China’s Luckin Coffee raises up to $651M in upsized US IPO

Another week, another cash-burning tech IPO in the U.S. Following on from Uber’s high-profile listing, ambitious Chinese startup Luckin Coffee has raised up to $650.8 million on the Nasdaq after it priced its shares at $17.

Despite concern at its high losses and little chance of near-term profitability, Luckin seems to have been greeted positively by investors. The company priced its shares at the top of its $15-$17 range and it upsized the share offering to 33 million, that’s three million more than previously planned. That gives Luckin an initial net raise of $571.2 million, although that could increase to $650.8 million if underwriters take up the full additional allocation of 4.95 million ‘greenshoe’ shares that are on offer.

The company will list on Friday under the ticker ‘LK.’

Luckin filed to go public last month, just weeks after it closed a $150 million Series B+ funding round led by New York private equity firm Blackrock, which interestingly holds a 6.58 percent stake in Starbucks. The deal valued Luckin at $2.9 billion and it took the three-year-old company to $550 million raised from investors to date.

The company has burned through incredible amounts of cash as it tries to quickly build a brand that competes with Starbucks, and the presence that the U.S. firm has built over the last 20 years in China. Through aggressive promotions and coupons, the company posted a $475 million loss in 2018, its only full year of business to date, with $125 million in revenue. For the first quarter of 2019, it carded an $85 million loss with total sales of $71 million.

We recently went in-depth on the business, which you can read here with a subscription to our Extra Crunch service, but we’ve long covered the startup’s ‘money is no object’ approach to building a digital rival to Starbucks in China.

China’s Tesla wannabe Xpeng starts ride-hailing service

There’re a lot of synergies between electric vehicles and ride-hailing. Drivers are able to save more steering an EV compared to a gas vehicle. Environmentally conscious consumers will choose to hire an electric car. And EVs are designed with better compatibility with autonomous driving, which is expected to hit the public road in the coming decades.

Indeed, Tesla is eyeing to launch its first robotaxis in 2020 as part of a broader ride-sharing scheme. Over in China where Tesla has a few disciples, EV startup Xpeng Motors, also known as Xiaopeng, just started offering a ride-hailing app powered by its own electric fleets.

Screenshot of Xpeng’s ride-hailing app ‘Youpeng Chuxing’

The company is the latest in a clutch of carmakers flocking to introduce their own ride-hailing platforms. Didi Chuxing’s massive loss has not deterred their ambitious plans. Rather, this may be a prime time to crack a market long dominated by Didi, which is prioritizing safety over growth following two high-profile incidents and a series of new government regulations.

Xpeng’s ride-hailing app is currently only available in a limited area within Guangzhou where it’s headquartered, shows a test conducted by TechCrunch’s on Thursday.

The company’s coffer is probably large enough to fund its newly minted venture. It’s one of the most-backed EV upstarts alongside rival Nio, which raised $1 billion from a New York initial public offering last year.

Xpeng has to date banked $1.3 billion from Alibaba, IDG Capital, Foxconn, UCAR and other big-name investors, according to disclosed funding data collected by Crunchbase. Founder He Xiaopeng, a serial entrepreneur who made a fortune selling his mobile browser company UCWeb to Alibaba, told CNBC in March that Xpeng may also try an IPO down the road but wants to focus on building the business first.

When it comes to sources of inspiration for the business, Xpeng told local media that it sees Tesla as its “benchmark”. The company has never been shy about its admiration for its American peer. In an interview with Quartz in 2018, He said one of the reasons he founded Xpeng “was because Elon Musk made Tesla’s patents available. It was so exciting.”

But the affection might have gone a little far. In March, Tesla sued an ex-employee for allegedly stealing Autopilot’s proprietary technology before taking a job at Xpeng.

Xpeng started shipping to its first owners in March and was founded five years ago against the backdrop of Beijing’s aggressive electric push in the transportation sector. The sprawling city Shenzhen, just north to Hong Kong, has turned all its public buses and almost all of its taxis electric.

XPRIZE names two grand prize winners in $15 million Global Learning Challenge

XPRIZE, the non-profit organization developing and managing competitions to find solutions to social challenges, has named two grand prize winners in the Elon Musk-backed Global Learning XPRIZE .

The companies, KitKit School out of South Korea and the U.S., and onebillion, operating in Kenya and the U.K., were announced at an awards ceremony hosted at the Google Spruce Goose Hangar in Playa Vista, Calif.

