Agritech startup TaniGroup raises $10M to help Indonesia’s farmers grow

In 2016, former World Bank analyst Eka Pamitra teamed up with five friends to start a business that would help farmers in their native Indonesia. Today their company — TaniGroup — closed a $10 million Series A round that’s aimed at expanding its service nationwide with the support of the government.

TaniGroup works for more than 25,000 farmers in Indonesia to help them get fairer rates for their crops, and grow their businesses. It does that in two ways: it operates a b2b platform that helps farmers sell their produce direct to retailers, which reaches a registered user base of 400 SMEs and 10,000 consumers. The company also manages a microloan fund that grants farmers access to working capital for growth.

TaniHub is the sales service and TaniFund is, as the name suggests, the microloan fund. The fund arrived in 2017 when the product had landed initial traction, and it is registered with the Financial Services Authority (OJK) and a member of Indonesian Fintech Lenders Association (AFPI).

Pamitra said a combination of factors mean TaniGroup can help farmers grow their overall income by 60 percent or more. That’s is driven more by sale volumes than price, the latter of which he said is usually 30-40 percent higher than traditional reseller channels.

“The most important thing is not necessarily pricing, farmers care more about the certainty of sales,” he explained to TechCrunch in an interview. “Many are afraid to plant too many crops because local aggregators or middlemen don’t have the capacity to absorb everything.”

“The fund focuses on preferred farmers we want to fund to help produce more or release them from the middlemen that currently fund them,” Pamitra added.

While middlemen have a reputation for operating like cartels and adding costs and complications, Pamitra said that in many cases they are actually farmers who help coordinate sales with others. For example, going to other farmers if they need additional produce to fulfill a higher-than-usual order that they can’t complete themselves.

“Some middlemen are the smartest in their group of farmers. We try to empower them through TaniFund; they often start teaching others their tips and can have a positive impact,” he said.

The company plans to spend its new money on general growth, which will include hiring more staff, improving the tech, expanding logistics and upgrading warehouses. That’s much needed since the government `has tapped the startup to help improve Indonesia’s farming community — Pamitra said TaniGroup has been given access to government research on farmers which includes a database of some 3 million farmers. (President Joko Widodo previously namechecked the startup as a company that is helping Indonesia’s agricultural industry.)

For now, TaniGroup’s ambitions are firmly focused on Indonesia but Pamitra said there is a belief that the business can expand overseas. Already it has exported orders to markets like Switzerland, Singapore, Malaysia and beyond, but there is real potential to expand the farmer network into new markets, he said. Officials from the Malaysia government have already expressed interest in making such a move, but Pamitra admitted that “there’s a lot to do here” in Indonesia first.

TaniGroup raised its Series A from Openspace Ventures — which led the round — Intudo Ventures, Golden Gate Ventures and The DFS Lab, a fintech accelerator that’s funded by the Bill and Melinda Gates Foundation. The startup previously raised an undisclosed seed round last April from Alpha JWC Ventures and several angel
investors.

Indonesia’s vegetable hawkers are going digital thanks to a new startup

Few things are more interesting that the convergence of old and new. It’s with that in mind that we once again look to Indonesia where East Ventures, an early-stage VC that’s behind a project to digitize the country’s street vendors, has backed a new startup that is modernizing street vendors who sell fresh produce.

In Indonesia — and other parts of Southeast Asia — street-based vendors are a common and important part of local life. Best known for street food, they also span general convenience kiosks and sellers of fruit, vegetables and snacks, who often operate through cycle-based mobile ‘stores.’

The focus for Kedai Sayur, which means ‘vegetable store’ in Bahasa, is mobile vegetable sellers. The six-month-old startup aims to bring the benefits of the digital economy to these humble “hawkers” in Indonesia.

Perhaps the most important focus of the business is that it helps hawkers get better pricing when it comes to sourcing their produce. As things stand currently, the procurement process is dogged by issues. Most notably that’s a long supply chain which adds cost — prices increase as more middlemen take their cut — and means that vegetables are less fresh by the time they reach the hawker.

