& meet dozens of singles today!
User blogs
As a turbulent week in the capital world, we’re taking a look at something a bit slower-moving: venture capital trends in Africa during 2020.
The Exchange has long explored quarterly and yearly data regarding the North American, European and Asian venture capital markets, along with data on particular startup categories. From today, we’ll also provide regular examinations of what’s happening in Africa.
As an aside, we’re sorry The Exchange didn’t come out yesterday. The world went mad and we had to tend to breaking news. We’re back!
To dig into African venture capital results, we’re looking at a report concerning 2020 data from Briter Bridges, a research group that focuses on the continent’s private capital market. The Exchange also interviewed report author and Briter director Dario Giuliani about the collected data.
The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.
What emerges is a generally growing venture capital scene, but one that had mixed results in 2020 compared to 2019. However, if we control for an outsized investment or two, things smooth out rather nicely.
Let’s check the top-line figures, get insight from Giuliani concerning where the capital is flowing most rapidly, and wrap with a look at which startup categories are seeing the most investment in Africa today.
Africa’s 2020 venture capital results
During my time at Crunchbase News, I helped lead a team that generated acre-feet of reporting on the global and domestic venture capital markets. It’s difficult work that involves making decisions on what counts, what doesn’t and how to handle rounds that have not been disclosed publicly.
Over time, I’ve also become comfortable with venture data from PitchBook and CB Insights as well, and am now adding the Briter dataset to the trusted cohort.
During my chat with Giuliani, it became clear that his team is doing the hard and valuable work of carefully collating and sorting information. I say all of that simply to let you know that we now have a regular source for trustworthy information (compiled in concert with seventy different investing groups) on Africa that we’ll use regularly to keep tabs on the continent. This is a win.
So, what does the data say? We have to parse it some, as historically Briter has collated mega-deals — which it counts as investments of $90 million or more — and M&A in the same bucket. So, tracking just the dollar volume of African deals smaller than $90 million gives us the following set of results:
In recent years we’ve seen a whole bunch of visual/style fashion-focused search engines cropping up, tailored to helping people find the perfect threads to buy online by applying computer vision and other AI technologies to perform smarter-than-keywords visual search which can easily match and surface specific shapes and styles. Startups like Donde Search, Glisten and Stye.ai to name a few.
Early stage London-based Cadeera, which is in the midst of raising a seed round, wants to apply a similar AI visual search approach but for interior decor. All through the pandemic it’s been working on a prototype with the aim of making ecommerce discovery of taste-driven items like sofas, armchairs and coffee tables a whole lot more inspirational.
Founder and CEO Sebastian Spiegler, an early (former) SwiftKey employee with a PhD in machine learning and natural language processing, walked TechCrunch through a demo of the current prototype.
The software offers a multi-step UX geared towards first identifying a person’s decor style preferences — which it does by getting them to give a verdict on a number of look book images of rooms staged in different interior decor styles (via a Tinder-style swipe left or right).
It then uses these taste signals to start suggesting specific items to buy (e.g. armchairs, sofas etc) that fit the styles they’ve liked. The user can continue to influence selections by asking to see other similar items (‘more like this’), or see less similar items to broaden the range of stuff they’re shown — injecting a little serendipity into their search.
The platform also lets users search by uploading an image — with Cadeera then parsing its database to surface similar looking items which are available for sale.
It has an AR component on its product map, too — which will eventually also let users visualize a potential purchase in situ in their home. Voice search will also be supported.
“Keyword search is fundamentally broken,” argues Spiegler. “Image you’re refurbishing or renovating your home and you say I’m looking for something, I’ve seen it somewhere, I only know when I see it, and I don’t really know what I want yet — so the [challenge we’re addressing is this] whole process of figuring out what you want.”
“The mission is understanding personal preferences. If you don’t know yourself what you’re looking for we’re basically helping you with visual clues and with personalization and with inspiration pieces — which can be content, images and then at some point community as well — to figure out what you want. And for the retailer it helps them to understand what their clients want.”
“It increases trust, you’re more sure about your purchases, you’re less likely to return something — which is a huge cost to retailers. And, at the same time, you may also buy more because you more easily find things you can buy,” he adds.
Ecommerce has had a massive boost from the pandemic which continues to drive shopping online. But the flip side of that is bricks-and-mortar retailers have been hit hard.
The situation may be especially difficult for furniture retailers that may well have been operating showrooms before COVID-19 — relying upon customers being able to browse in-person to drive discovery and sales — so they are likely to be looking for smart tools that can help them transition to and/or increase online sales.
And sector-specific visual search engines do seem likely to see uplift as part of the wider pandemic-driven ecommerce shift.
“The reason why I want to start with interior design/home decor and furniture is that it’s a clearly underserved market. There’s no-one out there, in my view, that has cracked the way to search and find things more easily,” Spiegler tells TechCrunch. “In fashion there are quite a few companies out there. And I feel like we can master furniture and home decor and then move into other sectors. But for me the opportunity is here.”
