Tencent backs fintech firm Voyager to set up battle with Alibaba in the Philippines

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China’s internet battle is rapidly reproducing itself in Southeast Asia. One new hotspot is the Philippines, where Tencent just agreed to invest in Voyager, a fintech business started by telecom firm PLDT.

The deal would bring Tencent into direct competition with arch-rival Alibaba, which entered the Philippines 18 months ago when its fintech affiliate Ant Financial invested in Mynt, a financial venture from Globe Telecom which is a competitor to Voyager.

Following a week of speculation, PLDT announced a deal today that sees Tencent and KKR pay up to $175 million for a minority stake in the Voyager business. There have been reports that PLDT is looking to sell its majority stake, for now that has been retained but the firm did say that it has options to add other investors via the creation of new shares that would reduce its total holdings to less than 50 percent. Still, it plans to retain its position as the largest shareholder whilst bringing in expertise and more capital for growth.

Fintech is rapidly becoming a key focus for startups and larger tech companies in Southeast Asia, where the internet and mobile phone ownership promises to increase digital inclusion and give the region’s collective population of more than 600 million people new ways to save and spend. Microloan startups have raised significant funds from investors this year — Philippines based SME lender First Circle just closed a $26 million investment this week, for example — and the bigger fish in the pond are eying key infrastructure plays such as mobile wallets and payment systems.

That’s where both Voyager and Mynt come into the picture.

Voyager offers a range of digital services which include a prepaid wallet, digital payment option for retails, a remittance network for sending money, a digital lending service and a loyalty and rewards program. Mynt is similar, offering payment, remittance and loans for consumers and businesses.

The Voyager deal is the biggest investment in a Philippines-based startup — though you can debate whether a telco spinout is really a “startup” — and it only goes to reiterate increased attention Southeast Asia is seeing from China, and how fintech is becoming one of the hottest verticals.

Alibaba and Tencent are carving up Southeast Asia’s startup ecosystem

Tencent and KKR teamed up together as investors of $5 billion-valued Go-Jek in Indonesia, which is the largest rival to SoftBank-backed ride-hailing startup Grab but also a fintech company itself. Go-Jek offers a mobile payment service which includes loans and remittance payments. Grab, valued at $11 billion, has rolled out competing products across multiple Southeast Asia markets. Indeed, it recently received an e-money license for GrabPay in the Philippines so it’s all set to join the party.

The Philippines is a particularly hot market for fintech for a number of reasons. The country’s large overseas worker base makes it the world’s third-largest remittance market — worth an estimated $28 billion — despite a sharp drop this year. While, as we wrote when covering First Circle’s news this week, SMEs account for 99.6 percent of the country’s business, 65 percent of its workforce and 35 percent of national GDP but there’s few credit options or limited data for assessment.

Fintech is seen as a key driver that enable Southeast Asia to massively increase its digital footprint and reap economic benefits. More broadly, the region’s internet economy to tipped to grow from $49.5 billion in 2017 to over $200 billion by 2025, according to a report from Google and Singapore sovereign fund Temasek.

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Upwork pops more than 50 percent in Nasdaq debut

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Upwork, the rebranded merger of oDesk and Elance, debuted on Nasdaq this morning, after dropping its S-1 about four weeks ago. Shares opened at $23.00, which represents a 53% jump — shares were priced at $15 before the opening bell by investors, a significant uptick from the company’s revised projection of $12 to $14, which was already an increase from its original $10 to $12 target. The stock trades under the ticker UPWK, and the company will fundraise approximately $102 million of new cash for its balance sheet ($187 million total with existing shareholders).

Shares are still currently up 40% compared to their original price.

I talked with Upwork CEO Stephane Kasriel this morning about the IPO road show, in which he said he took approximately 160 meetings with investors. Investors were engaged on the “combination of the strengths of the business and the strengths of the mission,“ and he was clearly excited about the engagement the offering received.

Upwork, whose antecedent companies go back almost two decades, is a positive cash flow business, albeit one growing top line revenue only about 27.6% year over year. Kasriel said that the company should be able to “compound at that rate for decades” due to the growing number of workers who freelance around the world in order to have flexible work arrangements. “When you think about which jobs are being created in the global economy, in most countries it is these knowledge jobs,” he said.

Upwork CEO Stephane Kasriel (Photo from Upwork)

In addition, “When you really take a long term view, what really matters is to be good stewards of capital,” Kasriel noted, and said that the company was very focused on areas like sales and marketing ROI. His goal is to continue to grow the company with limited dilution to shareholders, a message that apparently has been well-received.

