The Good NET Guide

Posts Tagged ‘russia’

Brazil is sort of a strange country to throw into the “emerging market” category. It’s not a particularly young country like India or Israel, nor is it a country like China or Russia that embraced capitalism fairly recently. Brazil is as old as the US and has had a decently built out infrastructure of things like roads and phone lines for some time.

Yes, it’s a growing country with a young and stabilizing democracy that has a long way to go in terms of technology, modernization and bridging a quality of life between very wealthy and very poor. In that sense, it shares enough in common with emerging markets that Wall Street, at least, tosses it in the “BRIC” bucket. Indeed, Wall Street has had a way bigger crush on Brazil to date than Silicon Valley.
That seems to have had two effects on the startup scene in Sao Paulo. The first is that there’s a good deal of innovation in the finance space. Banks in Brazil had to become advanced, many people told me, because of the runaway inflation that plagued the country for so many years. As opposed to other huge markets like Mexico, China or India that lagged in the adoption of checking accounts and other basic services, in Brazil you had to have your money in the bank, because the value of cash changed so rapidly.  So it’s no surprise more of those there’s-a-better-way spin-offs have come in finance than, say, Web 2.0 or mobile. (There’s a ton in agriculture and other sectors outside the cities too, but more on that in a future post.)
My favorite finance company that I met during my February trip to Brazil is called Crivo, and it left me wondering if that great wave of finance innovation might come from our Southern neighbors, not us.

Crivo has developed a way to do lightning-fast, three-second credit checks. Its servers pull information from a variety of sources, including all the places you’d expect but but also sources like utility records to verify an applicant’s address or ensuring that their phone number doesn’t just go to a payphone. “Even a single piece of information can be useful in detecting fraud,” says Daniel Turnini, one of Crivo’s founders. (Pictured above, on the right, with his co-founders.)

There’s nothing like a FICO score in Brazil so, in the past, credit decisions were made based on negative data and positive data. In other words you are “good” or “bad” in the bank’s eyes. There’s little record for positive data in Brazil, because the wealthiest people don’t want how much they paid for a house or a car in public records. It’s a security issue, Turnini says. That only leaves negative data.

So if there’s no information about you, it’s assumed you’re a good credit risk. But miss one payment and you have a “dirty name,” Turini says. It’s a flawed system. Many good credit risks (indeed I’d bet most people) have missed a payment before, and it’s a huge assumption to make that someone with no credit history would be a good borrower. In recent years there have been banks, insurance companies, and similar institutions vying to cash in on Brazil’s emerging middle class and increasingly wealthy upper classes, but had no real way of knowing how to extend credit.

Sound like great timing? It would have been if Crivo wasn’t started in 1998. Back then, few banks in the US would have been early adopters of something like this, let alone banks in Brazil. (Ok, most banks in the US still wouldn’t be.) Nailing that first customer was near impossible. The founders kept thinking they were on the right track because potential customers would freak out when they saw how quickly the software worked, but they’d never quite pull the trigger on a purchase. Always hoping things would finally click the next year, the founders kept bootstrapping the company. Finally, it did. Toyota’s Brazilian financial arm bought their software and used it to rapidly approve people for loans, beating other car makers who were flooding into the growing market. The company has been on a sharp growth rate for five years now. They did roughly $12 million in revenues last year, and expect that to double in 2010, Turini says. Crivo says it has more than 80 employees and 100 customers today.

There are clear ripple effects if Crivo does well. More people getting credit cards helps grow spending and ecommerce, more small businesses can get loans, and more people who can’t afford to pay in cash can buy houses – to name just a few advantages. We’ve seen the benefits of “greenfield markets” when it comes to innovation in telecom and even physical infrastructure, like roads and trains. Might Brazil be able to come up with some greenfield solutions for finance? It’s easy to see how a FICO score could be improved on and, ahem, really easy to make the argument that way too much credit has been extended in the US in the last ten years. But while we have a system in place, who is going to upend the apple cart and force widespread-adoption of a newer, smarter system? It’s South Korea and telecom all over again.

Yes, I realize that to many tech entrepreneurs, the idea of a country amassing an army of middle managers sounds about as appealing as a resurrection ship of Cylons. But a lot of the most talented local entrepreneurs, managers and even investors I met in Brazil had spun out of a year or two in consulting and finance.

An example was Diego Simon of VivaReal (pictured right, working in his tiny home office), a broad Latin American real estate portal that has increasingly been focusing on Brazil. Neither of the founders are Brazilian – or even live in Brazil – so finding someone like Simon was essential. Entrepreneurs from other South American countries say selling to Brazil as an outsider is harder for them than selling to China. That makes Simon exactly the Droid any company like VivaReal is looking for: He had experience running his family’s business, worked a stint for a multinational but left because he wanted to do something vaguely entrepreneurial – although he didn’t know exactly what. I’ve never been particularly bullish on real estate portals, but if VivaReal does well, it will be in no small part due to Simon criss-crossing Sao Paulo in his Fiat extolling the virtues of online listings under the auspices of a common culture and language.

