All posts in “Ceo”

Miku watches your baby (and your baby’s heartbeat) while you relax

Using technology that sounds like it comes straight out of Predator, Miku is a new baby monitor that watches and senses your baby’s vitals in real time. The system not only broadcasts a secure feed of your baby’s sleep time but it also analyzes the heart rate and breathing without wearables.

The system uses military technology to sense the baby’s vitals and it will store video even if the Wi-Fi goes out.

The Miku Baby Monitor uses patent-pending AI and machine learning technology called SensorFusion, which combines optical and wireless sensing to build a full and accurate picture of the baby’s critical health metrics with no wires or wearables. Beyond breathing and sleeping patterns, these sensors track temperature and humidity levels to ensure the baby’s environment is stable. Miku’s technology and corresponding app work with smartphones from anywhere in the world and sends instant alerts when it matters most, giving parents a tranquil peace of mind.

The app also records data over time, giving the parents a better understanding of sleep patterns and the like. Developed by CEO and new parent Eric White, the Miku builds on White’s experience building gear and software for the Department of Defense, ITT, L3 and Picatinny.

The team believes the monitor will also work will with elder care as well, allowing worried children to keep an eye on their parents.

“The Miku Baby Monitor is only the beginning for us,” said White. “As a new father, I know there is a huge need for this level of technology and sophistication in a product people entrust to help care for their loved ones. The applications for Miku’s technology are limitless.”

The Miku is available for order now and costs $399.

Zynga to acquire Small Giant Games, the maker of Empires & Puzzles, for $700M

Social game developer Zynga has entered into an agreement to acquire Small Giant Games, the startup behind the popular mobile game Empires & Puzzles, in a deal expected to total $700 million.

Zynga, which has tumbled since its 2011 Nasdaq initial public offering, will initially acquire 80 percent of Small Giant Games for $560 million, composed of $330 million in cash and $230 million of unregistered Zynga common stock. Zynga will fund part of the transaction with a $200 million credit facility.

“We’ve been impressed by the quality and momentum of Empires & Puzzles as we add another Forever Franchise into Zynga’s portfolio,” Zynga chief executive officer Frank Gibeau said in a statement. “Small Giant has created an innovative game that delivers a unique player experience that engages over the long term.”

The deal is expected to close on January 1. Zynga will purchase the remaining 20 percent of Small Giant over the next three years “at valuations based on specified profitability goals.”

Helsinki-based Small Giant Games had raised $52 million in equity funding from EQT Ventures, Creandum, Spintop Ventures, Profounders and others since it was founded in 2013. The company reported $33 million of revenue for Empires & Puzzles, its most popular game, 10 months after its launch in 2017. Small Giant, which is also behind Alliance Wars and Season 2: Atlantis, says they exceeded 2017’s revenue just four months into 2018.

“Our studio was founded on the idea that small, skillful teams can accomplish giant things, and I am confident that partnering with Zynga is the right next step in our evolution,” Small Giant CEO Timo Soininen said in a statement. “We will now operate as a separate studio within Zynga, maintaining our identity, culture and creative independence. By leveraging the expertise and support from the wider Zynga team, we will amplify the reach of Empires & Puzzles and the new games in our development pipeline.”

Zynga, founded in 2007, is the developer of FarmVille, Zynga Poker, Words with Friends and several other mobile games. The company reported revenues of $248.88 million for the quarter ended September 2018, failing to meet analyst estimates.

Zynga expects to bring in $243 million in revenue in the fourth quarter of 2018.

Ten pieces of friendly VC advice for when someone wants to buy your company

I’ve been fortunate to have been part of half a dozen exits this year, and have seen the process work smoothly, and, other times, like a roller coaster, with only the most tenuous connection to the track. Here are 10 bits of advice I’ve distilled from these experiences in the event someone makes you an offer for your startup.