As for Kasriel himself, he becomes a public company CEO. He was elevated to the CEO role in 2015 from SVP of Engineering – a somewhat unusual path, even in tech-obsessed Silicon Valley. He emphasized that “we are a tech company,” and noted that every day is a learning experience. “I was just on CNBC, and for introverts, what really scares me is to be on live broadcast TV,” he said.

A huge part of Upwork’s business today is focused on the enterprise, particularly complex workflows that require multiple types of talent. The company’s platform not only handles talent management, but the long array of tasks to manage people: HR, legal, procurement, information security, and others.

According to the company, it will host $1.5 billion worth of gross sales value across two million unique projects. The company estimates that its products are used by 30% of the Fortune 500.

Upwork, which has offices in Mountain View, San Francisco, and Chicago, has 1,500 employees – and as is to be expected – roughly 1,100 of them are freelancers. Kasriel said, “We use our own product, which we call drinking our own champagne.”

Among the major VC investors behind the company are Benchmark, which owned 15%, Sigma Partners, which owned 14.2%, and Globespan, T. Rowe Price, and FirstMark. The company is offering 6,818,181 new shares as well as 5,658,512 shares from existing shareholders. Citigroup, Jefferies, and RBC jointly led the book.

Now that the company has debuted, Upwork wants to refocus once again on its business following weeks of talking to investors. “We need to build this company for the ages,” Kasriel noted, and said that his message to employees was to “focus on the mission.”

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Rich-text editing platform Tiny raises $4M, launches file management service

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Maybe you’ve never heard about Tiny, but chances are, you’ve used its products. Tiny is the company behind the text editors you’ve likely used in WordPress, Marketo, Zendesk, Atlassian and other products. The company is actually the result of the merger of Moxiecode, the two-person team behind the open source TinyMCE editor, and Ephox, the company behind the Textbox.io editor. Ephox was the larger company in this deal, but TinyMCE had a significantly larger user base, so Tiny’s focus is now almost exclusively on that.

And the future of Tiny looks bright thanks to a $4 million funding round led by BlueRun Ventures, the company announced today (in addition to a number of new products). Tiny CEO Andrew Roberts told me the round mostly came together thanks to personal connections. While both Ephox and Moxiecode were profitable, now seemed like the right time to try to push for growth.

Roberts also noted that the merger itself is a sign of the company’s ambitions. “I think we’ve always been searching for how we could get that hockey stick growth to kick in,” he said. “I don’t think we would’ve done the merger if we weren’t hungry for that next level of success. So after two or three years [after the merger], we started to feel like we had the signs of a business that could grow into something significant and big and with some good numbers behind it. So were: ‘alright, now is the time.’”

While Tiny continues to offer its free open-source editor, it offers a cloud-hosted version of its service with a fee based on the number of users for developers who want the company to handle the backend infrastructure, as well as a self-hosted version that Tiny charges for based on the number of servers it runs on.

Roberts noted that quite a few developers try to build their own text editors. Yet handling all the edge cases and ensuring compatibility is actually quite hard. He estimates that it would take two or three years to build a new text editor from the ground up.

As part of today’s announcement, Tiny is also launching a number of new products. The most important of those from a business perspective is surely Tiny Drive, a file storage service that developers can integrate with the TinyMCE editor. Tiny Drive offers all of the file storage features that one would expect, including the ability to handle images and other assets. Tiny Drive uses AWS’s S3 file storage service and CloudFront CDN to distribute files.

Also new is the Tiny App Directory, which Roberts likened to the Slack App Directory. The idea here is to offer a curated list of TinyMCE plugins. For now, there is no revenue sharing here or any other advanced features, but it’s definitely a play for creating a larger ecosystem around the editor.

Tiny also today announced the first developer preview of the TinyMCE 5 editor. The updated editor features a new user interface that gives the editor a more modern look. Developers can customize it to their hearts’ content, with plenty of compatible plugins and advanced features to extend the editor based on their specific needs. There’s also now an emoticon plugin.

Talking about customized editors: You’re probably aware of WordPress’ efforts to modernize its text editor. The new editor, called Gutenberg, focuses more on page building than the current one, but as Roberts stressed, the underlying rich text editor is still based on the TinyMCE libraries. He noted that even the classic version, though, was always a subset of TinyMCE’s editor. What’s maybe even more important for Tiny as a company, though, is that none of WordPress’ changes will influence its business, even though WordPress and TinyMCE have long had what he describes as a “symbiotic relationship.”

“Tiny’s core business comes from a mix of software vendors, large enterprises, and agencies building custom solutions for clients that has little to do with the WordPress ecosystem,” he notes. “It is a popular and commercially viable project in its own right.”

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