The combat that, Kedai Sayur groups orders together and negotiates better-than-retail rates for its hawkers who order their produce through an app. Orders are made by 6pm each day, and delivered to hawkers by 5am the next morning, Kedai Sayur co-founder and CEO Adrian Hernanto told TechCrunch in an interview.

The startup also provides hawkers with a financial float that allows them to upsize their order without necessarily having the money up front, as is currently required. So, for example, they can double their orders for a day if they believe that one particular vegetable can sell beyond what they usually stock.

“The problem is barging power between hawkers and distributors,” Hernanto explained. “They trade in small quantity but across many products and that’s why they can only get retail price.”

With the working capital — which is not a loan — he explained that hawkers can “order as much as they can sell and then pay later after they receive payment from customers.”

“We want to remove their working capital limits,” he added.

Full repayment is required before a hawker can make their next order, said Hernanto.

This is what the average setup for a vegetable seller in Indonesia looks like (Image via Bay Ismoyo/AFP/Getty Images)

Distribution is also an area for modernization. Kedai Sayur offers an app for consumers that allows customers to order produce remotely, which the hawker can then deliver. This augments trade that hawkers traditionally do offline and, according to Hernanto, combined with working capital, some vendors have increased their takehome profit three- or four-fold.

The most visibily striking part of Kedai Sayur’s offering to hawkers is an upgraded mode of transport: three-wheeled vehicles that are brightly branded and contain a chiller section to keep produce cool. They can be leased from the company to replace the typically-dowdy bike-based kiosks that are synonymous with hawkers.

Beyond nicer aesthetics, there are practical benefits. Hernanto said the new transport can open up other avenues for making money.

That’s because the storage section is removable and it can be set up a kiosk. Hernanto said some enterprising hawkers sell coffee, bread and other daily products on the street or at night markets in addition to their vegetable sales.

Potentially there may be other options in the future based around logistics. Kedai Sayur is in talks with prospective partners about teaming up to deliver parcels and more.

“Hawkers are the neighborhood logistics experts. There is potential to utilize them for last-mile delivery as they already have a vehicle and know the neighborhoods well,” explained Hernanto — whose co-founders include Ahmad Supriyadi, whose mother was a vegetable hawker, and Rizki Novian.

A Kedai Sayur hawker [Image via Kedai Sayur]

One area where the Kedai Sayur offering is lacking right now is digital payments since most transactions are handled in cash, despite a proliferation of mobile wallets from all manner of companies, including ride-hailing unicorns Grab and Go-Jek.

Most hawkers are comfortable with cash, it is after all the tradition, but it makes paying the working capital back somewhat cumbersome. Cash requires Kedai Sayur to dispatch an agent to collect any outstanding money from the previous order before a new order can be made, but more fundamentally moving cash around is messy.

The startup currently works with Alfamart’s retail-based payments for offline over-the-counter payback and it takes a chunk of payments via bank transfer, but Hernanto said cash accounts for some 55 percent of collections.

That could change in the future since there are plans to add digital services like OVO — which is part-owned by Grab — and Go-Pay from Go-Jek. That’ll make collecting money easier, and it might also appeal to consumers who buy the products, too.

On the subject of collecting money, Kedai Sayur is — like many early-stage startups — currently in “growth mode.” Hernanto believes it will become sustainable through revenue collected on margins between selling product to hawkers and sourcing — which he sees at 20-30 percent — as well as a delivery fee charged to bring products to hawkers. In the future, he sees the potential to introduce more formalized financing in the future which could also drive revenue whilst helping provide new financing options.

“When hawkers join our system, they become bankable,” he said. “We see the potential for microloans to hawkers in the future.”

After six months of operations in Jakarta, Kedai Sayur has reached over 3,000 hawkers, according to Hernanto, with 60 percent growth on a monthly basis. He isn’t providing revenue details, but the company said in a press release that GMV — the total amount of product bought from its hawkers — has grown five-fold in the past four months. Finally, and importantly, the startup also this week announced a $1.5 million seed investment from East Ventures.