XPRIZE set each of the competing teams the task of developing scalable services that could enable children to teach themselves basic reading, writing, and arithmetic skills within 15 months.

Musk himself was on hand to award $5 million checks to each of the winning teams.

Five finalists including: New York-based CCI, which developed lesson plans and a development language so non-coders could create lessons; Chimple, a Bangalore-based, learning platform enabling children to learn reading, writing and math on a tablet; RobotTutor, a Pittsburgh-based company which used Carnegie Mellon research to develop an app for Android tablets that would teach lessons in reading and writing with speech recognition, machine learning, and human computer interactions, and the two grand prize winners all received $1 million to continue developing their projects.

The tests required each product to be field tested in Swahili, reaching nearly 3,000 children in 170 villages across Tanzania.

All of the final solutions from each of the five teams that made it to the final round of competition have been open-sourced so anyone can improve on and develop local solutions using the toolkits developed by each team in competition.

Kitkit School, with a team from Berkeley, Calif. and Seoul, developed a program with a game-based core and flexible learning architecture to help kids learn independently, while onebillion, merged numeracy content with literacy material to provide directed learning and activities alongside monitoring to personalize responses to children’s needs.

Both teams are going home with $5 million to continue their work.

The problem of access to basic education affects more than 250 million children around the world, who can’t read or write and one-in-five children around the world aren’t in school, according to data from UNESCO.

The problem of access is compounded by a shortage of teachers at the primary ad secondary school level. Some research, cited by XPRIZE, indicates that the world needs to recruit another 68.8 million teachers to provide every child with a primary and secondary education by 2040.

Before the Global Learning XPRIZE field test, 74% of the children who participated were reported as never having attended school; 80% were never read to at home; and 90% couldn’t read a single word of Swahili.

After the 15 month program working on donated Google Pixel C tablets and pre-loaded with software, the number was cut in half.

“Education is a fundamental human right, and we are so proud of all the teams and their dedication and hard work to ensure every single child has the opportunity to take learning into their own hands,” said Anousheh Ansari, CEO of XPRIZE, in a statement. “Learning how to read, write and demonstrate basic math are essential building blocks for those who want to live free from poverty and its limitations, and we believe that this competition clearly demonstrated the accelerated learning made possible through the educational applications developed by our teams, and ultimately hope that this movement spurs a revolution in education, worldwide.”

After the grand prize announcement, XPRIZE said it will work to secure and load the software onto tablets; localize the software; and deliver preloaded hardware and charging stations to remote locations so all finalist teams can scale their learning software across the world.

Andrew Wakefield, others hold anti-vaccine rally amid raging measles outbreaks

Andrew Wakefield, disgraced former doctor found to have committed fraudulent research.

Andrew Wakefield, Del Bigtree, and other prominent anti-vaccine advocates unleashed fear and toxic misinformation last night at a well-attended symposium in New York’s Rockland County. The area is currently grappling with one of the largest and longest-standing measles outbreaks in the country, mainly in its tight-knit, ultra-Orthodox Jewish community.

The Monday, May 13 event was reportedly promoted by targeted robocalls and billed as being a “highly informative night of science and discussion addressing your concerns, fears, and doubts.” But according to reporters who attended the event, the speakers made numerous unsubstantiated and egregiously false claims—as usual. In one instance, Brooklyn Orthodox Rabbi William Handler reportedly made the unsubstantiated claim that getting measles, mumps, and chickenpox reduces the risk of cancer, heart disease, and stroke by 60 percent. He did not provide a citation.

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After criticism over moderator treatment, Facebook raises wages and boosts support for contractors

Facebook has been repeatedly (and rightly) hammered for its treatment of the content moderators who ensure the site doesn’t end up becoming a river of images, videos and articles embodying the worst of humanity.

Those workers, and the hundreds (if not thousands) of other contractors Facebook employs to cook food, provide security and provide transportation for the social media giant’s highly compensated staff, are getting a little salary boost and a commitment to better care for the toll these jobs can take on some workers.

“Today we’re committing to pay everyone who does contract work at Facebook in the US a wage that’s more reflective of local costs of living,” the company said in a statement. “And for those who review content on our site to make sure it follows our community standards, we’re going even further. We’re going to provide them a higher base wage, additional benefits, and more supportive programs given the nature of their jobs.”

Contractors in the U.S. were being paid a $15 minimum wage, received 15 paid days off for holidays, sick time and vacation; and received a $4,000 new child benefit for parents that don’t receive paid leave. Since 2016, Facebook also required employees assigned to the company to be provided with comprehensive healthcare.

