& meet dozens of singles today!
User blogs
New wellness startup Heights is formally launching this week, focusing on a category it describes as ‘braincare’. The startup will market “ultra high quality, sustainable plant-based supplements that feed your brain” based on what it says is scientific data.
It has raised a $2 million Seed funding round (£1.7M) via the Seedrs crowdfunding platform, with the round also including the institutional investor Forward Partners. Angel investors include Tom Singh (founder of New Look), Damian Bradfield (WeTransfer), Dhiraj Mukherjee (Shazam), Renee Elliot (Planet Organic), and celebrity investor Chris Smalling (an England and Manchester United professional footballer).
The funds will be used for customer growth and new product development, including soon-to-launch a ‘psychobiotic‘ probiotic aimed at cognition and mental health.
Customers first take a ‘brain health’ survey, then sign up for a monthly, quarterly, or annual subscription.
Customers need only take two capsules a day, thus hugely decreasing the complexity of juggling regular vitamin taking.
The product fits through a letterbox and the unusual bottle was designed by the well-known product design agency Pentagram. A content and coaching program included in the subscription helps customers, and another brain health survey happens after a month. Heights claims that “93%” improve their brain health score within one month.
Heights is not alone in this new market for what some describe as ‘designer vitamins’ and the arena is already populated by the likes of Hims / Hers, Motion, Vitabiotics and Bulletproof.
These companies broadly fall into the “Nootropics” category — vitamins and minerals designed to improve cognitive function, memory, creativity, or motivation, in healthy individuals. But the market is not small. The ‘self care’, ‘healthcare’, and ‘personal development’ market is worth over $1Trillion but supplements alone is worth at least $100BN+.
Heights founders Dan Murray-Serter and Joel Freeman, with adviser Dr. Tara Swart.
However, co-founder Dan Murray-Serter says Heights is aiming to do something different to the aforementioned players.
In a text-based interview, he said: “Nootropics as a category really focus on quick fixes, which is why we’re working on the category creation of ‘braincare’ because there are no ‘quick fixes’ in life, and that terminology and category have essentially set people up with the same false hopes as ‘get-rich-quick’ schemes do. We’re set up differently — aka, starting with scientifically researched articles and journal references.”
He said Heights will be positioned more like a skincare or haircare brand, “because people understand that the daily habit/practice is what creates the longevity and impact, not just a one-day miracle.”
Murray-Serter says there are 20 key nutrients science says our brains need to thrive, and these are mostly found in a combination of buying multivitamins, omega 3s, and ‘nootropics’. He says Heights has sourced the “highest quality” ingredients in the most ‘bioavailable form’ in a patented capsule which makes it easier to digest for the body.
“One of the most common reasons the habit of taking vitamins doesn’t stick for people is that the bottle goes into a cupboard and gets ignored. So we started with design alongside quality,” he says. The Heights vitamins come in a distinctive, recyclable bottle which Heights will also aven recycle if you send it back to them.
Murray-Serter, who previously founded the mobile startup Grabble, says he came up with the idea for the startup after a bout of chronic anxiety and a 6 month-long period of insomnia. The problem was solved by high-quality, high-density vitamins and supplements, as opposed to normal supplements which usually only have the lowest recommended daily levels of vitamins inside them.
After starting a newsletter on the subject of optimizing cognitive performance with cofounder Joel Freeman, the pair amassed a following of 60,000 readers www.yourheights.com/sundays
and then came up with the idea of launching the actual product.
The company now has a ‘Braincare‘ podcast that has reached 100,000 downloads, and the founders have also been joined by key team member Chief Science Officer, Dr Tara Swart (pictured).
Two things may help Heights. Firstly, in the era of Covid-19, public health authorities and governments around the world have recommended taking Vitamin D to boost the body’s immune system should someone fall prey to the disease. It’s not insignificant that two Heights capsules contain 400% of the ‘Nutrient Reference Value’ (formerly known as Recommended Daily Allowance) of Vitamin D3, as well as many other supplements. Theoretically, one could take four normal tablets of this, but the customer experience and other added vitamins in Heights will appeal to many. Secondly, the growing awareness of mental health and interest in maintaining good mental health is now a regular subject of public discourse. So Heights appears to be well-positioned to ride both those waves.
While the pandemic has left some startups strapped for cash, the aptly-named Brazilian neobank Nubank is swimming in it. This morning, the company announced that it has raised a $400 million Series G round, putting their total funding to date at $1.2 billion. But even more remarkable, in addition to their new $25 billion valuation (up from $10 billion in 2019), is their customer base of 34 million users, which they’ve built up since the fintech’s launch in 2013.