As mentioned at the top, the startup fits with East Ventures’ thesis of using tech to augment traditional business.

In the case of Waring Pintar, the startup focused on street kiosk vendors that span out of East Ventures, the project has shown enough potential to merit a $27.5 million Series A round that closed earlier this year. The VC firm will be hoping for the same from Kedai Sayur which has already started planning for its next round of funding, according to CEO Hernanto.

East Ventures previously backed a project to modernize street vendors in Indonesia by equipping them with WiFi, power points, improved inventory and more

“Door-to-door vegetable hawkers probably had existed for hundreds of years ago in Indonesia. Surprisingly, they are still available in today’s modern society, standing side-by-side with the fast-growing modern supermarket and convenience store. In fact, the vegetable hawkers are one the most convenient way to get our daily produce,” said Willson Cuaca, East Ventures co-founder and managing partner, in a statement.

“Kedai Sayur fits into two of East Ventures hypothesis. The first one, technology inclusion to upgrade the underserved merchant accessing technology and second, improvement of Indonesia supply chain. There is local wisdom that helps traditional on-demand vegetable hawker to exist for so long and we want to preserve that culture with a touch of technology,” Cuaca added.

Hernanto, meanwhile, is optimistic that the business can expand to other countries, most likely those in Southeast Asia. For now, though, he is looking at expansion into three new cities beyond Jakarta next year before gearing up to venture overseas at a later date. As the world’s fourth largest country by population and Southeast Asia’s largest economy, Indonesia remains the priority.

The savage genius of SoftBank funding competitors

Venture capitalists aren’t supposed to make their portfolio companies battle to the death. There’s a long-standing but unofficial rule that investors shouldn’t fund multiple competitors in the same space. Conflicts of interest could arise, information about one startup’s strategy could be improperly shared with the other, and the companies could become suspicious of advice provided by their investors. That leads to problems down the line for VCs, as founders may avoid them if they fear the firm might fund their rival down the line.

SoftBank shatters that norm with its juggernaut $100 billion Vision Fund plus its Innovation Fund. The investor hasn’t been shy about funding multiple sides of the same fight.

The problem is that SoftBank’s power distorts the market dynamics. Startups might take exploitative deals from the firm under the threat that they’ll be outspent whoever is willing to take the term sheet. That can hurt employees, especially ones joining later, who might have a reduced chance for a meaningful exit. SoftBank could advocate for mergers, acquisitions, or product differentiation that boost its odds of reaping a fortune at the expense of the startups’ potential.

Andreessen pours $22M into PlanetScale’s database-as-a-service

PlanetScale’s founders invented the technology called Vitess that scaled YouTube. Now they’re selling it to any enterprise that wants their data both secure and consistently accessible. And thanks to its ability to re-shard databases while they’re operating, it can solve businesses’ troubles with GDPR, which demands they store some data in the same locality as the user to whom it belongs.

The potential to be a computing backbone that both competes with and complements Amazon’s AWS has now attracted a mammoth $22 million Series A for PlanetScale. Led by Andreessen Horowitz and joined by the firm’s Cultural Leadership Fund, head of the US Digital Service Matt Cutts, plus existing investor SignalFire, the round is a tall step up from the startup’s $3 million seed it raised a year ago. Andreessen general partner Peter Levine will join the PlanetScale board, bringing his enterprise launch expertise.

PlanetScale co-founders (from left): Jitendra Vaidya and Sugu Sougoumarane

“What we’re discovering is that people we thought were at one point competitors, like AWS and hosted relational databases — we’re discovering they may be our partners instead since we’re seeing a reasonable demand for our services in front of AWS’ hosted databases,” says CEO Jitendra Vaidya. “We are growing quite well.” Competing database startups were raising big rounds, so PlanetScale connected with Andreessen in search of more firepower.

