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How tech startups became billion-dollar empires amid COVID-19 pandemic

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For the first time since World War II ended in September 1945, the COVID-19 pandemic is arguably the worst crisis to hit the world. As of Friday, over 151 million people have been infected worldwide, out of which about 128 million people recovered, while over three million people have died.

Beyond the human casualties, which left affected families with varying doses of trauma, the pandemic shattered people’s aspirations and made a mockery of projections by companies, including startups and micro, small and medium scale enterprises.

It was only a matter of time before some began to fold up. The total lockdowns in many countries to contain the spread forced companies to shut their doors, and unknown to many, that was the beginning of their end.

In Nigeria, for example, the Association of Small Business Owners of Nigeria said last year that a number of MSMEs might never return to business and the government had to support critical sectors with intervention funds.

Similarly, New York-based Fortune reported in September 2020 that nearly 100,000 establishments that temporarily shut down due to the pandemic were eventually out of business. That invariably led to job losses, accompanied by its negative consequences. The world has not remained the same since then.

Another report by Yelp in September 2020 indicated that in the United States, 60 per cent of closed businesses as a result of the pandemic might not reopen.

But inasmuch as many companies had it rough, some others made a fortune during the pandemic.

For example, Stripe was named as the most valuable Silicon Valley startup. PaymentsDive reported that the pandemic, with its surge in contactless online purchasing, accelerated the company’s growth. Stripe raised $600m in its latest round of fundraising, giving the payments processing software company a $95bn valuation.

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Another classic example is Flutterwave, an African-cum-Silicon Valley payments company launched in 2016 by a Nigerian, Olugbenga Agboola, also known as GB. In March, the company announced it had raised $170m, raising the company’s value to $1bn. With that, Flutterwave became a unicorn, which is a term used for private startup companies that have a value of over $1bn.

Flutterwave’s Investor Relations and Business Manager, Kanyinsola Ajibade, in an interview said the COVID-19 pandemic also contributed to the company’s growth, given that more businesses opted for online payment solutions.

Earlier, Agboola, Flutterwave’s CEO, told TechCrunch that the company grew more than 100 per cent in revenue within the past year due to the pandemic.

A venture capitalist, Asheem Chandna, said in an article on Forbes that it had clearly been a mixed experience for companies; some have thrived while some have declined. “But overall, the net effect of COVID-19 has been to accelerate the disruptive role of technology across industries,” he added.

This was also evident in a London virtual events startup, Hopin, which grew from a value of $38m in January 2020 to about $2.1bn in November 2020, following a rise in demand for its product as a result of the pandemic.

The New York Times reported that the company’s chief executive, Johnny Boufarhat, said he was not planning on raising more money but that unsolicited offers from investors started pouring on. “It’s like a drumbeat,” Boufarhat was quoted as saying. As of March 2021, the company’s value has risen to $5.65bn.

The report noted that the boom was driven by higher demand for digital products and services and that low-interest rates pushed investors to seek returns on riskier assets.

CNBC also said, “With a $5.65bn valuation, Hopin is one of the largest unicorns – privately-held startups valued at $1bn or more – in Europe. The firm says it now has annual recurring revenue of $70m, up from $20m last year and is profitable.”

Speaking on the boom, an investor at Founder Collective, a venture capital firm, said, “I haven’t seen anything like this in over 20 years. The party is as loud and the drinks are flowing as freely as the dot-com boom, despite that we’re all drinking at home and alone.”

Another company that also made billions of dollars during the pandemic was Zoom, the videoconferencing company that created the Zoom app. Its valuation rose from $1bn to $116bn in less than two years. Zoom became one of the go-to apps for videoconferencing, necessitated by the need for companies and individuals to meet and work remotely.

Similarly, VAST Data, a tech company that focuses on data storage, specifically flash memory, hit the $1bn unicorn valuation due to the pandemic as transactions moved online. CNBC reported that part of VAST’s recipe for unicorn success in a pandemic could be the nature of its business.

Also, Instacart, an American company that operates a grocery delivery and pick-up service in the United States and Canada, almost doubled its valuation in 2020, rising to about $17.7bn.

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CNBC reported, “Instacart was valued at $7.9bn at the start of the year (2020) and raised another round of funding in June led by DST Global and General Catalyst. Instacart is now valued at the same level as Airbnb in private markets, highlighting the diverging fortunes startups have seen this year. Instacart has seen its share of the grocery delivery market surge to nearly 50 per cent as more consumers buy extra groceries than before and restaurants operate at limited capacity.”

Also, Clubhouse, a startup that started in 2019 and was valued at $100m was valued recently at $4bn. Reports said the demand for the app, which is still on the iOS platform only but might soon have its Android version released soon, rose because of the pandemic and the need for virtual meetings.

Meanwhile, CNBC said in a report in December 2020 that between October and November 2020, 28 companies became unicorns. It cited the example of Klaviyo, which raised its valuation from $800m to over $4bn in November 2020.