“We’ve gone from 12 million customers in 2019 to 34 million solely based on word of mouth,” said David Velez, the company’s co-founder and CEO. By September last year, the company was onboarding 41,000 new customers per day. NuBank prides itself on having a $0 customer acquisition cost. Velez said the startup spends what would be marketing money on “great salaries” and superior customer service, which in turn creates “fanatic” customers who share their love for the brand with others.
The new valuation places NuBank as the fourth most valuable financial institution in Latin America and the largest digital bank in the world by the number of customers and app downloads.
The round was led by both private and public investors including Singapore’s GIC, Whale Rock, and Invesco. Current investors Tencent, Dragoneer, Ribbit Capital, and Sequoia also participated in the round. Velez is a former Sequoia partner and is originally from Colombia though he attended Stanford University and worked in the U.S. for many years.
NuBank, based in São Paulo — the financial capital of Latin America and home to 12.8 million people — has expanded to Colombia and Mexico and plans to use the new funding to flesh out its operations in those markets while continuing to build out its product offerings in Brazil.
What started as a credit card company now functions as a full-service bank, minus the cumbersome bank branches, which is one way the company has been able to allocate its funding primarily toward growth.
“People were really done with being mistreated and paying high fees,” said Velez, speaking to Brazil’s notoriously bureaucratic and dreadful banking experience (liken it to going to the DMV, but regularly). Historically, to pay your monthly bills in Brazil, you had to go to a bank branch and wait in line — often outside in the heat — until it was your turn. The lines wrapped around the block like that of an Apple Store upon the release of the latest iPhone.
“It’s like they are doing you a favor by opening an account for you and then charging you 450% interest rate per year,” said Velez. “Our bet was that people would really like to be treated like humans,” he added.
In 1994, when the Brazilian real currency was introduced, it was pegged at 1:1 with the U.S. dollar. However, in recent years, with the country’s largest corruption scandal in history which saw three consecutive presidents jailed, impeached, and incriminated, respectively, the economy has plummeted. And COVID-19 certainly hasn’t helped. The exchange rate is now 1 USD to 5.40 BRL. With low exchange rates in Brazil, Colombia, and Mexico, a $400 million USD investment creates a sizable runway, especially since Nubank’s Brazil operation has been cash-flow positive since 2018.
The company is known for reaching the unbanked population in Brazil, especially those who simply weren’t in the financial position to get a credit card. Traditional banks are present in about 80% of Brazilian municipalities, but considering that Nubank’s app-based product is location-agnostic, it’s able to reach 100% of the municipalities, the company said. In addition, it’s been helping Brazilians build credit. Its Barney-purple credit card starts at a monthly limit of $50 reals per month (roughly $10 USD). If a customer pays on time the first month, their credit continues to increase over the following months.
Amongst its slew of products, Nubank also offers a debit card and savings account, and while it doesn’t have branches of its own, money can be withdrawn from network ATM’s, as is common in the U.S.
“Nubank was born out of the conviction that people deserved better, more transparent and human financial services that would allow them to be in control of their money and their future. We started seven years ago in Brazil, a country with one of the most concentrated banking sectors in the world, and we were able to free millions of people of the bureaucracy and the pain. Through technology and human customer service, we were able to have a positive impact on their daily lives,” said Velez.
The UK’s competition regulator will make a decision on whether or not Facebook’s purchase of Giphy has a ‘realistic prospect’ of substantially lessening competition by March 25, it said today, as it continues to scrutinize the acquisition.
“The Competition and Markets Authority (CMA) hereby gives notice pursuant to paragraph (b) of the definition of ‘initial period’ in section 34ZA(3) of the [Enterprise] Act that it has sufficient information in relation to the completed acquisition by Facebook, Inc of Giphy, Inc, (the Merger) to enable it to begin an investigation for the purposes of deciding whether to make a reference for a Phase 2 investigation,” it writes.
“The initial period defined in section 34ZA(3) of the Act in relation to the Merger will therefore commence on the first working day after the date of this notice, ie on 29 January 2021. The end of the initial period and the deadline for the CMA to announce its decision whether to refer the Merger for a Phase 2 investigation is therefore 25 March 2021.”
The Competition and Markets Authority launched a probe of Facebook’s $400M acquisition of the GIF-sharing platform back in June 2020.
The investigation put a freeze on Facebook’s ability to continue activities related to integrating Giphy into its wider business empire — such as integrating products or teams or working on business deals or contracts together — despite having already been completed the acquisition.
Facebook confirmed its plan to acquire Giphy in May 2020 — when it also announced its plan to integrate the platform into its photo and video sharing app, Instagram.