Now, it’s boosting those wages in San Francisco, Washington, New York and the San Francisco Bay Area to a $20 minimum wage, and $18 in Seattle.

“After reviewing a number of factors including third-party guidelines, we’re committing to a higher standard that better reflects local costs of living,” the company said. “We’ll be implementing these changes by mid-next year and we’re working to develop similar standards for other countries.”

Those raises apply to contractors that don’t work on content moderation. For contractors involved in moderation, the company committed to a $22 per hour minimum wage in the Bay Area, New York and Washington; $20 per-hour in Seattle; and $18 per hour in other metro areas outside the U.S.

Facebook also said it will institute a similar program for international standards going forward. That’s important, as a bulk of the company’s content moderation work is actually done overseas, in places like the Philippines.

Content moderators will also have access to “ongoing well-being and resiliency training.” Facebook also said it was adding preferences to let reviewers customize how they want to view content — including an option to blur graphic images by default before reviewing them. Facebook will also provide around-the-clock on-site counseling, and will survey moderators at partner sites about what reviewers actually need.

Last month, the company said it convened its first vendor partner summit at its Menlo Park, Calif. offices and is now working to standardize contracts with its global vendors. To ensure that vendors are meeting their commitments, the company is going to hold unannounced onsite checks and a biannual audit and compliance program for content review teams.

Luckin Coffee plans to raise over $500M in US IPO

Luckin Coffee, the ambitious Chinese upstart that’s going after Starbucks, could raise nearly $600 million from its upcoming IPO. That’s according to a price range released by the Chinese startup.

In a new filing, Luckin said it plans to sell 30 million shares at an initial range of $15-$17. That gives an estimated raise of $450 million to $510 million, but it could be bumped up if underwriters take up the additional allocation of 4.5 million shares. So, as a grand total, the listing could raise $586.5 million if the full offering is bought at the top of the range.

The company will list on the Nasdaq as ‘LK.’

Luckin filed to go public last month, just weeks after it closed a $150 million Series B+ funding round led by New York private equity firm Blackrock, which interestingly holds a 6.58 percent stake in Starbucks. The deal valued Luckin at $2.9 billion and it took the three-year-old company to $550 million raised from investors to date.

The company has burned through incredible amounts of cash as it tries to quickly build a brand that can rival Starbucks, and the presence that the U.S. firm has built over the last 20 years in China. Through aggressive promotions and coupons, the company posted a $475 million loss in 2018, its only full year of business to date, with $125 million in revenue. For the first quarter of 2019, it carded an $85 million loss with total sales of $71 million.

Starbucks CEO Kevin Johnson has been vocally dismissive of the viability of that strategy of “heavy, heavy discounts.”

“We’re deploying capital and building 600 new stores per year. [We’re] generating the return on invested capital that we believe is sustainable to continue to build new stores at this rate for many years to come,” he told CNBC in a recent interview.

Starbucks claims 30,000 stores worldwide. It has been in China for 20 years and it is aiming to reach 6,000 stores in the country by 2022. Luckin, fuelled by that VC money, has quickly scaled to reach 2,370 locations in under two years with plans to add a further 2,500 this year. That would see it overtake Starbucks — which has 3,600 stores across 150 Chinese cities — although that a metric gives a distorted view since Luckin specializes in digital orders and on-demand delivery. That’s in contrast to the retail model operated by Starbucks.

WorldCover raises $6M round for emerging markets climate insurance

WorldCover, a New York and Africa-based climate insurance provider to smallholder farmers, has raised a $6 million Series A round led by MS&AD Ventures.

Y-Combinator, Western Technology Investment, and EchoVC also participated in the round.

WorldCover’s platform uses satellite imagery, on-ground sensors, mobile phones, and data analytics to create insurance options for farmers whose crops yields are affected adversely by weather events—primarily lack of rain.

The startup currently operates in Ghana, Uganda, and Kenya . With the new funding WorldCover aims to expand its insurance offerings to more emerging market countries.

“We’re looking at India, Mexico, Brazil, Indonesia. India could be first on an 18 month timeline for a launch,” WorldCover co-founder and chief executive Chris Sheehan said in an interview.

The company has served over 30,000 farmers across its Africa operations. Smallholder farmers as those earning all or nearly all of their income from agriculture, farming on 10 to 20 acres of land, and earning around $500 to $5000, according to Sheehan.