“We can take a lot of the ideas from the fashion sector and apply it to furniture,” he adds. “I feel like there’s a huge gap — and no-one has looked at it sufficiently.”
The size of the opportunity Cadeera is targeting is a $10BN-$20BN market globally, per Spiegler.
The startup’s initial business model is b2b — with the plan being to start selling its SaaS to ecommerce retailers to integrate the visual search tools directly into their own websites.
Spiegler says they’re working with a “big” UK-based vintage platform — and aiming to get something launched to the market within the next six to nine months with one to two customers.
They will also — as a next order of business — offer apps for ecommerce platforms such as WooCommerce, BigCommerce and Shopify to integrate a set of their search tools. (Larger retailers will get more customization of the platform, though.)
On the question of whether Cadeera might develop a b2c offer by launching a direct consumer app itself, Spiegler admits that is an “end goal”.
“This is the million dollar question — my end-goal, my target is building a consumer app. Building a central place where all your shopping preferences are stored — kind of a mix of Instagram where you see inspiration and Pinterest where you can keep what you looked at and then get relevant recommendations,” he says.
“This is basically the idea of a product search engine we want to build. But what I’m showing you are the steps to get there… and we hopefully end in the place where we have a community, we have a b2c app. But the way I look at it is we start through b2b and then at some point switch the direction and open it up by providing a single entry point for the consumer.”
But, for now, the b2b route means Cadeera can work closely with retailers in the meanwhile — increasing its understanding of retail market dynamics and getting access to key data needed power its platform, such as style look books and item databases.
“What we end up with is a large inventory data-set/database, a design knowledge base and imagery and style meta information. And on top of that we do object detection, object recognition, recommendation, so the whole shebang in AI — for the purpose of personalization, exploration, search and suggestion/recommendation,” he goes on, sketching the various tech components involved.
“On the other side we provide an API so you can integrate into use as well. And if you need we can also provide with a responsive UX/UI.”
“Beyond all of that we are creating an interesting data asset where we understand what the user wants — so we have user profiles, and in the future those user profiles can be cross-platform. So if you purchase something at one ecommerce site or one retailer you can then go to another retailer and we can make relevant recommendations based on what you purchased somewhere else,” he adds. “So your whole purchasing history, your style preferences and interaction data will allow you to get the most relevant recommendations.”
While the usual tech giant suspects still dominate general markets for search (Google) and ecommerce (Amazon), Cadeera isn’t concerned about competition from the biggest global platforms — given they are not focused on tailoring tools for a specific furniture/home decor niche.
He also points out that Amazon continues to do a very poor job on recommendations on its own site, despite having heaps of data.
“I’ve been asking — and I’ve been asked as well — so many times why is Amazon doing such a poor job on recommendations and in search. The true answer is I don’t know! They have probably the best data set… but the recommendations are poor,” he says. “What we’re doing here is trying to reinvent a whole product. Search should work… and the inspiration part, for things that are more opaque, is something important that is missing with anything I’ve seen so far.”
And while Facebook did acquire a home decor-focused visual search service (called GrokStyle) back in 2019, Spiegler suggests it’s most likely to integrate their tech (which included AR for visualization) into its own marketplace — whereas he’s convinced most retailers will want to be able to remain independent of the Facebook walled garden.
“GrokStyle will become part of Facebook marketplace but if you’re a retailer the big question is how much do you want to integrate into Facebook, how much do you want to be dependent on Facebook? And I think that’s a big question for a lot of retailers. Do you want to dependent on Google? Do you want to be dependent on Amazon? Do you want to be dependent on Facebook?” he says. “My guess is no. Because you basically want to stay as far away as possible because they’re going to eat up your lunch.”
Source: https://techcrunch.com/2021/01/29/cadeera-is-doing-ai-visual-search-for-home-decor/
The U.S. Securities and Exchange Commission (SEC) has issued an official statement on the tumult of the past week in the public stock market. It’s a relatively brief statement, and doesn’t mention any of the key players by name (aka GameStop, Reddit, Robinhood and others), but it does say acknowledge that “extreme stock price volatility has the potential to expose investors to rapid and severe losses” which could “undermine market confidence,” and basically says the Commission is watching closely to ensure that it doesn’t.
The SEC statement does specify that it believes the “core market infrastructure” remains intact despite the heavy trading volumes of the past week, which were prompted primarily by activity organized by retail investors acting in concert through organization on r/WallStreetBets, a subreddit dedicated to day trading. These retail investors resolved to collectively purchase and hold GME stocks (and subsequently, shares in other companies like movie theater chain AMC) in a bid to sweat out hedge funds with significant short positions in the same.
The ensuing high volume of trading activity from individual retail investors led to various actions from platforms that provide free trading to these individuals, including Robinhood, Webull, Public and M1. Robinhood initially cited “protecting” its users as the reason for limits imposed, but later revealed that a lack of funding to cover trade clearances likely caused the temporary measures, since it tapped $500 million to $600 million in credit facility and raised $1 billion in funding overnight.