But those plans remain on ice as a result of competition scrutiny in the UK. (Last June Facebook and Giphy confirmed they were complying with the CMA’s order to pause integration activity.)
It’s another sign of the growing regulatory friction that tech giants are facing when they seek to grow via acquisition. Last year, for example, European regulators also spent months eyeing Google’s Fitbit acquisition — although they did finally clear the deal in December. But only after obtaining a number of commitments from the tech giant related to how Fitbit data could be used and rivals’ access to APIs.
In the Facebook-Giphy case, the UK watchdog will make a decision in March on whether to open a deeper and broader Phase 2 investigation (after which it would need to issue a final decision).
It could also decide at that point that there is no ‘realistic prospect’ of a substantial lessening of competition as a result of Facebook acquiring Giphy and conclude its intervene — lifting the bar on continued integration between the pair.
The regulator also has discretion to choose not to open a Phase 2 investigation for other reasons, such as if it believes the market is not of sufficient importance to justify the deeper dive or that benefits to customers from a merger outweigh any negative competitive effects.
Given the acquired business in this case is a platform for swapping reaction GIFs it certainly seems possible the CMA may decide that a deeper dive isn’t merited. But we’ll know more in a couple of months.
Whatever happens, regulatory concern linked to Facebook’s grip on the social web has already delayed its plans for Giphy by well over half a year — and the probe may yet drag on for longer — impacting its ability to move fast (and break things).
Source: https://techcrunch.com/2021/01/28/uks-competition-watchdog-still-eyeing-facebooks-giphy-buy/
If the rise of direct-to-consumer businesses has been one of the big e-commerce trends of the last decade, then the growth of startups raising huge rounds to consolidate D2C players, to bring more economies of scale to the model, has definitely been a related theme of the past year.
In the latest move, a startup out of Germany called the Berlin Brands Group has announced that it plans to invest €250 million (about $302 million at today’s rates) to buy up smaller companies and bring them into its fold.
While a lot of the company’s would-be competitors in the consolidation race are focusing primarily on the Amazon Marketplace — leaning on fulfillment by Amazon (FBA) to carry out the distribution and logistics — Peter Chaljawski, the founder and CEO, tells us that it’s a different story in its existing target market of Europe.
“In the M&A market, one big difference between the U.S. and Europe is that the latter is more fragmented,” he said. “In the U.S., D2C sellers do a lot on Amazon. In Europe, there are still lots of alternatives. And in some markets like France, consumers don’t even like Amazon.” This is in addition, of course, to selling directly to consumers and bypassing marketplaces altogether, an area that Chaljawski said will continue to be a big focus for BBG. In all, BBG today says it uses some 100 channels to sell its products.
BBG is not your typical e-commerce startup, in that up to now it’s managed to build a big and profitable business largely on its own steam. And despite being a big e-commerce player in Berlin, BBC has no connection to Rocket Internet, the famous incubator of e-commerce businesses founded in the city.
The $302 million earmarked for acquisitions is coming off the startup’s own balance sheet. And from what we understand, it’s also coming ahead of BBG raising a significant round of outside funding to continue its growth. Although BBG has raised money (of an undisclosed amount, per PitchBook) in the past, this would be its first significant equity round when it closes.
BBG itself has built its own profitable direct-to-consumer business from the ground up. Founded in 2005 first focused on audio equipment (Chaljawski had ambitions to be a DJ in a past life) it has some 14 brands today, covering 2,500 items, that it has hatched and grown itself, which it sells in 28 markets.
The conglomerate model that BBG has taken covers a variety of categories, mostly in consumer electronics (including audio gear, fitness equipment and home appliances), and are sold under a range of different brands like auna, Klarstein and Capital Sports. To date, it says it has sold more than 10 million products, and it is profitable, making €300 million (around $363 million) in revenues in 2020.
Its focus for new acquisitions will include more brands and products in garden, home and living goods, sports, electronics and household appliances, with targets generating anything from €500,000 to €30 million in revenues.
While BBG has mostly been about organic growth, it started taking its first foray into inorganic expansion last December, with the acquisition of home goods brand Sleepwise, which Chaljawski describes as making “a very nice blanket.”
The comfort of a nice blanket might come in handy. Despite its success to date, a number of challenges lie ahead for BBG.
First of these are competitors. BBG’s strategy shift and acquisition plans come at a time when consolidators in the space are starting to emerge, armed with fistfuls of dollars to consolidate smaller brands that have emerged with success on marketplaces like Amazon’s (in fact, primarily the Amazon marketplace) but perhaps without obvious paths to scaling.