Vitess is a horizontal scaling sharding middleware engineered for MySQ that was built to run on “Borg” the predecessor to Kubernetes at Google. It lets businesses segment their database to boost memory efficiency without sacrificing reliable access speeds. PlanetScale sells Vitess in four ways: hosting on its database-as-a-service, licensing of the tech that can be run on-premises for clients or through another cloud provider, professional training for using Vitess and on-demand support for users of the open-source version of Vitess. PlanetScale now has 18 customers paying for licenses and services, and plans to release its own multi-cloud hosting to a general audience soon.

With data becoming so valuable and security concerns rising, many companies want cross-data center durability so one failure doesn’t break their app or delete information. But often the trade-off is unevenness in how long data takes to access. “If you take 100 queries, 99 might return results in 10 milliseconds, but one will take 10 seconds. That unpredictability is not something that apps can live with,” Vaidya tells me. PlanetScale’s Vitess gives enterprises the protection of redundancy but consistent speeds. It also allows businesses to continually update their replication logs so they’re only seconds behind what’s in production rather than doing periodic exports that can make it tough to track transactions and other data in real-time.

Now equipped with a ton of cash for a 20-person team, PlanetScale plans to double its staff by adding more sales, marketing and support. “We don’t have any concerns about the engineering side of things, but we need to figure out a go-to-market strategy for enterprises,” Vaidya explains. “As we’re both technical co-founders, about half of our funding is going towards hiring those functions [outside of engineering], and making that part of our organization work well and get results.”

But while a $22 million round from Andreessen Horowitz would be exciting for almost any startup, the funding for PlanetScale could assist the whole startup ecosystem. GDPR was designed to reign in tech giants. In reality, it applied compliance costs to all companies — yet the rich giants have more money to pay for those efforts. For a smaller startup, figuring out how to obey GDPR’s data localization mandate could be a huge engineering detour they can hardly afford. PlanetScale offers them not only databases but compliance-as-a-service too. It shards their data to where it has to be, and the startup can focus on their actual product.

They scaled YouTube — now they’ll shard everyone with PlanetScale

eFounders backs Yousign to build a European eSignature company

French startup Yousign is partnering with startup studio eFounders. While eFounders usually builds software-as-a-service startups from scratch, the company is trying something new with this partnership.

eFounders wants to create all the tools you need to make your work more efficient. The startup studio is behind many respectable SaaS successes, such as Front, Aircall or Spendesk. And electronic signatures are a must if you want to speed up your workflow.

Sure, there are a ton of well-established players in the space — DocuSign, SignNow, Adobe Sign, HelloSign, etc. But nobody has really cracked the European market in a similar way.

Yousign has been around for a while in France. When it comes to features, it has everything you’d expect. You can upload a document and set up automated emails and notifications so that everybody signs the document.

Signatures are legally binding and Yousign archive your documents. You can also create document templates and send contract proposals using an API.

The main challenge for Yousign is that Europe is still quite fragmented. The company will need to convince users in different countries that they need to switch to an eSignature solution. Starting today, Yousign is now available in France, Germany, the U.K. and Spain.

Yousign had only raised some money. eFounders is cleaning the cap table by buying out existing investors and replacing them.

“We can’t really communicate on the details of the investment, but what I can tell you is that we bought out existing funds for several millions of euros in order to replace them — founders still have the majority of shares,” eFounders co-founder and CEO Thibaud Elzière told me.

In a blog post, Elzière writes that eFounders has acquired around 50 percent of the company through a SPV (Single Purpose Vehicle) that it controls. The startup studio holds 25 percent directly, and investors in the eFounders eClub hold 25 percent.

Yousign now looks pretty much like any other eFounders company when they start. Of course, founders and eFounders might get diluted further down the road if Yousign ends up raising more money.

KaiOS raises $50M, hits 100M handsets powered by its feature phone OS

While Android and iOS have locked up the market for smartphone operating systems, a feature phone platform that has the distinction of being the world’s third biggest mobile OS is announcing a hefty round of funding to continue its expansion. KaiOS, which makes the OS that powers devices like Nokia’s feature phones and Jio’s devices out of India, has raised $50 million from Cathay Innovation (which led the round) and previous investors Google and TCL Holdings.