“In a robust year for venture capital investments, Klaviyo and dozens of others rode the digitisation tailwind into unicorn territory,” the report added. Klaviyo Chief Executive Officer, Andrew Bialecki, told CNBC in December, “Between March and the end of the year, the number of customers, the number of brands building on Klaviyo doubled.”

It also cited MessageBird, a cloud platform facilitating communications for companies like Uber, SAP, and Lufthansa across Southeast Asia, Europe, and Latin America, was said to have tripled its valuation to $3bn during the pandemic.

It cited Unqork, Faire and Calm, a unicorn founded in 2019 and grew its valuation to $2.2bn during the course of the pandemic, likely driven by increased venture interest in mental health apps amid the global health crisis.

Duolingo, an education app suitable for learning languages, also saw its value rise significantly. Its value rose from $1.5bn the previous year to $2.4bn. According to CNBC, the COVID-19 pandemic led to the 500 million-download mark for Duolingo.

Co-founder of the app, Von Ahn, said, “We’ve been very fortunate that our growth has been organic. And it’s not just been organic – it’s been rapid.”

TripActions, a Silicon Valley-based startup, raised $155m funding, leading to a valuation of $5bn, according to computerworld.com.

It listed several other tech startups capitalising on growing demand amid the disruptions caused by the pandemic for tools in the world of big data, DevOps, cloud, mobility, the Internet of things and cybersecurity. The startups include Cockroach Labs, Cohesity, Confluent, Front, Funnel, GitLab, Graphcore, Snyk, Tanium and Tessian.­­­­

GeekWire also reported that US startups broke a record in 2020, reeling in $156.2bn, topping $142.7bn in 2018, and $138.1bn in 2019.

Notably, several other startups within and outside the Silicon Valley in the United States raked in billions of dollars in investors funding during the pandemic. In Nigeria also, some sectors of the economy witnessed growth but some experienced a decline.

However, speaking to this and how Nigerian companies fared during the pandemic, the Associate Director, Strategy and Economics at KPMG, Mr Olusegun Zaccheaus, explained that it was important to point out that most of the referenced growth was based mainly on the valuation of the companies.

“The question you want to ask is what drives valuation increase? If you are in an industry that people think would be the future, you get a lot more investments and there is high liquidity in the economy, so people invest in the company significantly and your valuation goes up. That happened for many tech companies. It’s not tied to their profits but valuation at the stock exchange.

“However, if you want to talk about the Nigerian context, look at the sectors that did well, like ICTs, telecoms, cement and we saw that Dangote reached the revenue of N1tn mark. The other sector that did well was financial services and we know the story.”

Zaccheaus said the logistics business also did well, even though they were not listed on the stock exchange to be able to measure how well they performed.

He added, “Logistics is one of the major sectors that is doing well this period and the reason is straightforward; people could not go out. On the other hand, any sector affected by foreign exchange and consumer power didn’t do quite well because sales didn’t increase as such.”

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Nigeria to deploy 5G technology – NCC

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The Nigerian Communications Commission on Wednesday signed a Memorandum of Understanding with the Nigerian Communications Satellite Limited for the use of C-Band spectrum of the Nigerian communications satellite for 5G services in Nigeria.

The C-Band spectrum is expected to play a critical role in helping the nation achieve enhanced broadband and ultra-reliable latency communication.

Chairman, Board of Commissioners, at NCC, Prof. Adeolu Akande, said at the event in recent times, several administrations had begun to license spectrum for commercial deployment of 5G.

He said, “Today, 5G services have already been deployed in United States of America, South Korea, and many more countries.

“Fifth Generation will build on this momentum, bringing substantial network improvements, including higher connection speeds, mobility, and capacity, as well as low-latency capabilities.”

Nigeria hopes to be one of the leading nations in 5G deployment. The NCC disclosed this much in a document, ‘Deployment of Fifth Generation Mobile Technology in Nigeria’ available on its website on Wednesday.

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The document said, “Fifth Generation represents the fifth generation in mobile communications evolution and an incremental deployment is expected over the following decade.

“It is designed to be a system of systems that will bring flexibility to mobile, fixed, and broadcast networks and support more extensive data requirements.

“The technology will impact on the way interactions are done by enabling in some cases unforeseen business models, enhanced lifestyles all resulting in increased productivity.

“Some of the technologies already being touted include automated cars and advanced manufacturing, Internet of things (IoT) which will enable thousands of connected devices, such as smart energy meters, work together and share information. These changes and innovation have enormous economic benefits.”

It added that IHS Economics estimated that 5G would enable $12.3tn of global economic output in 2035.

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Instagram comedian, 34 others nabbed for Internet fraud

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An Instagram comedian and social media influencer, Nwagbo Chidera, also known as Pankeeroy, has been arrested for alleged Internet fraud.

Chidera was arrested alongside 34 others at the James Court in the Lekki area of Lagos State by operatives of the Economic and Financial Crimes Commission for alleged involvement in computer-related fraud.