1. Understand the motivations of your acquirer.

The first thing you need to understand is why the acquiring company wants your startup. Do you have a strategic product or technology, a unique team or a sizable revenue run rate? Strategic acquirers, like Google and Facebook, likely want you for your tech, team or sometimes even your user traction. Financial acquirers, like PE firms, care a great deal more about revenue and growth. The motivations of the buyers will likely be the single-biggest influencer of the multiple offered.

It’s also essential to talk price early on. It can be somewhat awkward for less experienced founders to propose a rich valuation for their company, but it’s a critical step toward assessing the seriousness of the discussion. Otherwise, it’s far too easy for an acquirer to put your company through a distracting process for what amounts to an underwhelming offer, or worse, a ploy to learn more about your strategy and product roadmap.

2. Don’t “Test the waters.” Pass, or fully commit.

Going through an M&A process is the single most distracting thing a founder can do to his or her company. If executed poorly, the process can terminally damage the company. I’d strongly advise founders to consider these three points before making a decision:

  • Is now the right time? The decision to sell can be a tough choice for first-time founders. Often the opportunity to sell the company comes just as the process of running it becomes enjoyable. Serial entrepreneurship is a low-percentage game, and this may be the most influential platform a founder will ever have. But the reflex to sell is understandable. Most founders have never had a chance to add millions to their bank accounts overnight. Moreover, there is a team to consider; usually all with mortgages to pay, college funds to shore up and myriad other expenses; their needs should factor into the decision.
  • Is it actually your choice to make? Most investors look at M&A as a sign your company could be even bigger and as an opportunity to put more capital to work. However, when VCs have lost confidence and see a fair offer come in, or they hear a larger competitor is looking at entering your space, they may push you to sell. Of course, the best position to be in is one where you can control your destiny and use profitability as the ultimate BATNA (“best alternative to a negotiated agreement”).
  • How long do you have to stay? In the case of competing offers, you may have limited ability to negotiate price, but other deal terms could be negotiable. One of the most important is the amount of time you have to stay at the company, and how much of the sale price is held in escrow, or dependent on earn-outs.

3. Manage your team.

As soon as you attract interest from an acquirer, start socializing the idea that most M&A deals fall apart — because they do. This is important for two reasons.

First, your executive team will likely start counting their potential gains, and they just may let KPIs key to running the business slip. If the deal fails to close, the senior team will be dejected, demotivated and you may start to hear some mutinous noises. This attitude quickly percolates through the team and can be deadly for the culture. What was supposed to be your moment of triumph can quickly turn into a catastrophe for team morale.

This is typically the toughest part of the M&A process. You need the exec team to execute to close a deal, but you’re running into some of the deepest recesses of human nature, too. Recognize the fact that managing internal expectations is as important as managing the external process.

4. Raise enough money to stay flush for a year.

Assuming you’re selling your company from a position of strength, make sure you have enough capital so that you don’t lose leverage due to a balance sheet lacking cash. I’ve seen too many companies start M&A discussions and take their foot off the gas in the business, only to see the metrics drop and runway shorten, allowing the acquirer to play hardball. In an ideal scenario, you want at least nine months of cash in the bank.

5. Hire a banker.

If you get serious inbound interest, or if you’re at the point where you want to sell your company, hire a banker. Your VCs should be able to introduce you to a few strong firms. Acquisition negotiations are high stakes, and while bankers are expensive, they can help avoid costly rookie mistakes. They also can classically and plausibly play the bad cop to your good cop, which also can contribute positively to your post-merger relations.

My only caveat is that bankers have a playbook and tend not to get creative enough. You can still be additive in helping fill the funnel of potential acquirers, especially if you’ve had communication with unlikely acquirers in the past.

6. Find a second bidder… and a third… and a fourth.

The hardest bit of advice is also the most valuable. Get a second bidder ASAP. It’s Negotiation 101, but without a credible threat of a competitive bid, it is all too easy to be dragged along.

Hopefully, you’ve been talking with other companies in your space as you’ve been building your startup. Now is the time to call your point of contact and warn them that a deal is going down, and if they want in, they need to move quickly.