The funding takes the total raised by KaiOS — which has now shipped 100 million devices across 100 countries — to $72 million. It comes less than a year after Google invested $22 million in the the business — a strategic round that also marked KaiOS beginning the process of creating native integrations of different Google services like Maps and (more recently) Assistant into the platform.

KaiOS is not disclosing its valuation but Sebastien Codeville, its CEO, confirmed to be that it is “definitely up.” (Pitchbook put it at a very modest $43.75 million last year on the back of Google’s earlier round.)

We actually knew a little about this round back in February, at MWC in Barcelona, when KaiOS announced new handset partners and a raft of new features. A spokesperson for KaiOS told TechCrunch that the delay in closing the deal and making it public was due to a need to coordinate with different stakeholders.

As it turned out, KaiOS’s timing for this announcement turned out to be pretty interesting. The big news this week in mobile is what kind of an impact Huawei will face in the wake of a US regulation barring it from  doing business in the US. One development in that story has been just how serious Huawei is about building its own operating system to replace Google’s Android and its related services.

This is big news because while Huawei is currently the world’s second-biggest mobile phone maker, we haven’t seen any platform gain reasonable mobile phone traction against the hegemony of iOS and Android outside of China — including the failure of Firefox OS, which retreated from the market only to reemerge, phoenix-like, as KaiOS two years ago — in part because of the extensive ecosystems that have coalesced around these two.

But while all eyes are on smartphones, KaiOS’s funding and general growth represents an interesting alternative for markets, carriers and consumers that might be in the market for what KaiOS refers to as “smart feature phones.”

Today, the company counts companies like Reliance Jio, Google, Facebook, Twitter, Orange, MTN and Qualcomm among its partners, and it’s been building an interesting, two-pronged strategy for targeting people both in developed and developing markets.

As Sebastien Codeville, the CEO of KaiOS, describes it, in emerging markets (which are KaiOS’s primary target), its devices are being purchased by first-time phone users, or those that have had very basic, non-data mobile phones and are upgrading without the big step and expense of smartphones. “We are bringing people to internet usage with a device they are familiar with,” he said of the form factor. “Other key characteristics are a long battery life, a keyboard, and a more resistant touch panel.”

The developed market, he added, was an interesting opportunity because of the amount of professionals and others who want pared-down devices for weekend use to unplug from their daily grind.

Many had left feature phones for dead with the growth in popularity of devices like the iPhone, app stores and of course apps themselves. But research from Counterpoint found that feature phones still accounted for almost 25 percent of all handset shipments in Q3 of last year, working out to a $28 billion dollar market opportunity in the years ahead. Today there are some 1.5 billion feature phone users, an interesting number to consider as smartphone sales continue to feel the crunch. 

Kard is a challenger bank for teens

Meet French startup Kard, a challenger bank that works a lot like N26 or Revolut. But Kard is all about convincing teens that their first bank account is going to be a Kard account — a bit like Step in the U.S.

When I talked with Kard co-founder and CEO Scott Gordon, he kept saying that Kard was a product for the generation Z. While I’m not a fan of that buzzword, it still looks like a well-designed app with some personality.

“Gen Z is a generation that has been forgotten by traditional banks,” Gordon said. “70 percent of their transactions are digital transactions,” he added later. Many teenagers borrow their parents’ card for those expenses.

Kard wants to empower teens with their own bank account, their own IBAN and their own Mastercard debit card. Instead of controlling every expense, parents can just top up the Kard account and let their child spend it however they want — you can top up with a bank transfer or using another card — just like in Revolut. Opening an account is free.

Like other electronic wallet apps, opening a Kard account is much simpler than opening a traditional bank account in France. You can sign up in a few minutes from your phone and confirm your identity later by sending a photo of your ID, etc.