The SEC’s statement includes a callout that seems specifically directed at entities like Robinhood, and it’s fair to interpret it as a warning:
In addition, we will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws. Market participants should be careful to avoid such activity. Likewise, issuers must ensure compliance with the federal securities laws for any contemplated offers or sales of their own securities.
Robinhood has already had run-ins with the financial regulator for unrelated business practices. Meanwhile, lawmakers from both the House and the Senate, as well as NY AG Letitia James have all expressed their intent to review the event and all surrounding activities, which likely involves the role trading platforms like Robinhood played in the week’s events.
After a turbulent week for the stock market and halts to the trading of certain speculative securities including GameStop (GME) and AMC, consumer investing app Robinhood has raised new capital. The new funds total more than $1 billion, with the company telling TechCrunch that they were raised from its existing investor base.
The New York Times reports that the company raised the new equity capital after tapping its credit lines for $500 to $600 million; the company did not answer a question from TechCrunch regarding its credit lines.
The reported drawdown matches reporting from yesterday indicating that Robinhood had accessed nine-figures of capital to ensure it had enough funds on hand to meet regulatory minimums and other requirements related to its users’ trading activity.
Individual retail investors, along with institutional capital, have attacked short positions in some stocks in recent weeks, leading to a tug-of-war between bullish investors and bearish wagers; the resulting tumult led to surging volume for volatile stocks, leading to Robinhood needing more capital to keep its gears turning.
In a post discussing its decision yesterday to restrict trading on select securities, Robinhood wrote that it has “many financial requirements, including SEC net capital obligations and clearinghouse deposits,” adding that “some of these requirements fluctuate based on volatility in the markets and can be substantial in the current environment.”
The unicorn consumer fintech company halted trading in stocks like GameStop that had become the center of the trading storm yesterday, leading to frenetic accusations from incensed users that something nefarious was afoot. Later in the day the clearing house entity powering trading for other consumer trading services also halted service for a similar set of stocks.
Robinhood told users that it would allow trading to begin in some fashion today in shares it had previously restricted.
It does not appear that the current trading scrap will abate soon. Shares of GameStop, the most famous so-called “meme stock” in the current trading war, is up just under 94% this morning in pre-market trading, implying that many investors are willing to continue pushing its value higher in hopes of breaking short bets laid by other investors.
One result of the current climate is a boom in demand for trading apps. Today on the US iOS App Store, Robinhood is ranked first; Webull, a rival service is second; Reddit, a hub for trading gossip mostly via r/WallStreetBets is third; Coinbase a popular crypto trading service is fourth in line. Square’s Cash App, which allows for share purchases is ranked seventh, Fidelity’s iOS app comes in tenth place, and TD Ameritrade is 16th. Finally, E*Trade’s own app is ranked 18th. That’s a good showing for fintech, both startup and incumbent alike.
No one knows what comes next, how the trades play out, and if the present-day surge in retail interesting in stock trading will persist. What does seem clear, however, is that today is going to be very silly.
Another COVID-19 vaccine is almost ready to begin being distributed – a single-shot inoculation made by Johnson & Johnson’s Janssen pharmaceutical subsidiary. The company just released an efficacy report based on data from its Phase 3 trial, which found that the new vaccine is 66% effective overall in preventing moderate to severe incarnations of COVID-19 in those who received the jab, and 85% effective in preventing sever disease.
Those numbers aren’t as impressive as the reported figures for the Moderna and Pfizer/BioNTech vaccines that are already being distributed via emergency FDA approval, both of which reported 90+% efficacy. But Johnson & Johnson’s vaccine is a single shot rather than a two-course treatment, which should make it much easier to distribute much more quickly. The vaccine also showed 100% efficacy in preventing hospitalization or death among participants in the trial, 28 days after vaccination, which is a key measure when considering the broader impact of COVID-19 on healthcare resources, and efficacy varied by region, with the jab proving 72% effective in the U.S. across moderate and severe cases vs. 66% globally.
It’s also important to note that Johnson & Johnson’s Phase 3 trial is happening amid the emergence of new strains of the virus, including much more contagious versions like the UK and South African variants. At the time that both Moderna and BioNTech released their trial data, these variants hadn’t yet emerged or been confirmed by pandemic researchers.
Johnson & Johnson’s vaccine uses a modified version of a common cold virus to deliver DNA that provides a person’s body with instructions on building a replica of the spike protein that SARS-CoV-2 uses to attach to cells. The modified adenovirus can’t replicate in human cells, however, meaning it won’t lead to illness – only an immune response that can later be employed to combat contracting the virus that leads to COVID-19. This adenovirus method is much more proven in terms of use in human patients vs. the mRNA method that the other vaccines currently in use employ.
All of which is to say, despite headline numbers that appear to fall short relative to the data we’ve seen from Moderna and Pfizer, this Johnson & Johnson report is actually very encouraging. The company says it expects to file a request for an Emergency Use Approval (EUA) from the FDA in February, which could see it begin to be distributed next month, adding yet another weapon in the arsenal to combat the global pandemic.