Until you’re in a position of formal exclusivity, keep talking with potential acquirers. Don’t be afraid to add new suitors late in the game. You’d be amazed at how much info spreads through M&A back channels and you may not even be aware of rivalries that can be extremely useful to your pursuit.

Even when you’re far down the road with an acquirer, if they know you have a fallback plan in mind it can provide valuable leverage as you negotiate key terms. The valuation may be set, but the amount paid upfront versus earnouts, the lock-up period for employees and a multitude of other details can be negotiated more favorably if you have a real alternative. Of course, nothing provides a better alternative than your simply having a growing and profitable business!

7. Start building your data room.

Founders can raise shockingly large sums of money with pitch decks and spreadsheets, but when it comes time to sell your startup for a large sum, the buyer is going to want to get access to documentation, sometimes down to engineering meeting minutes. Financial records, forward-looking models, audit records and any other spreadsheet will be scrutinized. Large acquirers will even want to look at information like HR policies, pay scales and other human resources minutiae. As negotiations progress, you’ll be expected to share almost every detail with the buyer, so start pulling this information together sooner rather than later.

One CEO said that during the peak of diligence, there were more people from the acquirer in his office than employees. Remember to treat your CFO and General Counsel well — chances are high that they get very little rest during this process.

8. Keep your board close, your tiny investors far away.

Founders are in a tough situation in that they’re starving for advice, but they should avoid the temptation to share info about negotiations with those who don’t have alignment. For instance, a small shareholder on the cap table is more likely to blab to the press than a board member whose incentives are the same as yours. We’ve seen deals scuttled because word leaked and the acquirer got cold feet.

Loose lips sink startups.

9. Use leaks when they inevitably happen.

Leaks are annoying and preventable, but if they do happen, try using them as leverage. If the press reports that you’ve been acquired, and you haven’t been, and also haven’t entered a period of exclusivity, try to ensure that other potential bidders take notice. If you’ve been having trouble drumming up interest with potential bidders, a report from Bloomberg, The Wall Street Journal or TechCrunch can spark interest in the way a simple email won’t.

10. Expect sudden radio silence.

There’s a disconnect between how founders perceive a $500 million acquisition and how a giant like Google does. For the founder, this is a life-changing moment, the fruition of a decade of work, a testament to their team’s efforts. For the corp dev person at Google, it’s Tuesday.

This reality means that your deal may get dropped as all hands rush to get a higher-priority, multi-billion dollar transaction over the finish line. It can be terrifying for founders to have what were productive talks go radio silent, but it happens more often than you think. A good banker should be able to back channel and read the tea leaves better than you can. It’s their day job, not yours.

No amount of advice can prepare you for the M&A process, but remember that this could be one of the highest-quality problems you’re likely to experience as a founder. Focus on execution, but feel good about achieving a milestone many entrepreneurs will never experience!

African fintech startup Jumo raises $12.5M more to fund Asia expansion

Months after a big round, African fintech startup Jumo has pulled in a fresh $12.5 million to add more fuel for its expansion into Asia Pacific.

The new investment comes from London-based investment fund Odey Asset Management, and it is an extension to a $52 million round that closed back in September. The deal takes Jumo, which recently moved its headquarters to Singapore, to $103 million raised from investors. Its backers include Goldman Sachs, Proparco — which is attached to the French Development Agency — and Finnfund, and it was part of Google’s Launchpad accelerator last year.

Founded in 2014, Jumo specializes in social impact financial products, such as microloans, savings and insurance. It started in Tanzania, and today claims to have originated more than $1 billion in loans. Since September, when it announced a first expansion into Asia via Pakistan, it claims it has grown to 10 million people saving or borrowing from its platform (from a previous nine million). The company has some 350 staff across 10 offices in Africa, Europe and Asia.

Over the last year, the company said it has doubled the number of financial service providers and telcos on its platform. Of those deals, one of its highest profile is a digital finance product for Uber drivers that’s live in Kenya. That collaboration is likely to expand in Africa and potentially beyond, Jumo said.

