Why Amazon’s Acquisition Of Whole Foods Matters For Startupland

By Tomasz Tunguz from Redpoint Ventures for his blog

Amazon’s acquisition of Whole Foods is notable for many reasons. Of course, there’s the magnitude $13.7B. The second is the shockwaves reverberating through the grocery industry. Costco fell 10% and Kroger almost 25% on the news. Third, the acquisition underscores the importance of physical retail even to the largest American ecommerce giant. Those are all remarkable in their own right.

However, the most interesting part of this acquisition is that it marks the current apotheosis of technology’s impact in the broader economy. In the last 18 months, non-traditional tech acquirers changed the M&A landscape for startups. Walmart, Unilever, GM, Ford spent billions of dollars collectively to acquire Jet, Bonobos, Dollar Shave Club, Cruise, and Chariot. That’s all fine and expected.

But, Amazon’s acquisition of Whole Foods is the reverse: a leading technology company buying a leader of a traditional industry. That might not seem like an important distinction, but it is.

Five of the top ten most valuable companies in America are technology companies: Apple, Amazon, Google, Microsoft and Facebook. Exxon, Berkshire Hathaway, GE, JPMC and Johnson & Johnson fill out the list. The more than $250B on their collective balance sheets implies very few acquisition targets are out of their reach. And if the ripples from the Amazon/Whole Foods merger are any indication, technology initiated M&A of traditional industries has the power to upend the status quo.

How would the world change if Apple bought Tesla to pursue the automotive industry? Or if Facebook bought Citibank to create the next generation mobile bank serving a billion people? Tack on a major global mobile phone carrier, and the social network might replicate M-Pesa’s or WeChat’s social success globally. Would Google acquire Salesforce, and in one fell swoop, add another $8B in annual revenue, add an enormous enterprise salesforce, and develop a global leading software business? Salesforce might be less of a traditional business, but the impact to the software world would be just as disruptive.

Amazon’s acquisition of Whole Foods could be the first of several major transactions in which leading technology companies redefine traditional industries by leveraging their near-infinite balance sheets and injecting rapidly advancing technologies or unique distribution that incumbents simply can’t match.

If the trend does continue, these major acquisitions will create quite a bit of volatility and uncertainty – great conditions for fast-moving startups to develop and seize the new opportunities that will inevitably crop up to compete with tech/traditional conglomerates.

First appeared at his blog here

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Raising Tokens to Build a Company or an Ecosystem?

We need to keep thinking of new roles for the token. I’ve already outlined about 20 such roles in this previous post, Tokenomics: A Business Guide to Token Usage, Utility and Value.

In light of the increasingly larger amounts of tokens being raised recently, I’m beginning to wonder that the intent of these big raises may not just to be to build a company, but also to bootstrap an ecosystem and invest in incentives for user engagements.

Specifically, Civic will allocate 33% of their tokens for distribution to incentivize participation in the ecosystem. Bancor will use 20% (or more) of their token proceeds for their “reserve”, a segment that is apparently needed to run their token liquidity scheme. The IPFS / Filecoin relationship is another interesting case, where Filecoin (upcoming token sale) will be the way to incentivize users to store IPFS content (from IPFS applications for example). I wouldn’t be surprised if other upcoming token sales might do similar things, where the user incentive is built-into the token’s utility.

When I did the OpenBazaar first round of financing in 2015, along with USV and Andreessen-Horowitz, we specifically included in those terms, that a % of that money raised had to be used with their ecosystem of developers who were building applications on top of their protocol. That was another way to incentivize the ecosystem.

The key thing that needs to happen is the explicit linkage of the token with the usage, whether that usage is directly linked to the end-user or the developer.

With Steemit as an example, the tokens are inside a logged user’s wallet, and you use them to actually spend on voting, commenting, publishing, etc, and when you earn something, it goes straight into your wallet. So, the token wallet operation is intrinsically linked to the actual usage of the product.

I’d like to see more cases like Steemit who figured this out, more than a year ago, as soon as they launched.

Building a new company is already hard. Bootstraping an ecosystem and a community of users at the same time as building a product is even harder.

With the influx of available cryptocapital that has become widely accessible, it’s going to be interesting to watch what happens next, because companies now have the luxury of raising enough money to build simultaneously a product, a company, and an ecosystem.

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Fiserv to Acquire Monitise for $89 Million

By Julie Muhn for Finovate

Financial services company Fiserv has agreed to acquire U.K.-based Monitise for 2.9 pence per share, which equates to $89 million.

The acquisition comes after a storied history for Monitise, which was valued at $2.6 billion at its peak in 2014 and had formed successful partnerships with IBM, Santander, Telefonica, Virgin Money, and others. In 2015, however, the company changed its business model because of increased competition from tech giants such as Alphabet and Apple who offered mobile payment services for free. After the pivot, Monitise wasn’t able to recover and ended up putting itself up for sale in 2015.

Founded in 2003, Monitise demoed its mobile banking platform on a Nokia flip phone at FinovateFall 2007, the same year it went public on the London stock exchange. In 2009, Monitise’s mobile payments partner, Metavante, was acquired by Fiserv rival FIS. Most recently, Monitise launched FINkit, a cloud-based platform, in 2016 to foster collaboration between banks and fintechs. BehavioSec, Currencycloud, and Envestnet | Yodlee were among the founding FINkit members.

Fiserv anticipates the acquisition, which is subject to shareholder approval, to “accelerate the Fiserv digital strategy and the development of a next-generation digital banking platform for leading financial institutions worldwide.” The Wisconsin-based company will foster Monitise’s FINkit program to help its bank clients accelerate adoption of fintech services.