The problem is—like in China and India—the allure of the multi-national paycheck and prestige is strong in Brazil. The management expertise may be there in greater numbers, but convincing someone to take a gamble on an unproven startup for stock is as hard as it is anywhere in the emerging world.

Here’s a rather unique DIY project for you: a russian builder created a USB key design using a block of wood, a switch, and a fan.

Original post: 
DIY Russian style: wooden USB drive

Air superiority hasn’t been top news in a while. But Russia’s got a nifty new stealth fighter jet they’re showing off. Video after the jump.

More:
Stealth Jets. Now in Russian!

Yuri Milner, the CEO of Russian investment and operating company Digital Sky Technologies, had quite a 2009. I had a chance to sit down with Milner today at the World Economic Forum in Davos, Switzerland for a short video interview.

The company now holds substantial equity in two of the hottest pre-IPO startups, Facebook and Zynga. And their innovative way of structuring deals, where they buy both preferred stock from the company and common stock from employees, is becoming the hot new way to invest in startups. In fact, people are now referring to “DST-style deals,” even where DST isn’t one of the investors. See Yelp, for example:

The size of the rounds is in the $50 million range, but includes both a primary investment component as well as a secondary offering for long time employees. These deals are now being referred to as “DST deals,” since DST first invested in Facebook in May 2009 at a $10 billion valuation and later funded employee buyouts at a $6.5 billion valuation. They did a similar deal with Zynga.

I first met Milner the day he announced his investment in Facebook, where he and Facebook CEO Mark Zuckerberg explained the details and rationale for their investment in an exclusive TechCrunch video interview.

The price he paid for his Facebook stock – a $10 billion valuation – was scoffed at in May. Today, it’s clear he got a great deal as Facebook common stock is trading at $14 billion and above. The Facebook common stock purchased by DST last summer cost Milner just a $6.5 billion valuation.

It was just a few months later that Milner was in the news again, beating out the competition to become the lead investor in a huge venture round for Zynga.

We’ve had our fun with Milner and DST, watching as the Russian firm stepped in and paid higher prices for hot startups than local VCs would even consider.

But the reality is that DST’s investment decisions look pretty damned smart with the benefit of hindsight. And the entity isn’t really “Russian” anymore – Milner is making almost all of his investments outside of Russia, and most of the new investors he’s bringing in to fund all this activity are non-Russian.

More and more, Milner is just looking like a really smart and really aggressive investor.

Yuri Milner, the CEO of Russian investment and operating company Digital Sky Technologies, had quite a 2009. I had a chance to sit down with Milner today at the World Economic Forum in Davos, Switzerland for a short video interview.

The company now holds substantial equity in two of the hottest pre-IPO startups, Facebook and Zynga. And their innovative way of structuring deals, where they buy both preferred stock from the company and common stock from employees, is becoming the hot new way to invest in startups. In fact, people are now referring to “DST-style deals,” even where DST isn’t one of the investors. See Yelp, for example:

The size of the rounds is in the $50 million range, but includes both a primary investment component as well as a secondary offering for long time employees. These deals are now being referred to as “DST deals,” since DST first invested in Facebook in May 2009 at a $10 billion valuation and later funded employee buyouts at a $6.5 billion valuation. They did a similar deal with Zynga.

I first met Milner the day he announced his investment in Facebook, where he and Facebook CEO Mark Zuckerberg explained the details and rationale for their investment in an exclusive TechCrunch video interview.

The price he paid for his Facebook stock – a $10 billion valuation – was scoffed at in May. Today, it’s clear he got a great deal as Facebook common stock is trading at $14 billion and above. The Facebook common stock purchased by DST last summer cost Milner just a $6.5 billion valuation.

It was just a few months later that Milner was in the news again, beating out the competition to become the lead investor in a huge venture round for Zynga.

We’ve had our fun with Milner and DST, watching as the Russian firm stepped in and paid higher prices for hot startups than local VCs would even consider.

But the reality is that DST’s investment decisions look pretty damned smart with the benefit of hindsight. And the entity isn’t really “Russian” anymore – Milner is making almost all of his investments outside of Russia, and most of the new investors he’s bringing in to fund all this activity are non-Russian.

More and more, Milner is just looking like a really smart and really aggressive investor.

The Receivables Exchange, an online marketplace for real-time trading of accounts receivable, this morning announced that it has closed $17 million in Series C financing led by Boston, MA-based Bain Capital Ventures, with prior investors Redpoint Ventures and Prism Ventureworks participating.

