’s second-largest ecommerce player

Alibaba and JD.com have been in a war over the Chinese e-commerce space for a decade or so, but a third player called Pinduoduo has managed to shake up the duopoly in recent times. The startup, which was founded in 2015 by an ex-Googler and went public on the Nasdaq last July, has further flexed muscles during the recent “6/18” shopping spree.

According to data provider QuestMobile, Pinduoduo’s daily active users have outnumbered JD’s for at least the past 12 months, and it came out of the mid-year sales festival — first popularized by JD as a counterpart to archrival Alibaba’s “11/11” shopping day — with 135 million DAUs.

JD, in comparison, ended with 88 million DAUs and Alibaba’s Taobao retained its top spot at 299 million. That result further solidified Pinduoduo’s position as China’s second-biggest ecommerce company by number of users.

The boom of Pinduoduo is in part attributable to ties with its investor Tencent — also a backer of JD — which enables it to sell via WeChat’s lite app and tap the giant’s vast social network. Alibaba, on the other hand, has for years been prevented from selling through WeChat.

In terms of sales, Pinduoduo still remains some miles behind JD, which focuses on large-ticket items like home appliances and targets China’s urban, deep-pocketed shoppers. Pinduoduo took a more rural tack and has built a reputation for hawking ultra-cheap goods at small-city consumers.

In 2018, Pinduoduo racked up 471.6 billion yuan ($68.6 billion) in gross merchandise volume, a somewhat problematic term for gauging sales as it totals the value of orders placed, regardless of whether they are actually sold, delivered or returned. (Alibaba stopped revealing GMV a few years ago.) JD’s GMV was almost four times that of Pinduoduo at 1.68 trillion yuan ($243.9 billion) last year.

One has to keep in mind that JD is a 21-year-old firm born out of the PC era, whereas Pinduoduo has been up and running on mobile for less than four years. The startup’s continued growth is undeniable. In a March report, investment bank UBS’s Evidence Lab predicted that Pinduoduo could overtake JD in GMV as early as 2021.

But Pinduoduo’s story is not all roses. Currently trading at $20.54, its stock has plunged about 35 percent since a March high. The online marketplace has also been chided for selling counterfeits and subpar goods, an endemic problem that’s long plagued Chinese e-commerce. This year Pinduoduo was put on the U.S. government’s “notorious” blacklist alongside rival Alibaba for selling fakes, while the company claims it’s actively working to root out problematic listings.

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Warburg Pincus announces new $4.25 billion fund for China and Southeast Asia

Warburg Pincus, the private equity fund with over $60 billion under management, is doubling down on Asia after it announced a $4.25 billion fund dedicated to China and Southeast Asia.

The firm has been present in China for 25 years, and it has invested over $11 billion in a portfolio of over 120 startups that includes the likes of Alibaba’s Ant Financial and listed companies NIO (a Tesla rival), ZTO Express (a courier firm)among others. The new fund will work in tandem with the firm’s $14.8 billion global growth fund which was finalized at the end of last year.

What’s particularly interesting about the new fund is that it has expanded to include Southeast Asia, where internet adoption is rapidly expanding among 600 million consumers, for the first time. It is the successor to Warburg Pincus’ previous $2.2 billion ‘China’ fund and, with the addition of Southeast Asia, it’ll aim to build on initial investments in the region that have included Go-Jek in Indonesia (although it is going regional) and Vietnamese digital payment startup Momo from its Singapore office.

Indeed, the firm’s head of Southeast Asia — Jeff Perlman — said in a statement that Southeast Asia is “exhibiting many of the strong investment themes and trends which have driven our China business over the last 25 years.”

While there is plenty of uncertainty around China, and more widely Asia, due to the ongoing trade battle with the U.S. — which has ensnared Huawei and other tech firms — Warburg Pincus said it had received strong demand for LPs whilst out raising this new fund.

Though it declined to provide details of its backers — and you’d wager that few, if any, are U.S-based — it said it surpassed its initial target of $3.5 billion for the China-Southeast Asia fund. That’s despite evidence suggesting that China’s investment space is experiencing a slowdown in total funding raised despite more deals.

In terms of target investments, the firm said it intends to focus on areas including consumer and services, healthcare, real estate, financial services and TMT — technology, media and telecommunications.

Warburg Pincus is already one of the largest investors in Southeast Asia in terms of potential check size, although it has been fairly selective on deals at this point. The fund’s move to include the region alongside will be a boon for companies looking for growth-stage deals that are hard to find in the current venture capital ecosystem.

More broadly, it is also a major endorsement for Southeast Asia as a startup destination. The region has long been seen as having immense growth potential, but it often sits in the shadows of more mature regions like India and China.

Warburg isn’t alone in grouping Southeast Asia with another region. Sequoia’s India fund reaches into Southeast Asia — alongside its recently-launched accelerate program — as does the most recent fund from Vertex Ventures.

On the other side, a number of Chinese funds are increasingly doing deals in the region and setting up shop in Singapore. Those include GGV which has backed startups like fintech company Thunes, Ant Financial-backed fund BAce Capital and ATM Capital, which helps Chinese companies expand into and localize in Southeast Asia.

Meanwhile, other funds are also stepping up to address the gap in later stage capital. B Capital, a firm led by former Facebook co-founder Eduardo Saverin, recently made a first close of over $400 million for a fund that’s targeted at Southeast Asia and other regions. Asia Partners is a maiden venture spearheaded by Nick Nash, the former president of Sea, that aims to tap into the post-Series B gap using a PE style approach that may be much like that of Warburg Pincus.

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Songtrust adds another 55,000 artists to its rights management service

Over the past year, Songtrust has added another 55,000 artists and songwriters to its rights management service.

The company, a subsidiary of Downtown Music, a publishing and rights management firm that manages rights for artists such as John Lennon, One Direction and Santigold, now has 205,000 artists on its roster and has 2 million songs it tracks.

The company has also opened three offices in Atlanta, Los Angeles, and Nashville to complement existing locations in New York, London and Amsterdam.

The company’s growth follows that of a music industry that continues to enjoy a renaissance (at least in terms of dollars spent).

The global recorded music market grew 9.7% in 2018 to $19.1 billion, according to data from the International Federation of the Phonographic Industry (which has been tracking the industry since the days when the dominant technology was the record player).

Much of that growth is now coming from streaming, the IFPI reports, with streaming revenues growing 34% year over year and accounting for 47% of total revenue thanks to paid subscription services. There were 255 million users of paid services by the end of 2018 — and Songtrust can attribute much of its growth to the opacity in how that money makes its way back to artists.

Increasingly, those artists are having to track their performance in international markets as well. Latin America continues to be the fastest gorwing region for music consumption, followed by Asia and Australasia. Most of that growth is due to K-Pop, since South Korea accounts for 17.9% growth in money spent alone.

All of this movement shows no sign of abating, according to the bankers that track these kinds of things. Goldman Sachs recently projected that the industry could grow to over $130 billion in revenue over the next decade.

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