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Sequoia, Lightspeed India on startup outlook during coronavirus



A man scans an Alipay QR code to get e-vouchers at a store on March 27, 2020 in Hangzhou, Zhejiang Province of China.

Shang Zeyang | China News Service | Getty Images

Like most businesses around the world, start-ups are encountering challenging times as the coronavirus hurts business sentiment and dries up funding. Small- and medium-sized businesses have been more adversely affected in most places, but large corporations have also started slashing jobs.

Entrepreneurs currently trying to build their businesses have to understand how the pandemic is going to shift user behavior in the future and adapt, Rajan Anandan, a managing director at Sequoia Capital India, told CNBC.

He oversees the venture firm’s Surge program which provides seed capital of up to $2 million and community access to selected start-ups in Southeast Asia and India.

In the first quarter of the year, as infection cases around the world began ticking up, there was an overall decline in fundraising activities, data from CB Insights and Crunchbase showed. The data points to worse times ahead as the current quarter could see a more pronounced slowdown.

Currently, there are more than 5 million people worldwide who have been infected by Covid-19, the respiratory disease caused by the coronavirus. The pandemic has pushed the global economy into a downturn as most governments clamped down on business activities to contain the virus.

Make sure you don’t run out of cash

For start-up founders, the immediate priority is to ensure there is sufficient “runway” — the amount of time they have before their businesses run out of cash, said Anandan.

“Once you have adequate runway, focus on reimagining your business. If you’re in a sector that’s been deeply impacted, you may consider … pivoting to an entirely different segment,” Anandan said. He explained start-ups may also need to revamp the way they sell, where they spend their marketing dollars and where they can find new customers.

“Try to understand how the consumer and buying behaviour is likely to change in light of COVID-19 and align your strategies in line with what the likely new scenario is going to be,” Anandan said by email. “If you have runway, then this is also the time to build – to set yourself apart from your competition.”

Complete funding rounds quickly

Hemanth Mohapatra, a partner at venture capital firm Lightspeed India, said that start-ups currently raising funds need to close their rounds as soon as they can.

“Our advice to founders is to close their rounds as quickly as possible, not to wait on multiple term sheets, not to wait on the best possible terms they can possibly get, not to shop around and just close the round quickly,” he told CNBC’s “Street Signs” last Thursday. He added that in the current climate, valuations for start-ups will likely fall, but he predicted the market will bounce back faster than expected. 

Find opportunities as behaviors change

While the pandemic derailed several sectors including travel and tourism this year, other areas — such as e-commerce, digital payments, remote work, online learning, and health-care technologies — have seen a positive impact.

Vinod Nair, an angel investor in early-stage start-ups, told CNBC the ongoing crisis has led to two types of changes in behavior: First, a tactical shift in consumption habits that is expected to last up to two years. Secondly, there are some structural changes taking place — like more people will probably be working from home even after the pandemic is over, according to Nair.

Having been through multiple crises — back in late-90s and also in 2008 — we have seen the best companies and the best founders come out of these crises.

Hemanth Mohapatra

partner at Lightspeed India

“I look for (investment) themes where there is either a structural change or where a change that was already anticipated has just got accelerated a lot,” he said.

For example, the use of online marketplaces, digital payments and electronic health services — from online workout classes to consulting with doctors over the internet — will likely increase, he said.

Look for growing trends

Sequoia India’s Anandan said that alongside changing consumer behavior, the pandemic has accelerated the pace of digitalization. In India, that is evident in the kind of growth seen in areas like education technologies and digital health, he pointed out.

“The number of online learners in education has doubled over the past two months. Telemedicine, which was virtually non-existent in India months ago, is now growing at an exponential rate,” he said.

Lightspeed India’s Mohapatra pointed to a silver lining amid the challenging business environment at the moment.

“Having been through multiple crises — back in late-90s and also in 2008 — we have seen the best companies and the best founders come out of these crises,” he said. “We think calamity leads to creativity.”

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Man City’s ban from European football overturned



Manchester City players celebrate after scoring against Brighton & Hove Albion at the American Express Community Stadium on July 11, 2020.

Manchester City FC | Manchester City FC via Getty Images

Manchester City’s two-year UEFA ban from European football has been overturned by the Court of
Arbitration of Sport (CAS), the Lausanne-based court said on Monday.

CAS ruled that City did not breach financial fair play rules by disguising equity funding as sponsorship, but imposed a 10 million euro fine for failing to cooperate with UEFA.

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Germany’s sex workers protest to go back to work amid coronavirus ban



Prostitutes in Germany are demanding the right to get back to work as the country’s brothels remain closed due to the coronavirus pandemic.

Approximately 400 prostitutes and brothel operators from across Germany demonstrated in the red light district of Hamburg on Saturday, Germany news agency Deutsche Welle reported Sunday

Prostitution is legal and regulated in Germany but the country’s brothels have been closed for almost four months due to the outbreak.

Now, sex workers say they are being treated unfairly and are demanding the right to return to work, especially as other businesses where close contact is permitted, such as hair salons and tattoo parlors, have reopened.

The protest was organized by the Association of Sex Workers with the group warning that the closure of licensed venues had forced some prostitutes onto the streets, putting them in danger both in terms of their health and personal safety.

Ahead of the protest on Herbertstrasse, a street in the district of St. Pauli in Hamburg and the only street in the city’s “red light district” where sex workers occupy windows, similar to Amsterdam’s red light district, the association posted a statement on its website calling for sex workers to be able to work again.

“Prostitutes stand up and ask the politicians to open the brothels,” the association said. “While around the infamous Herbertstrasse in Hamburg/St. Pauli, normal life returns after the coronavirus lockdown, shops, hotels, bars and restaurants have reopened, tourists are guided through the world-famous neighborhood, the windows in Herbertstrasse remain dark (and there is) no life, no business, no joy. Nothing is going on.”