This third round of financing brings the total invested into the company to just south of $30 million.

The Receivables Exchange started its online receivables financing marketplace in 2008 with the launch of its proprietary receivables trading platform.

The platform essentially enables businesses to sell their accounts receivable to a global network of accredited institutional investors that compete in real-time to purchase them. That way, companies are able to reduce their cash conversion cycles and gain access to capital that can be reinvested into growing their core business operations.

According to the company, the majority of companies have more than 60% of their working capital tied up in accounts receivable, limiting their ability to fund their own growth and contribute to that of the U.S. economy.

The Receivables Exchange says it will use the funding to scale its operations and sales activities and to expand its marketing, business development and corporate partnership efforts.

It’s official: the European Commission has granted regulatory approval for Oracle to acquire Sun Microsystems for approximately $7.4 billion, without further conditions. In a statement released moments ago, Oracle says it expects unconditional approval from China and Russia as well and intends to close the transaction shortly.

Oracle will host an all-day live event for customers, partners, press and analysts on January 27th, 2010 at 9:00 AM Pacific time at its headquarters in Redwood Shores, California.

Just in case you weren’t planning on attending or following the major Apple event.

The approval comes after an in-depth antitrust investigation opened in September amid concerns that Oracle’s acquisition of MySQL would stifle competition in the database market. In August 2009, the Departement of Justice had already given the deal green light.

From the press release:

The Commission’s in-depth investigation showed that although MySQL and Oracle compete in certain parts of the database market, they are not close competitors in others, such as the high-end segment.

Given the open source nature of MySQL, the Commission also assessed Oracle’s ability and incentive to remove the constraint exerted by MySQL after the merger and the extent to which this constraint could, if necessary, be replaced by other actors on the database market.

“I am now satisfied that competition and innovation will be preserved on all the markets concerned. Oracle’s acquisition of Sun has the potential to revitalize important assets and create new and innovative products,” said Neelie Kroes, the European antitrust commissioner.

The database market is highly concentrated with the three main proprietary database vendors – Oracle, IBM and Microsoft – accounting for approximately 85% of the market in terms of revenue, the commission added.

Believe it or not, the current plan for the International Space Station is to abandon it in 2015 and let it crash into the atmosphere in 2016. Sad, right

Continued here:
The European Space Agency wants to extend the ISS’s life until 2020

Digital Sky Technologies, the Russian investment group founded by Yuri Milner and Gregory Finger, has increased its stake in social networking leader Facebook to more than 5% of the American company, Russia’s leading business newspaper Kommersant reports.

Furthermore, DST is looking to increase its stake in Facebook even more, according to Yakov Sadchikov from Quintura, who picked up on the news this morning.

The Russian investment group earlier this year invested $200 million in Facebook, giving the company a $10 billion valuation. Additionally, DST at the time had the option to buy another $100 million worth of common stock from existing employees and investors, which is exactly what it ended up doing last July (under unfavorable terms for former Facebook employees).

The Road To 5%

Kommersant now cites a source with inside knowledge of the firm’s operations as saying DST has invested up to $400 million in Facebook to date, bringing its stake in the social networking company to over 5%, more than three times Microsoft’s stake (1.6%).

Broken down, that means Digital Sky Technologies took 1.96% in preferred shares for the $200M financing and increased its total stake by more than 3% so far, by buying up common shares at $14.77 per share.

Hungry For More

Still according to the business paper, the source claimed DST started another round of common share purchasing in October at the same valuation, and intends to increase its Facebook share even more in the future. For your background: Facebook recently said over 350 million people have now registered for the social network, and in September announced that it had turned cash-flow positive. Its annual revenue is estimated at about $500 million.

We’ve contacted Facebook for more information and will update if they get back to us.

Digital Sky Technologies has been pretty busy lately: just this month the investment company announced the merger of Astrum Online with Mail.ru (DST backed both companies), were rumored to be negotiating the acquisition of ICQ with AOL and led a $180 million investment round in social gaming company Zynga.

Something tells me we’ll be hearing much more from the investment firm in 2010.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

Achieving Payment Card Industry Data Security Standard (PCI DSS) compliance for online transactions is an expensive and timely endeavor; routinely costing hundreds of thousands of dollars and spanning several quarters in tim. According to Gartner, PCI compliance will cost up to an average of $2.7 million among Level 1 merchants and $267,000 among Level 2 merchants. Further, Visa and Mastercard will be imposing new PCI requirements upon online merchants, which will include more frequent on and off site security reviews, beginning in 2010; thus forcing more companies to upgrade their systems to meet compliance standards.

Demand billing and recurring subscription management company, Aria, offers a solution built to manage PCI compliance for companies.