Expansion is very much the name of the game all round for the company. Jumo CEO Andrew Watkins-Ball told TechCrunch in September that there are plans to expand to more Asian markets next year but, for now, the company isn’t saying which ones.

Africa’s agtech wave gets $10 million richer as Twiga Foods raises more capital

Kenya’s Twiga Foods has raised $10 million from investors led by the International Finance Corporation to add processed food and fast-moving consumer goods to its product line-up.

The startup has built a B2B platform to improve the supply chain from farmers to markets. Twiga Foods now aims to scale additional merchandise on its digital network that coordinates pricing, payment, quality control and logistics across sellers and vendors.

CEO and co-founder Grant Brooke sees “a growth horizon…to build a B2B Amazon,” with produce as the base.

“If we can build a business around fresh fruit and vegetables, everything else after that is much simpler to add on,” he told TechCrunch.

“Fresh food and vegetables gives you clients that are ordering every two days, and now that’s paying for access to vendors and a proper way to be on every street,” said Brooke.

“It’s now much easier to lay things over that that would have been very expensive to get to end retailers.” In addition to the processed food FMCG it will add now, CEO Grant Brooke named household goods, such as light bulbs that stock and sell in lower volumes than produce, as something the startup could include in the future.     

The $10 million IFC-led investment — co-led by TLcom Capital — comes in the form of convertible notes, available later as equity, according to Wale Ayeni, regional head of IFC’s Africa VC practice. As part of the deal, Ayeni will join Twiga Foods’ board.

Of the decision to fund the startup, Ayeni indicated IFC likes what the company’s already done in “figuring out a way to service a mass market with a digital platform focused on food in a sector that’s not really been touched,” he said. Another factor was Twiga’s prospects to create additional revenue by improving B2B supply chain for FMCG and other consumer products.

Co-founded in Nairobi in 2014 by Brooke and Kenyan Peter Njonjo, Twiga Foods serves around 2,000 outlets a day with produce through a network of 13,000 farmers and 6,000 vendors. Parties can coordinate goods exchanges via mobile app using M-Pesa mobile money for payment.

The company has reduced typical post-harvest losses in Kenya from 30 percent to 4 percent for produce brought to market on the Twiga network, according to Brooke.

“That’s savings we can offer the outlets and better pricing we can offer the farmers,” he said.

Twiga Foods generates revenues from margins on the products it buys and sells. As an example, the company could buy bananas at around 19 shillings ($.19) a kilo and sell at 34 ($.34) shillings a kilo.

“Our margin is how efficient we are at moving products between those two elements,” and the company purchases from farmers at roughly 10 percent higher than Kenya’s traditional produce middlemen, according to Brooke.

Agtech has become a prominent startup sector in Africa. A number of companies, such as Ghana’s Agrocenta and Nigeria’s Farmcrowdy, have raised VC for apps that coordinate payments, logistics and working capital across the continent’s farmers and food markets.

In 2017, Twiga Foods raised a $10.3 million Series A round lead by Wamda Capital. Earlier this year the startup partnered with IBM Africa to introduce to its network of vendors a blockchain-enabled finance working capital platform.

With the new investment and product expansion, Twiga Foods will explore offering to its client network additional financial services. The startup doesn’t divulge revenue information, but “profitability is on the horizon for us,” said Brooke.

Twiga Foods will maintain its focus primarily on Kenya, but “we’re starting to research and dabble in Tanzania,” according to Brooke.

The startup doesn’t plan to move beyond B2B to direct online retail. “I don’t think B2C e-commerce is viable on the continent once you factor in job size and cost of acquisition versus lifetime value,” said Brooke. He also named the high cost of marketing: “In B2C e-commerce space you really have to be in the advertising space. Our clients are ordering every two days with no marketing budget,” said Brooke.

So for the time being, Twiga Foods aims to stick with improving the supply chain for products between Kenya’s buyers and sellers.