After that, you get an account that you control from a mobile app. You can block and unblock the card, see transactions, send and receive money in real time with other Kard users. It ticks all the right boxes that you’ve come to expect if you have a bank account from a challenger bank.

In a couple of months, you’ll also be able to create money pots, round up your transactions to save some money, donate money to nonprofits, etc.

Kard is also borrowing a few ideas from Venmo. Users will be able to share expenses with their group of friends in the Kard app. Many teens already share a photo of their brand new sneakers on Snapchat for instance. Kard wants you to use their own app for this kind of content.

The startup raised $3.4 million (€3 million) back in January from Kima Ventures, Jean-Pascal Beaufret, Jambu Palaniappan, Francis Nappez, Julien Lemoine, Jason Dorsey and David Amsellem.

While the service is not live yet, you can sign up to the waiting list on the company’s website. Kard’s positioning is interesting. The startup doesn’t need to convince people to open yet another bank account — the company is tapping an endless funnel of new users by focusing on teens.

Like all startups focused on teens, it faces a dilemma. It has to retain its users as their needs become more complex and attract new teens as the product becomes more complex.

Ikea invests in Livspace, a one-stop platform for interior design based in India

Fresh from raising $70 million last year via big names including Goldman Sachs and TPG Growth, Livspace, an India-based startup that offers a one-stop-shop for interior design, has lured yet another marquee investor: Ikea.

The startup said today it has taken an undisclosed investment from Ingka Investments, the VC arm of Ikea parent Ingka Group, which operates 90 percent of Ikea’s retail footprint. Livspace CEO and co-founder Anuj Srivastava declined to provide a figure for the deal, but he told TechCrunch that the stake involved is a minor one while there is no plan to bolt a larger round on to this investment. Deal Street Asia first reported news of the deal.

“There is strong strategic and commercial potential,” Srivastava, a former Googler who started Livspace in 2015, said of the new investor. “This is an opportunity to create the best possible omnichannel experience for consumers.”

India is a tough place for international retail companies but Ikea has made progress in recent times.

The company opened its first India-based store in Hyderabad last year and, having gained FDI approval to operate retails store, it is planning a substantial expansion with at least 25 new stores in the offing.

Livspace, for those unaware of it, runs a service that is aimed at taking the hassle out of interior design. The company’s platform connects homeowners with designers and the supply chain to go through ideas, chose a plan and implement it. That includes, among other things, 3D virtual renders of a renovation, offline meetings at a Livspace design center and, in some cases, customized furnishings. By bringing all parties together, Livspace claims to offer cost savings to consumers as well as higher rates and more efficient use of time for designers.

That model resonates with Ikea (Ingka), according to Srivastava, who said the company sides began talking following the announcement of Livspace’s Series C round last September.

“We’ve felt the natural synergy always existed,” he said. “This is an extremely strong endorsement of our vision.”

Synergies, indeed, although somewhat frustratingly neither party is saying how they will work together going forward. The obvious suggestion would be that Ikea products become available through Livspace, but Srivastava said the specifics are still to be agreed.

Further down the line, though, he admitted that Ikea’s involvement could fuel an international expansion beyond India. Going overseas is something that the company is openly talked up in the past and, with Ikea’s global footprint of 367 stores across 30 markets, the investment from Ingka could give Livspace a running start in new markets.

That, like the details of the alliance, is something that will come later, however.

“The India business is keeping us really, really busy at this time,” said Srivastava on that possibility.

“We’re engaged in exploratory activities but there’s no immediate plan or timeline,” he added as a tease. A new market launch isn’t likely until something like 12-18 months down the line, the Livspace CEO said.

As for whether this deal might be a precursor to an eventual acquisition, such are the synergies, Srivastava said that possibility isn’t being entertained.

“There is no such intention as of now,” he explained. “We continue to have strong interest from financial investors and continue to operate with the intention to stay independent, there’s now even more belief in our platform approach.”

“There is distinctly an investment outlay involved [with] no long term indication of an M&A opportunity,” he added.