They include the likes of Thrasio (which most recently raised $500 million in debt to use to buy companies), SellerX, Heyday, Heroes, Perch and more.
This story from December in the FT (before that most recent debt round of Thrasio’s) estimated that there has been at least $1 billion raised collectively by these companies to build out new online consumer empires based on this model.
The vision for all of them is very clear: they want to create the next Unilever, P&G, or Sony, and they are leveraging new economic models and technology to bring in manufacturing, logistics, economies of scale, sales analytics and new innovations in marketing to do it.
Another challenge is how successful and efficient a company, which has up to now taken a very deliberate and organic path, will be in integrating lots of new brands, with the cultures and business partnerships relationships that exist with those, in tow.
The third is the sourcing of quality brands themselves. As we’ve pointed out before, taking just Amazon as one example, there is a ton of junk sold there, including a whole industry of those who buy off wholesale sites and resell on Amazon, which is one reason why so many merchants sell what look like identical products in specific categories. These marketplace sellers leverage things like SEO and armies of reviews to get their products sifting to the top of huge piles of search results, and they can often sell well, even if they are not great buys for you the consumer. That means misleading signals for a potential consolidator looking for hot companies to snap up.
The balance between how marketplaces are leveraged versus how much brands and their owners try to build these things on their own will be an interesting one to watch in the coming years. Amazon and its ilk have only continued to grow and become more efficient, although this sometimes means they are too powerful rather than more useful for third parties:
On the other hand, we’re seeing another persistent theme to help them: the presence of startups and bigger companies continuing to make tools to help the smaller players stay in the game on their own terms. They include biggies like Shopify, but also newer players like GoSite, Shogun and Xentral.
Google has updated and broadened its Play Store policy on gaming loyalty programs to help developers better understand the practices that are permitted, months after confusion about the guidance prompted some backlash in India, the biggest Android market by users.
The company said on Thursday that it now specifies guidance on gamified loyalty programs that are based on a qualified monetary transaction in an app and offer prizes of cash or other real-world cash equivalent perks.
Scores of apps run gamified loyalty programs in their apps to appease and win users. Last year, the company sent notices to several Indian startups including Paytm, Zomato, and Swiggy whose in-app gamifying techniques, the company said at the time, resembled gambling. Google had asked the firms to withdraw from engaging in such gamifying techniques. The new policy covers developers worldwide, the company said.
“App developers in India are actively building uniquely Indian features and services. One example is the use of mini games, quizzes and other gamification techniques to delight users and convert them into loyal customers. These experiences are often launched during important festivals and sporting events, and getting it right within the specific time window is critically important,” wrote Suzanne Frey, Vice President, Product, Android Security and Privacy, in a blog post.
The company still does not permit real gambling apps in India, but said developers globally now will have better clarity on rules so they can inform their strategies.
“This is one of the things we discussed when we spoke to several startup CEOs in India and around the world in the past few months. And, as part of the very first policy update of 2021 we are clarifying and simplifying the policies around loyalty programs and features,” wrote Frey.
A Google spokesperson told TechCrunch that the company will be outlining the full guidelines later today.
As part of the update, the company said it is also launching How Google Play Works, a repository of useful information and best practices to help developers. “It also contains India-specific details on programs that local developers can leverage to find success and scale. For users, this site helps to demystify key aspects of the Google Play platform, and explains how user security and protection remains at the heart of everything we do,” wrote Frey.
In a virtual event on Thursday, Sameer Samat, VP of Android and Google Play at Google, said today’s update is the first of many the company plans to issue this year and it is committed to listening to more feedback from the industry.
More on Google and Jio Platform’s upcoming smartphones
In a wide-range discussion at the event organized by startup network TiE, Samat also talked about the efforts Google is putting into bringing Android-powered smartphones to more people in India. Last year, Google announced an investment of $4.5 billion into Indian telecom operator Jio Platforms. As part of the partnership, the two firms have said they will work on low-cost Android smartphones.
“While India is the fastest growing smartphone market in the world, there are a lack of devices priced in a certain range that prevents a number of consumers from purchasing,” he said. “We have been optimizing Android for entry level devices with Android Go. The point of that project is to enable Android to run on entry level hardware that hopefully brings the price down. There are more than 100 million Android Go smartphones in the market today, but we need to go further than that.”
Samat said the company is trying to bring the set of services that higher-end smartphones feature to “entry-level” handsets it is building with Jio Platforms. “More affordable phones cannot mean lower quality phones.” He suggested that these phones will have a different consumer interface that is directly aimed at users who have not previously used a smartphone.
This is a developing story. More to follow…
