Visa and Kenya’s Safaricom partner on M-Pesa, payments and tech

Visa just connected to Africa’s most powerful mobile payments network. The global financial services company and Kenyan telecom Safaricom — operator of the M-Pesa mobile money product — announced a partnership today on payments and tech.

The arrangement opens up Visa’s global merchant and card network across 200 countries to M-Pesa’s own extensive financial services network in East Africa.

The two companies will also collaborate “on development of products that will support digital payments for M-Pesa customers,” according to a Safaricom release. The partnership is still subject to regulatory approval.

Safaricom’s M-Pesa app is arguably the most recognized fintech product in Africa and has become a global case study in using mobile money to increase financial inclusion.

On a continent that is still home to the largest share of the world’s unbanked population, Kenya has one of the highest mobile-money penetration rates in the world. This is largely due to the dominance of M-Pesa in the country, which stands as Africa’s 6th largest economy. Across Kenya’s population of 53 million, M-Pesa has 24.5 million customers and a network of 176,000 agents. The product’s mobile money market share in the country has hovered above 75% for years.

M-PESA Sector Stats 4Q 2019 per Kenya’s Communications Authority

Since launching M-Pesa in Kenya in 2007, Safaricom has expanded the product to additional East African countries and added financial options, such as lending and small business services to the platform.

M-Pesa is as ubiquitous to Kenyan culture as Coca Cola is in the U.S. The product’s easy to use and allows transfers and payments on any basic mobile phone via SMS.

Image Credits: Getty Images

The details are still vague, but Visa and Safaricom also said they will use the partnership to facilitate online commerce. The two payment providers aim to “offer an expanded set of mobile e-commerce capabilities to merchants and consumers by enabling secure and convenient cashless payment solutions,” according to a Visa release sent to TechCrunch.

Visa has been on a VC and partnership spree with African fintech companies over the last year. The company announced collaborations with payment startups Paga and Flutterwave and invested $200 million in Nigerian financial services provider Interswtich. In its 2020 Investor Day presentation, Visa named working with the continent’s payments startups in particular, as part of its strategy to expand on the continent.

As one of the most well capitalized and profitable companies in Kenya, Safaricom’s no startup. But the reach of its M-Pesa network will certainly give Visa an extended presence in Africa. The partnership will also expand the global financial services offered to Safaricom’s large East African consumer and small business network.

Visa’s Africa strategy banks on startup partnerships

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Google under fire for squeezing travel startups hit by coronavirus refunds

Google is facing anger from the German startup ecosystem for refusing to restructure ad payments linked to travel and transport bookings that were subsequently wiped out by the coronavirus crisis.

TechCrunch has seen a letter addressed to Google that’s co-signed by eight travel industry startups in which the tech giant is asked for flexibility in how it enforces payment terms around these earlier ad auctions.

“By selectively enforcing strict payment terms on larger partners — especially from the travel and transportation industry — for its services provided to market those products, Google is opting out of sharing the responsibility to do right by consumers,” writes Christian Miele, the president of the German Startups Association — on behalf of the CEOs of Dreamlines, FlixBus, GetYourGuide, Homelike, HomeToGo, Omio, Tourlane and Trivago, who are co-signatories to the letter.

The eight startups represent €75M+ ($80M+) in ad revenues for Google in Q1 2020, per the letter.

The startups go on to call on Google to “share the burden”, noting that “leading companies from Germany and around the world have gone to unprecedented lengths for consumers” — such as issuing no-questions-asked refunds as a result of what it calls the “current extraordinary global situation”.

Globally, the travel industry has been decimated by the coronavirus crisis with demand evaporating almost overnight and no realistic prospect of the sector recovering until at least next year — plunging travel startups into a nuclear winter.

At specific issue here is the startups say Google is demanding payment for ads attached to bookings they subsequently refunded. Such as, for example, Easter trips and tours booked earlier in the year before the pandemic had taken hold in Europe.

This means the startups are now on the hook for substantial payments to Google for bookings that did not convert into revenue for their own businesses.