The other suspects include Chinedu Christian, Gafar Adedamola, Chuka Richard, Dibo Samson, Rotimi Damilola, Habeeb Damilola, Afolabi Michael, Adekanbi Adeola, Emeka Egwuatu, Adeyemi Olumide, Awokoya Iyaniwura, Efunnuga Samuel, Samson Egwuatu, Gbemileke Simeon, Omoyemi Owolabi and Farouk Olatunde.

Others are Orapitan Segun, Oladunjoye Olawale, Ibrahim Olanrewaju, Wasiu Sola, Olamiposi Damilola, Isieq Olamilekan, Abel Junior, Emmanuel Martins, Timilehin Jesse, Kelvin Kendal, Omotola Emmanuel, Rasaq Farouq, Oyelere Shakiru, Timileyin Damilare, Kelly Nwanou, Adedeji Olayinka, Balogun Ibrahim and Makinde Benjamin.

According to the EFCC, Chidera, who was allegedly involved in bitcoin scam after he suffered depression, presented himself as a vendor, who redeemed bitcoin vouchers using the bitcoincoretrading.com platform to defraud unsuspecting victims.

The EFCC, in a statement on Thursday, stated that investigation revealed that one of the suspects, Christian, allegedly defrauded an aged Asian-American lady of over $475,000, adding that he confessed to posing as Dave Frederick, a 58-year-old American on a mission in Syria to lure his victims and defrauding them of their hard-earned funds.

It was gathered that a Mercedes Benz AMG GLE model worth N36m was recovered from him, while the suspect had about N22.3m worth of bitcoins in his blocked chain account.

Other items recovered from the suspects include exotic cars, iPhones, laptops, Android devices and MacBook devices.

The statement added that the suspects would soon be charged.

In another development, the EFCC said its operatives arrested 11 suspected Internet fraudsters in a sting operation in Rivers and Bayelsa states.

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In a statement issued by Uwujaren, the anti-graft agency stated that the suspects were nabbed on Wednesday.

Uwujaren said the suspects were busted following a discreet surveillance operation about their activities in the two states.

The statement read in part, “The suspects are: Eliot Chuku, Oghenero Tega, Pamkim James, Jeremiah Agbani, Frank Freeman, George Naomi, Joshua Patrick, Francis Paul, Bernard Peter, Akarolo Chimeganum and Precious Ebi.

“They were arrested in four locations in Bayelsa State – Queens Estate, Mike Okporkpor, Kpansia and Yenagoa, as well as Unity Estate in Rivers State.

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Global News

Facebook unveils audio push, adds podcasts

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Facebook on Monday said it is adding podcasts and “live audio rooms” in a push to get people talking and take on the fast-growing audio-based app Clubhouse.

“We think a lot of magic happens at the intersection of audio formats, as well as at the confluence of text, audio and video,” Facebook app chief Fidji Simo said in a blog post.

Facebook’s plan to weave audio offerings into the social network comes as it works to prevent losing users to Clubhouse.

Facebook has seen a steady rise in users opting for voice, from audio calls at the social network to leaving spoken messages using WhatsApp of Messenger.

The Silicon Valley titan is building new audio creation tools Simo described as “like having a sound studio in your pocket.”

The tools will let people create short-form Soundbites such as jokes, anecdotes, or spontaneous thoughts, according to Simo.

“While we’re big believers in the power of short-form audio, we also know that some stories and conversations deserve more airtime,” Simo said.

– People talking –

More than 170 million people are connected to Facebook pages centred on podcasts, and some 35 million users are members of podcast fan groups, but listening to one required leaving the social network.

“Within the next few months, you’ll be able to listen to podcasts directly on the Facebook app — both while using the app or when the app is backgrounded,” Simo said.

Facebook also planned to begin testing Live Audio Rooms, expected the feature to be available to all users by the middle of this year.

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To make its audio offerings sustainable for the long term, Facebook is building in ways for people creating content to make money, according to Simo.

Creators hosting Live Audio Rooms will be able to get paid directly by fans, and Facebook plans to add the option to charge for access, Simo said.

Safety and privacy safeguards are also being added to audio features, according to the social network.

The news came a day after Clubhouse said it closed a new funding round as the popular live audio app struggles to scale up in response to demand. The latest round gives the startup a valuation of some $4 billion, according to sources.

Launched last year, the San Francisco-based platform is looking to establish itself as the standard-bearer for digital audio and has already inspired copycat products.

Facebook’s move is “a natural response to a competitive threat,” tech analyst Rob Enderle of Enderle Group.

“If you do nothing, you could become MySpace,” he added, referring to a pioneering social network that faded into oblivion after Facebook arrived.

Facebook’s pattern has been to either buy startups the pose potential threats or to copy features that are attracting  users, the analyst noted.

While riding the hot trend in audio-centric online socializing is smart of Facebook, squashing Clubhouse could add to scrutiny it already faces from antitrust regulators, according to Enderle.

“When a competitor comes along providing your customers something that you aren’t, you don’t have a lot of choices in how to respond.”

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