Farmer’s connect to WorldCover by creating an account on its USSD mobile app. From there they can input their region, crop type, determine how much insurance they would like to buy and use mobile money to purchase a plan. WorldCover works with payments providers such as M-Pesa in Kenya and MTN Mobile Money in Ghana.

The service works on a sliding scale, where a customer can receive anywhere from 5x to 15x the amount of premium they have paid.  If there is an adverse weather event, namely lack of rain, the farmer can file claim via mobile phone. WorldCover then uses its data-analytics metrics to assess it, and if approved, the farmer will receive an insurance payment via mobile-money.

Common crops farmed by WorldCover clients include maize, rice, and peanuts. It looks to add coffee, cocoa, and cashews to its coverage list.

For the moment, WorldCover only insures for events such as rainfall risk, but in the future it will look to include other weather events, such as tropical storms, in its insurance programs and platform data-analytics.

The startup’s founder clarified that WorldCover’s model does not assess or provide insurance payouts specifically for climate change, though it does directly connect to the company’s business.

“We insure for adverse weather events that we believe climate change factors are exacerbating,” Sheehan explained. WorldCover also resells the risk of its policy-holders to global reinsurers, such as Swiss Re and Nephila.

On the potential market size for WordCover’s business, he highlights a 2018 Lloyd’s study that identified $163 billion of assets at risk, including agriculture, in emerging markets from negative, climate change related events.

“That’s what WorldCover wants to go after…These are the kind of micro-systemic risks we think we can model and then create a micro product for a smallholder farmer that they can understand and will give them protection,” he said.

With the round, the startup will look to possibilities to update its platform to offer farming advice to smallholder farmers, in addition to insurance coverage.

WorldCover investor and EchoVC founder Eghosa Omoigui believes the startup’s insurance offerings can actually help farmers improve yield. “Weather-risk drives a lot of decisions with these farmers on what to plant, when to plant, and how much to plant,” he said. “With the crop insurance option, the farmer says, ‘Instead of one hector, I can now plant two or three, because I’m covered.”

Insurance technologyis another sector in Africa’s tech landscape filling up with venture-backed startups. Other insurance startups focusing on agriculture include Accion Venture Lab backed Pula and South Africa based Mobbisurance.

With its new round and plans for global expansion, WorldCover joins a growing list of startups that have developed business models in Africa before raising rounds toward entering new markets abroad.

In 2018, Nigerian payment startup Paga announced plans to move into Asia and Latin America after raising $10 million. In 2019, South African tech-transit startup FlexClub partnered with Uber Mexico after a seed-raise. And Lagos based fintech startup TeamAPT announced in Q1 it was looking to expand globally after a $5 million Series A round.

 

 

Activision Blizzard has five franchises lined up for its new Call of Duty esports league

Activision Blizzard said it has lined up five franchises for a new, city-based Call of Duty esports league.

Atlanta, Dallas, New York, Paris and Toronto will all play host to franchise teams that will compete in a professional league based on what is perhaps Activision Blizzard’s most successful title, the company announced after its earnings call earlier today.

Each city is partnering with existing Overwatch League team owners to leverage the existing framework that Activision has labored over for the past few years to lay the groundwork for a global, city-based Call of Duty league, the company said.

The first teams are Atlanta Esports Ventures, the joint venture owned by Cox Enterprises and Province Inc.; the Envy Gaming esports team which has been active in Call of Duty competitive play since 2007 and with Dallas Fuel Overwatch league team; New York’s Sterling.VC, a sports media company backed by Sterling Equities (owners of the New York Mets); c0ntact Gaming, which owns the Overwatch League team Paris Eternal and the Paris-based Call of Duty team; and Toronto’s OverActive Media.

“The upcoming launch of our new Call of Duty esports league reaffirms our leadership role in the development of professional esports. We have already sold Call of Duty teams in Atlanta, Dallas, New York, Paris and Toronto to existing Overwatch League team owners, and we will announce additional owners and markets later this year,” said Bobby Kotick, chief executive of Activision Blizzard. “Our owners value our professional, global city-based model, the success we have had with broadcast partners, sponsors and licensees, and the passion with which our players have responded to our events.”

The announcement came on the heels of an earnings announcement that saw the company report earnings of $1.825 billion for the quarter, beating its outlook of $1.715 billion but down slightly from the year ago period when the company brought in almost $2 billion.

The company credited esports and its  Overwatch League and the newly announced Call of Duty city-based league (including selling its first five teams to cities) for contributing to the better-than-expected numbers.