“The conflict is with the advertising dollars that we paid to Google for customers that could never be converted,” explains GetYourGuide CEO Johannes Reck. “People typically book two to three weeks out when they book for transport, hotel. It’s a little bit closer for experiences but particularly in the pre-Easter season… there are lots of booking volumes that come through Google and are then booked.

“We held the cash from these bookings and then the entire lockdown happened. Naturally what we did it after the lockdown happened is that we refunded all of the customers which were pretty significant amounts of money but which was obviously the right thing to do because they couldn’t travel — they had to stay at home.”

Reck says that when GetYourGuide went back to Google — to ask for at least a discount on the payments or else for them to be restructured so the business would not need to pay until travel picks up again — Google point blank refused.

“Google said A) we’re not going to participate in the cancellations at all — that’s all your thing to do, your customers, basically. Despite the fact that [they] can track every single customer. They know exactly which customers came from Google. And B) we’re also not restructuring the payment terms — so you have to pay immediately, within thirty days,” Reck told TechCrunch.

“That’s obviously terrible because all of our employees are on short term labor programs right now.”

“To me it’s inexplicable that we have to carry the full burden while the most profitable company in the world that has received more than €500M from us last year doesn’t want to do that,” he added. “That to me is just wrong.”

We reached out to Google to ask about the payments but at the time of writing the company had not responded.

Google’s parent entity, Alphabet, reported earnings yesterday, disclosing a significant slowdown in its ad business in March. However it still reported $41.16BN in revenue for the quarter — beating analyst estimates. Earnings per share did not do as well as expected, though, coming in under expectations at $9.87 in per-share income.

Ads remain the primary money engine for Alphabet, with Google generating the bulk of its revenue and profit, which are in turn largely generated by ad incomes. So the tech giant is exposed to the coronavirus crisis, as marketing budgets are put to the torch — though its multi-billions in revenue make it considerably less exposed than startups that advertise on its platform.

Aside from the raw impact of an unprecedented crisis hammering these smaller businesses, there’s a specific political dimension to the startups’ complaint — given they are in receipt of financial aid from the German government which is providing funds to support wage bills during the coronavirus crisis.

So now there’s the prospect of taxpayer funding flowing into Google’s coffers — instead of helping startups retain staff.

“We’re currently getting governmental credit and now the governmental credit would basically need to be paid out to Google to fund advertisment bills for customers that could never be legally converted, so we are pretty outraged,” said Reck.

The German government laid out further details of a separate €2BN financial support program today, which is specifically intended for VC-backed startups and SMEs — and is slated to start delivering support funds next month.

Though, again, the startups’ concern is the intended relief won’t help them unless Google agrees to defer the ad payments.

Asked whether GetYourGuide might need to make staff redundant if Google refuses to restructure the payments, Reck said: “So far we have not. And for the eight companies that sent the letter I think the situation is different. Ultimately we would get governmental credit — and that governmental credit would be used to pay Google.”

He also pointed out that other tech giants have been flexible over similar payments.

“It’s really striking because they are very isolated,” he said of Google. “Facebook, Microsoft, every other company was very forthcoming with travel and transportation companies in this pandemic. They all say pay whenever you’re ready to pay — don’t worry about us, get through it first. Facebook even gave additional ad discounts for the future when we want to reboot.

“So to me it’s staggering because the group of companies that wrote the letter spent more than half a billion dollars last year on Google. And still they’re not willing to do anything for us.

“At the end of the day Google needs to step up to their responsibility,” Reck added. “If you’re even benefitting from people losing jobs in this pandemic I think that’s just completely wrong.”

Discussing the matter in a telephone call with TechCrunch, Thomas Jarzombek, commissioner of the Federal Ministry for Economic Affairs and Energy for the Digital Industry and Start-ups, told us the German government raised the issue of the ad payments in a call with Google yesterday. He said Google told it it would be dealing with such requests on a “case-by-case” basis, which Jarzombek described as a concern — given the lack of transparency around its decisions.