The deal is Ikea’s first in India, but it is not the retail giant’s dalliance in startups by any means.

The company previously acquired TaskRabbit in 2017 and it bought a 49 percent stake in U.S-based kitchen service company Traemand with a view to a full acquisition last December. Its investment deals have included taking part in a $31 million Series B for France-based Aledia LED and participation in a $12.4 million round for online food retailer Matsmart. The company has also run social entrepreneurship programs.

Big revenues, huge valuations and major losses: charting the era of the unicorn IPO

We can make charts galore about the tech IPO market. Yet none of them diminish the profound sense that we are in uncharted territory.

Never before have so many companies with such high revenues gone public at such lofty valuations, all while sustaining such massive losses. If you’re a “growth matters most” investor, these are exciting times in IPO-land. If you’re the old-fashioned value type who prefers profits, it may be best to sit out this cycle.

Believers in putting market dominance before profits got their biggest IPO opportunity perhaps ever last week, with Uber’s much-awaited dud of a market debut. With a market cap hovering around $64 billion, Uber is far below the $120 billion it was initially rumored to target. Nonetheless, one could convincingly argue it’s still a rich valuation for a company that just posted a Q1 loss of around $1 billion on $3 billion in revenue.

So how do Uber’s revenues, losses and valuation stack up amidst the recent crop of unicorn IPOs? To put things in context, we assembled a list of 15 tech unicorns that went public over the past three quarters. We compared their valuations, along with revenues and losses for 2018 (in most cases the most recently available data), in the chart below:

 

Put these companies altogether in a pot, and they’d make one enormous, money-losing super-unicorn, with more than $25 billion in annual revenue coupled to more than $6 billion in losses. It’ll be interesting to revisit this list in a few quarters to see if that pattern changes, and profits become more commonplace.

History

It’s easy to draw comparisons to the decades-old dot-com bubble, but this time things are different. During the dot-com bubble, I remember penning this lead sentence:

“If the era of the Internet IPO had a theme song, it might be this: There’s no business like no business.”

That notion made sense for bubble-era companies, which commonly went public a few years after inception, before amassing meaningful revenues.

That tune won’t work this time around. If the era of the unicorn IPO had a theme song, it wouldn’t be nearly as catchy. Maybe something like: “There’s no business like lots of business and lots of losses too.”

I won’t be buying tickets to that musical. But when it comes to buying IPO shares, the unicorn proposition is a bit more appealing than the 2000 cycle. After all, it’s reasonably plausible for a company with dominant market share to tweak its margins over time. It’s a lot harder to grow revenues from nothing to hundreds of millions or billions, particularly if investors grow averse to funding continued losses.

Of course, the dot-com bubble and the unicorn IPO era do share a common theme: Investors are betting on an optimistic vision of future potential. If expectations don’t pan out, expect share prices to follow suit.

Starbucks’ Chinese nemesis surges 20% in public debut

Shares of Luckin Coffee jumped 20% in its first day of trading on the Nasdaq stock market.

After opening at $17.00, shares of the Chinese Starbucks competitor climbed as high as $25.96, or more than 50%, before settling back down to $20.38 at the market’s close. The company has a market cap north of $5 billion after its first day of trading.

The brick-and-mortar coffee chain has achieved major success in China by offering speedy delivery services to Chinese consumers. The company has nearly 2,400 stores compared to Starbucks’ 3,500, but it has plans to more than double that number by the end of the year as it seeks to become the country’s coffee king.

Luckin’s success doesn’t immediately seem to be thwarting the stock market success of Starbucks, which has had a glowing 2019. The company hit another all-time high Friday, closing out the day at $78.91, up more than 35% from a year ago, giving the Seattle company a market cap of nearly $96 billion.

Starbucks and Luckin Coffee may seem like mortal enemies, but their rivalry is more complicated than one might immediately think. Check out our Extra Crunch deep dive from earlier this week on the Xiamen-based company’s financials.

The misunderstandings of 18-month-old Luckin’s $500M IPO