Jeffery Yabuki, Fiserv President and CEO said, “Monitise has been a global pioneer and innovator in digital banking for more than a decade.” He added, “Combining its talented associates and advanced technologies with leading digital solutions from Fiserv will expand our clients’ ability to provide differentiated experiences to their customers.”

Founded in 1984, Fiserv most recently presented at FinDEVr New York 2017, where the company’s Sr. Product Manager, Jon Zimmermann, and VP of Electronic Payments, Paul Diegelman, addressed the audience in a presentation titled Payments Processing: Bank-Grade Standards, Now Available to Anyone. Yesterday, the company announced that it will help banks and credit unions join the Zelle P2P payment network via its Turnkey Service for Zelle.

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Fundbox Launches New Small Business Product “Direct Draw”

 

By

Fundbox, a cash flow optimization tool platform for small businesses, announced on Tuesday the launch of its new product, Direct Draw. According to the company, the Direct Draw product allows small businesses to easily apply for credit with just a business bank account, without requiring their personal credit to get started.

While sharing details about Direct Draw, Fundbox reported:

Direct Draw enables Fundbox to help the 18 million SMBs in the U.S. that are underserved by existing funding options, most of which rely on personal credit, something that is unpopular with many [small businesses]. Direct Draw is possible because of the company’s deep investments in artificial intelligence and the 12.8 million unique businesses in its Small Business Graph. Fundbox estimates that six out of 10 small businesses in the U.S. are financially underserved and struggle to find funds to grow.2 Banks only approve 24 percent of the applications they receive from small businesses3 and often cannot lend less than $100,000 profitably.4Many banks and fintech companies in the U.S. require a small business owner’s personal credit for underwriting, which many owners dislike because it prevents them from separating personal and business finances, and because personal credit inquiries can hurt their credit scores.

Eyal Shinar, founder and CEO at Fundbox, also explained:

“The launch of Direct Draw marks another way Fundbox is giving small businesses more control over their finances and access to capital to grow their business. Our artificial intelligence allows us to democratize credit access for SMBs that prefer to not use their personal credit. We do this by leveraging our Small Business Graph to analyze customers’ business fundamentals in the context of their network.”

Fundbox customers using Direct Draw only need to connect their bank account to get started. Fundbox noted that approved customers may withdraw funds any time with the funds transferring as soon as the next business day.

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Former UBS innovation lead establishes cryptocurrency fund

By Cryopto Fund

Europe’s first diversified Cryptocurrency Fund Crypto Fund AG is launching the Cryptocurrency Fund, which will be based on the Cryptocurrency Index, investing in the most important cryptocurrencies such as Bitcoin, Ether, Ripple, and other well-established cryptocurrencies.

The Swiss Fund will be registered with FINMA and embodies the first diversified investment vehicle for digital assets available to professional investors. With the Cryptocurrency Fund™ the Zug (Switzerland) based Crypto Fund AG will offer an index-based, passive product according to the Swiss Collective Investment Schemes Act (KAG), which provides a regulated access to cryptocurrencies for professional investors.

The Cryptocurrency Index™ is calculated by a well-known index provider, and invests in the largest virtual currencies by market capitalization and liquidity. This ensures a high level of diversification which leads to a reduced volatility of the fund, while at the same time ensuring the ability to benefit from the emergence and high growth rate of new cryptocurrencies.

Jan Brzezek, CEO of Crypto Fund AG, explains: “We recognized the growing demand of qualified investors for a regulated and transparent gateway to cryptocurrencies and realized that we need a proven and recognized legal framework allowing qualified investors to invest in cryptocurrencies. Unlike the Winkelvoss-ETF, which was rejected by the SEC, we use the regulated and proven Swiss fund structure according to KAG, where the asset manager, the fund management company and the custodian bank are legally separate from each other. The Fund will be highly diversified and will not list on an exchange and exclusively target qualified investors.”

The team headed by cryptocurrency expert Mr. Brzezek, who until recently worked for the President of UBS Asset Management and UBS Group EMEA and was also nominated as Group Innovation Expert by UBS, is complemented by experienced other finance professionals and is supported by well-known Swiss entrepreneurs: Dr. Tobias Reichmuth, CEO and Founder of the successful infrastructure fund manager SUSI Partners AG, has joined Crypto Fund AG both as founding investor and Chairman of the Board. Together with Fintech expert and investor Marc P. Bernegger (Board Member) and further soon to be announced senior banking industry professionals, they support the fast growth of Crypto Fund AG.

Mr. Reichmuth says: “Private and institutional investors alike show a keen interest for cryptocurrencies as a deflationary value storage medium independent of central banks. Access via a regulated vehicle, to execution and safe storage were so far missing. The Cryptocurrency Fund™ will be the first regulated fund globally which provides a safe and easy access to the rapidly growing cryptocurrency world.”

The fact that Switzerland was chosen as a fund domicile is not a coincidence. Mr. Bernegger adds: “The term “Crypto Valley” has quickly gained acceptance and demonstrates the concentration and growth of Cryptocurrency companies and foundations in the region of Zug and Zurich. It is also important to mention that Switzerland with its good reputation in asset management and stable regulation has already accepted virtual currencies as an asset class. In addition, the Swiss mountains offer safe and tested warehouses for digital assets.”

The law firm MME Legal, which is specialized in blockchain and ICOs, advises Crypto Fund AG on legal matters. The launch of the Fund is expected for Q4 2017. Initial discussions with FINMA have already taken place.

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Target and Cartwheel apps to merge starting this summer, mobile payments and improved maps to follow

 Target’s mobile app strategy will undergo a significant change, starting this summer. The retailer announced this week it will soon combine the functionality of its Cartwheel savings app with its main shopping app, in preparation for an eventual Cartwheel shutdown. The Target app will also receive a notable upgrade this year, adding support for an indoor map that shows your location in… Read More

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