“In Germany there are a lot of companies behaving in some kind of social manner to support the ones that are not that strong financially,” said Jarzombek. “When we look at Google it’s obvious that this is one of the financially strongest companies in the world. And what I’m more concerned about in that case is that Google told us they will decide ‘case by case’ whom they will help out.”

He said the issue is one that’s likely to affect startups more than “traditional” types of businesses which are likely to be spending less on Google ads.

“For these digital startups the amount they’re spending on ads on Google and on Facebook is maybe the biggest share of their cost position,” he added. “So to be honest we are afraid that this can be a disadvantage for them.”

He also raised the spectre of competition — saying the concern is Google’s case by case decisions may be less favorable for startups that are “in some kind of competition” with the tech giant.

“There are other companies that are in competition with all these Google verticals… and it may be in these ‘case by case’ decisions Google will not be very kind to them,” he suggested. “So this kind of procedure is completely intransparent to us — and also to the companies.”

In recent years Google has faced substantial antitrust scrutiny and enforcement in Europe, related its dominant position in the search market — with the European Commission levying a number of fines, including related to Google Shopping and search ad brokering.

The Commission has also previously said it has received a number of complaints about the tech giant’s activities in other verticals — including travel search — though so far without launching a formal probe.

Jarzombek told us the German government has not currently raised the issue of Google’s selective response to ad payment restructuring with the Commission, as it’s not yet clear how the company will respond to the calls for a rethink — saying it’s waiting for a “final response” from Google to its concerns.

But he emphasized he remains concerned about the lack of transparency around Google’s processes, reiterating: “The procedure is intransparent for us and also intransparent for the startups.”

Asked if GetYourGuide has any competition concerns related to Google’s response towards the travel startup sector, Reck told us: “We’ve just been a very happy Google partner up to this point. We’ve done tremendous work with them. Antitrust is mostly regarding flights and hotels — it’s not experiences. And we have always had a very good relationship with them which is why I’m so absolutely baffled that in the worst hour of our company history they currently completely changed behavior and become so aggressive.”

While there may be no legal requirement for Google to amend contractual terms around the payments, even during a pandemic, Reck says the bigger point is simply about doing the right thing.

After all, this is a company that used to attach itself to the motto ‘do no evil’.

“Google never wants to give in on any of these things — out of principle. But I think their principle here is just misguiding them into a completely wrong direction because according to their principle we should never have refunded customers and then everything would be fine. But that doesn’t follow the logic of a pandemic where everyone has to stay at home,” said Reck.

“I don’t even want to get into the legal argument on this because I think just morally it’s wrong,” he added. “As [one of] the most profitable organizations in the world you cannot charge startups who are furloughing their employees and put them on short term labor programs and who are basically now getting subsidized by the government — those subsidies can’t flow back into Google.”

Update: A Google spokesperson has now sent the following statement:

Small and medium-sized companies are facing unprecedented challenges and our teams are working day and night to help our partners protect their business and stay in touch with their customers. This includes an 800M US-$ financial support package for organizations, including US-$ 340M advertising credits for our SMB customers and helping people stay up to date on the latest travel advisories. We’re committed to doing even more to help our users and our customers through this crisis, and are in continued communication with our partners, including the travel industry.

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Dribbble, a bootstrapped ‘LinkedIn’ for designers, acquires Creative Market, grows to 12M users

Traditionally dominated by big players like Adobe and Autodesk, the world of design has been flush with a newer wave of startups that are creating collaboration spaces and new cloud-based tools designed to address the needs of creatives today. Today, two of those players are combining. Dribbble, an online community for designers that lets them post their work and look for work, is acquiring Creative Market, a marketplace for ready-to-use fonts, icons, illustrations, photos and other design assets.

Financial terms of the deal are not being disclosed, Dribbble’s CEO Zack Onisko said in an interview. Prior to this, bootstrapped Dribbble was profitable — revenues come from its job boards, advertising and member subscriptions, kind of like a LinkedIn aimed at the design community — and it had 6 million monthly active users, with 3.5 million registered users. Adding in Creative Market will bring the total number of monthly active users across the two sites to 12 million.