The statement added that “prostitutes are upset” at the continuing ban on sex work, and are concerned for their livelihoods.

“They have met all government requirements, paid taxes, received little corona support, stand with their backs to the wall and are tired of the fact that politics is not taking action.”

The group argues that prostitution does not pose a higher risk of infection than other body-related services, such as massages, cosmetics, dancing and contact sports and that hygiene “has always been part of business for prostitutes.” The group added that workers are prepared to implement more protective measures, such as partitions in the windows, ventilation and the recording of customer contact data. 

The group has questioned whether it is proportionate to keep Germany’s brothels closed given the country’s falling number of coronavirus infections. Like its European counterparts, Germany has seen a high number of coronavirus cases (with nearly 200,000 cases to date) but unlike its neighbors, it has kept the death toll low with 9,071 fatalities so far. Germany has attributed its low death toll to several factors, including a robust contact-tracing system and modern hospital infrastructure.

There are estimated to be around 400,000 sex workers in Germany, although no official data is recorded. The Association of Sex Workers cited members that feel humiliated having to turn to the state for financial support, and also those that insist they can offer their services in a safe way. One worker, Anna, was quoted as saying that partitions had been set up in the windows of Herbertstrasse.

“Mouth-nose masks are already there. We went through everything carefully: we can also offer sexual services under coronavirus protective measures. We find it insulting and incapacitating if we are not trusted,” she said.

The association said that sex workers in Belgium, Switzerland, the Netherlands, Austria and the Czech Republic had been allowed to return to work since the beginning of June.

In Amsterdam, where Europe’s most well-known Red Light District is located, sex workers were allowed to return to work last month after the government brought forward an initial return to work date of September 1.

Red Light United, a group representing sex workers’ interests in the Netherlands, said that the ban on sex work during the coronavirus crisis had forced many women with little or no financial buffers into illegal work. 

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Trump advisor Navarro calls TikTok CEO Kevin Mayer an ‘American puppet’



A TikTok logo seen displayed on a smartphone with Chinese flag on the background.

Omar Marques | SOPA Images | LightRocket via Getty Images

White House trade advisor Peter Navarro dubbed TikTok’s new CEO Kevin Mayer, an “American puppet” for working at the Chinese-owned social media app, in an interview with Fox Business on Sunday.

Navarro also used the interview to double down on accusations that Chinese apps are gathering data on Americans and handing that over to Beijing. He also said to expect “strong action” from President Donald Trump on TikTok and other Chinese apps.

TikTok has been in the cross-hairs of Washington for some months. But pressure on TikTok, which is owned by Beijing-based Bytedance, rose last week when Secretary of State Mike Pompeo said the government is “looking at” banning the viral app.  

We have never shared TikTok user data with the Chinese government, and would not do so if asked. Period.

The Trump administration maintains that TikTok and other Chinese apps gather lots of data from American users and send that back to China, accusations repeated by Navarro. 

“What the American people have to understand is all the data that goes into those mobile apps that kids have so much fun with and seem so convenient, it goes right to servers in China, right to the Chinese military, the Chinese Communist Party, and the agencies that want to steal our intellectual property,” Navarro told Fox.

“Those apps can be used to steal personal and financial information for blackmail and extortion, they can be used to steal business intellectual property and proprietary secrets.” 

The Ministry of Industry and Information Technology was not immediately available for comment when contacted by CNBC.

Navarro also mentioned WeChat, China’s largest messaging app which is owned by technology giant Tencent

“TikTok and WeChat are the biggest forms of censorship on the Chinese mainland, and so expect strong action on that,” he alleged. 

TikTok does not operate within mainland China. Instead, ByteDance runs a very similar product called Douyin.

After mentioning that India banned several Chinese apps, Navarro said: “TikTok, WeChat, I suspect the president is just getting started with those two,” without elaborating if that meant a ban was coming. 

In response to Navarro’s comments, a TikTok spokesperson said protecting the privacy of its users’ data is a “critical priority.” 

“Our Chief Information Security Officer has decades of industry and US law enforcement experience. TikTok’s parent is a privately owned company backed by some the best-known US investors, which hold four of its five board seats,” a TIkTok spokesperson told CNBC. 

“TikTok is enjoyed by users throughout the world, but the app is not even available in China. As we have said repeatedly, we have never shared TikTok user data with the Chinese government, and would not do so if asked. Period.”

Tencent declined to comment. 

TikTok has faced accusations of censorship in the past but has denied that it removes “content based on sensitivities around China or other governments.” In regards to privacy, TikTok has previously said that U.S. user data is stored in the United States, with a backup in Singapore. The app also said that it has “never provided user data to the Chinese government” nor would it do so if asked. 

Meanwhile, services operating on the Chinese mainland, including WeChat, regularly censors posts and messages that are deemed sensitive to the Chinese government. 

TikTok CEO an ‘American puppet’

For its part, TikTok has been trying to distance itself from its Chinese parent company. 

ByteDance hired former Disney executive, Kevin Mayer, to be TikTok’s CEO earlier this year. His priority was seen as rebuilding trust with regulators

But Navarro criticized the hire, calling Mayer an “American puppet” and saying that the strategy of putting a U.S. citizen in charge is “not going to work.” 

TikTok was not immediately available for comment specifically on the remarks regarding Mayer. 

The White House trade advisor also said that any plans to spin-off TikTok into an American company would also not be beneficial to the U.S.

“If TikTok, if it separates as an American company, that doesn’t help us because … we’re going to have to give China billions of dollars for the privilege of having TikTok operate on U.S. soil,” Navarro said. 

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