The acquisition is happening at a time when we’re seeing some big growth among startups that speaks to how the balance of power is shifting in the world of software aimed at designers.

Just today, Figma announced a $50 million raise at a $2 billion valuation, money that it plans to use for its own spate of acquisitions and investments in more design tools. Canva last year raised funding at a $3.2 billion valuation. Smaller, younger startups like Frontify (which helps companies manage their design assets) have also been raising and Dyndrite have also been raising. Meanwhile, Adobe continues to work on ways to keep its legacy products, like the 30-year old Photoshop (look, it’s a millennial!) relevant.

Indeed, even the concept of who the target audience even is has shifted.

“We talk about designers but really it’s creatives,” Onisko said. “A lot of creatives are multi-skilled and they work in all sorts of different mediums. The historic focus is product and web design but we’ve seen it slide into motion graphics or 3D or photography.”

This is actually the second time Creative Market has been acquired. The startup was first purchased by Autodesk in 2014, at a time when the latter was looking to widen its range of products both to take on Adobe more squarely, and to target more casual and prosumer users as well as to address the wider needs of its core designer community.

That ultimately didn’t work out, and Creative Market was spun out as a startup again in 2017, with $7 million in funding led by Accomplice.

More than two years on from that, it seems that Creative Market saw the logic in coming together with another company for better economies of scale.

And perhaps this time, the acquirer is a better cultural fit. Both companies are pretty distributed and decentralised (making for a very easy transition to working under stay-at-home orders in recent weeks). And it might have helped, too, that Onisko had once previously been Creative Market’s chief growth officer before taking on the role as Dribbble’s CEO.

The plan will be to keep both companies’ brands and teams separate, with Chris Winn continuing to lead Creative Market as its CEO. Creative Market will continue to build out its marketplace of design assets, and Dribbble will continue to position itself as a place for those designers to set out their profiles and connect with those looking to hire them, as well as each other.

“We’re able to do our own thing and beat our own drums,” said Onisko, with the plan being to keep “marching on our own roadmaps.”

Over time, when the time is right, Onisko said there might be an opportunity to integrate the businesses, but that will be in the future.

One area where the two will be coming together right away is in cross-pollinating membership. Up to now, people joined Dribbble by invitation from previous members, which Onisko said was a good way of keeping growth in check and applying a kind of peer-reviewed quality control layer. Now, the idea will be that Dribbble will open up to all new users, and those who are already registered on Creative Market can automatically become members on the sister site.

“The big opportunity is that we can do in 2-3 years what we would have done in 3-5 years as separate companies,” Onisko added.

“We’re so excited to bring together two fully-distributed teams who work everyday to serve the design community,” said Winn, in a statement. “The opportunity for both companies is that much larger thanks to this partnership and I’m so excited to join forces.”

For its part, Onisko said that Dribbble has no intention of changing from its growth course when it comes to finances. The company has always been bootstrapped — that is, surviving with no outside investors — and is profitable. And there are no plans to use this moment to seek outside funding, he added. The company has been approached by interested parties — “all the usual suspects,” he said — for acquisition, Onisko said, but for now that’s also not been something the company has wanted to explore.

“We feel that we’re very much in our infancy,” Onisko said. “We have pretty big ambitions and want to march forward. We’ve talked to all the usual suspects, and we are on friendly terms and keep all the conversations going, but we will continue to stay independent and operate in our contrarian way.”

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Facebook now allows users in the U.S. & Canada to export photos and videos to Google Photos

Facebook is today rolling out a tool that will allow users in the U.S. and Canada to export their Facebook photos and videos to Google Photos. This data portability tool was first introduced in Ireland in December, and has since been made available to other international markets.

To use the feature, Facebook users will need to click on “Settings,” followed by”Your Facebook Information,” then “Transfer a Copy of Your Photos and Videos.” Facebook will ask you to verify your password to confirm your identity in order to proceed. On the next screen, you’ll be able to choose “Google Photos” as the destination from the “Choose Destination” drop-down box that appears. You’ll also need your Google account information to authenticate with its service before the transfer begins.

The tool’s release comes about by way of Facebook’s participation in the Data Transfer Project, a collaborative effort with other tech giants including Apple, Google, Microsoft, and Twitter, which focuses on a building out common ways for people to transfer their data between online services.

Of course, it also serves as a way for the major tech companies to fend off potential regulation as they’ll be able to point to tools like this as a way to prove they’re not holding their users hostage — if people are unhappy, they can just take their data and leave!

Facebook’s Director of Privacy and Public Policy Steve Satterfield, in an interview with Reuters on Thursday, essentially confirmed the tool is less about Facebook being in service to its users, and more about catering to policymakers’ and regulators’ demands.

“…It really is an important part of the response to the kinds of concerns that drive antitrust regulation or competition regulation,” Satterfield told the news outlet.

The launch also arrives conveniently ahead of a Federal Trade Commission hearing on September 22 that will be focused on data portability. Facebook said it would participate in that hearing, if approached, the report noted.

In Facebook’s original announcement about the tool’s launch last year, it said it would expand the service to include more than just Google Photos in the “near future.”

The transfer tool is not the only way to get your data out of Facebook. The company has offered Download Your Information since 2010. But once you have your data, there isn’t much else you can do with it — Facebook hasn’t had any large-scale rivals since older social networks like MySpace, FriendFeed (RIP!), and Friendster died and Google+ failed.

In addition to the U.S. and Canada, the photo transfer tool has been launched in several other markets, including Europe and Latin America.

 

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Early stage investor The Fund expands beyond NYC with new partners in LA and London

The Fund, an early-stage investment firm with a memorably straightforward name, is looking beyond New York City as it starts investing its second fund.

Founders Jenny Fielding (who’s also managing director at Techstars New York) and Scott Hartley (also co-founder and partner at Two Culture Capital) told me that in the past two years, they’ve already backed 52 New York City startups.

“The seed funds in New York have all gone upstream,” Fielding argued, making it harder for founders to get the smaller checks they need when they’re getting started. So The Fund is aiming to participate in those “first check” rounds of between $500,000 and $1.2 million.

To find those investments, Fielding and Hartley said rely on a “crowdsourced” approach, taking recommendations from the startup founders that they’ve recruited as limited partners in The Fund — a group that includes names like General Assembly founder Matthew Brimer, One Medical founder Tom Lee, Handy co-founder Oisin Hanrahan, SoundCloud founder Alex Ljung and ClassPass co-founder Sanjiv Sanghavi.

At the same time, rather than relying on a “voting and consensus” process, the decisions are ultimately made by the investment committee, a smaller group that initially included Brimer, Fielding, Hartley and Katie Hunt.

The firm is targeting $9 million for the second fund, with one-third deployed in New York, another third in Los Angeles and the final third in London.

Hartley said The Fund is taking a “modular approach” to this expansion, with an independent investment committee in each city: In New York, it will be Josh Hix, Katie Shea and Becky Yang, along with Fielding and Hartley; in Los Angeles, the committee includes Raina Kumra, Josh Jones, Anna Barber and Austin Murray; and in London, it’s Carmen Alfonso Rico, Eamonn Carey and Marina Gorey.

“The big vision is, we’ve literally written the playbook,” Fielding said. “Fund one was an experiment, and now fund two is an experiment: Does this scale? After we have about a year’s worth of data about deals under our belt, we want to take it to the next level. Why shouldn’t The Funds be popping up in every city?”

And even though COVID-19 has brought a halt to large sectors of the global and domestic economy, Hartley said the firm has continued to write checks at the same pace.

“We had such conviction in the [founding] teams that it hasn’t really slowed down the cadence of our investing,” he said. “We take a long-term approach with pre-seed investing. We see this as a multi-year journey.”

Fielding added that it’s been “inspiring” and “phenomenal” to see how their existing portfolio companies have adapted to this new reality. As an example, she pointed to how rowing class startup CityRow has shifted to virtual classes.

And if you’re wondering about that name, Fielding said they were perfectly aware that calling themselves The Fund could prompt some  “Who’s on first?”-style confusion.

“We wanted to make fun of ourselves a little bit,” she said. And besides, most of the good tree names were taken.

Digging for dollar signs amid edtech’s current momentum

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Here’s what NASA’s Mars helicopter will look like when it makes history with the first extraterrestrial powered flight

NASA is getting ready to send its next Mars rover to the red planet later this year, and that mission will also carry Ingenuity, a brand new helicopter robot that will attempt to make history by becoming the first vehicle to perform a powered atmospheric flight on another planet. NASA’s Jet Propulsion Laboratory (JPL) created a trailer of sorts to show you approximately what that flight will look like, when it takes place sometime after the targeted February 18, 2021 arrival date for the Mars 2020 mission.

Ingenuity may look like a simple dual rotor drone, but it’s actually a groundbreaking piece of engineering that has to overcome significant technical challenges in order to complete its mission of performing short-altitude ‘hops’ on Mars. That’s its sole goal, and the 4-lb craft doesn’t have any other instruments on board, since it’s essentially a demonstrator that will set up the design and development of future aerial exploration craft to help with the study of Mars.

Even flying the soft-ball sized main body of Ingenuity is an achievement because flying on Mars requires much more lift than it does here on Earth due to the nature of the planet’s atmosphere. Accordingly, the helicopter’s test flights will only last around 90 seconds each, and climb to a height of just 16.5 feet – easy here at home, but roughly equivalent flying at around 100,000 feet on Earth – much higher than most commercial aircraft.

NASA’s Mars 2020 mission is currently scheduled to launch between July 17 and August 5 this year, and NASA Administrator Jim Bridenstine has reiterated multiple times that the mission remains a top priority despite restrictions and workarounds necessitated by COVID-19, because the optimal window for making the trip to Mars only recurs once every two or so years.

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Freada Kapor Klein warns of ‘vulture capitalists’ during pandemic

The tech industry experienced turmoil before during the dot-com bust and again during the 2008 economic downturn. But this time it’s a bit different, according to Kapor Capital founding partners Freada Kapor Klein and Mitch Kapor.

“What’s different this time is that it is society-wide,” Kapor Klein said during an Extra Crunch Live appearance this week. “It’s not just the dot-com bust or its not just financial services. It is much more widespread. But again, as you point out, tech is in a much better position because tech is related to the things that are thriving.”

Kapor, formerly a partner at a Sand Hill Road VC firm during the dot-com bust, said it’s similar in that it’s an “enormous disruption with great uncertainty about what will be on the other side of it.”

The details, however, are very different. Assuming there will eventually be a vaccine, Kapor said he believes things will be able to get back to some sort of normal, “notwithstanding the irrecoverable disruptions of permanently-closed small businesses.”

In the two previous downturns, there was something inherently wrong with the economy, but that’s not the case right now, he added.

“The good news is that, to the extent to which the pandemic gets under control, the economy should restart,” said Kapor. “The question, though, is on what basis and do we use this as an opportunity to rethink some fundamentals. Are we actually serious about treating essential workers better, really having a safety net and paid sick leave and universal health benefits and childcare — where we can see and feel now the absence of that is hurting the people we depend on four our lives. But it is not a certainty. This is the other thing about these great disruptions. We have some agency about what happens next. And so it’s almost a cliché now, but it’s terrible to waste, you know, a crisis. Our hope is that coming out of this, as a society, we make some different decisions about how we allocate resources and what we think the baseline is that everybody is entitled to.”

But while we’re all still knee-deep in the pandemic, there are ways to ensure employers treat workers fairly and VC firms treat founders with respect and don’t take advantage of them during these vulnerable times.

Below you’ll find some more stellar insights from the duo that touch on making tough decisions to layoff or furlough employees and how to do it in an equitable way, as well as the rise of what Kapor Klein refers to as “vulture capitalists.”

Equitable layoffs

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