Technology

Emerging markets credit startupMines.iohas closed a $13 million Series A round led by The Rise Fund, the global impact fund formed by private equity giant TPG, and 10 others, including Velocity Capital.

Mines provides business to consumer (B2C) &credit-as-a-service& products to large firms.

&We&re a technology company that facilitates local institutions — banks, mobile operators, retailers — to offer credit to their customers,& Mines CEO and co-founder Ekechi Nwokah told TechCrunch.

Most of Mines& partnerships entail white-label lending products offered on mobile phones, including non-smart USSD devices.

With offices in San Mateo and Lagos, Mines uses big-data (extracted primarily from mobile users) and proprietary risk algorithms &to enable lending decisions,& Nwokah explained.

&We combine a strong AI technology with full…deployment services — disbursement…collections, payments, loan management, and regulatory — wrap it up in a box, give it to our partners and then help them run it,& he said.

Mines& typical client is a company &that has a large customer base and wants to avail credit to that customer base,& according to Nwokah. The startup generates revenue from fees and revenue share with partners.

Mines started operations in Nigeria and counts payment processorInterswitchand mobile operator Airtel as current partners. In addition to talent acquisition, the startup plans to use the Series A to expand its credit-as-a-service products into new markets in South America and Southeast Asia &in the next few months,& according to its CEO.

Mines sees itself as a &hardcore technology company based in Silicon Valley with a global view,& according to Nwokah. &At the same time, we&re very African,& he said.

The startup&sleadership teamis led by three Nigerians — Nwokah, Chief Scientist Kunle Olukotun and MD Adia Sowho. The company came together after Olukotun (then and still a Stanford professor) and Nwokah (a then-AWS big data specialist) met in Palo Alto in 2014.

Looking through the lens of their home country Nigeria, the two identified two problems in emerging markets: low access to credit across large swaths of the population and insufficient tools for big institutions to put together viable consumer lending programs.

Due to a number of structural factors in these markets, such as low regulatory support, lack of credit data and tech support, &thereno incentive for many banks and institutions to take risk on a retail lending business,& according to Nwokah.

Nwokah sees Mines& end user market as &themore than 3 billion adults globally without access to credit,& and its direct client market as big &banks, retailers and mobile operators…who want to power digital credit tailored to these markets.&

Mines views itself as different from the U.S.controversial payday lenders by serving different consumer needs. &If you live in a country where your salary is not guaranteed every month, where you don&t have a credit card…where you have to pay upfront cash for almost everything you do, you need cash,& he said

The most common loan profile for one of Mines& partners is $30 at 15 percent flat for a couple of weeks.

Nwokah wouldn&t name specific countries for the startuppending South America and Southeast Asia expansion, but believes &this technology is scalable across geographies.&

As part of the Series A, Yemi Lalude from TPG Growth (founder of The Rise Fund) will join Mines& board of directors.

On a call with TechCrunch, Lalude named the companyability to &drive financial inclusion within a matter of seconds from mobiles devices,& their &local execution on the ground& and model of &partnering with many large organizations with their own balance sheets& as reasons for the investment commitment.

With Mines& pending Asia and South America move they join Nigerian tech companiesMallforAfrica.comand data analytics firmTerragon Group, who have expanded or stated plans to expand internationally this year.

The 1960s were a beautiful time for watches. Horology was in its prime and the great names we know and love today & Rolex, Omega, Cartier & were just one of many watchmakers churning out commodity products to a world that needed to tell the time. Their watches & simple, elegant, and mechanically complex & were the ultimate in mechanical efficiency and design and no one did it quite as well as Seiko. This mechanical golden age ended in the late 1970s with the rise of the quartz watch but Seiko is resurrecting it with their Grand Seiko line of luxury pieces.

Grand Seiko is special for a few reasons. First, itSeikohaute horlogerie skunkworks, allowing the company to experiment with all the fancy materials and techniques that Swiss watchmakers have worked with for years. The watches are made of precious metals and feature Seiko Hi-Beat movements. These watches &vibrate& 36,000 times an hour or ten times a second. This means that the balance wheel inside the watch is moving back and forth far faster than, say, an Omega Co-Axial 8500/1 series which is clocked at 25,200 vibrations per hour. What this means in practice is that the seconds hand moves with an almost uncanny smoothness.

The rest of the watch I tested, the euphoniously-named SBGH263G, is based on a piece from 1968 that came from Seikomechanical hey-day. The $6,200 watch has a 39mm case and, according to Seiko, is style for maximum elegance. They write:

The dial has elegant and easy-to-see Arabic numeral for the hour mark. The concept color &Shironeri& is a reflection of Japanese tradition. The color and texture of the dial come from the glossy white silk of the outfit worn by the bride in a Japanese wedding. It symbolizes purity and innocence.

This watch is a formal piece for wearing, presumably, to your own wedding. That said, italso very reminiscent of 1960s style watches. The size, case shape, and polished hands and numerals all hearken back to a simpler time in watchmaking when everything didn&t have to look like a robotgoiter or a pie plate.

It is quite small and if you&re used to Panerais or Nixons you&ll definitely notice a grandpa vibe about this piece. Because it is not very complex & that is it does not have any real complications like a stopwatch & it is very pricey. However, knowing Grand Seikodedication to a very lost art of non-Swiss horology, itwell worth a look.

I&ve been following Grand Seiko for years now and the quality and care the company has been putting into these watches is palpable. This watch is no commodity product. The case is polished to a high sheen and everything & from the screws to the beautiful domed sapphire crystal & is put together with great care. Seiko also makes lower end pieces & my favorite is the Orange Monster & but this is far above that in terms of build quality and price.

Pieces like this Grand Seiko remind us that, before Apple Watches and Fitbits, there was an entire universe of truly striking timepieces made for the absolutely sole purpose of telling the time. I love pieces like this one because they are no frills and yet they are full of frills. The watch is as simple as can be & three hands and a date window without any lume or extraneous buttons & and yet it shows amazing technical skill. It is expensive but this is a handmade watch by a storied manufacturer and itwell worth the price of admission if you&re a lover of the elegantly antiquated.

During a gold rush, Silicon Valleyline is to always invest in picks and shovels instead of mining. Sometimes it pays just to do both.

TechCrunch has learned through a company fundraise overview that Beijing-based mining equipment seller Bitmain hit a quarterly revenue of approximately $2 billion in Q1 of this year. Despite a slump in bitcoin prices since the beginning of the year, the company is on track to become the first blockchain-focused company to achieve $10 billion in annual revenue, assuming that the cryptocurrency market doesn&t drop further.

Fortune previously reported that the company had $1.1 billion in profits in the same quarter, a number in line with these revenue numbers, given a net margin of around 50 percent.

That growth is extraordinary. From the same source seen by TechCrunch, Bitmain revenues last year were $2.5 billion, and around $300 million just the year before that. The company reportedly raised a major venture round of $300-400 million from investors, including Sequoia China, at a valuation of $12 billion.

For comparison, popular cryptocurrency wallet Coinbase made $1 billion in revenue in 2017. In addition, Nvidia, a company based out of California that also makes computer chips, generated revenues of $9.7 billion in its 2018 fiscal year (2017 calendar year). Nvidiarevenues were $3.21 billion in Q1 fiscal year 2019 (February-April 2018), and historical revenue figures show a general seasonal uptrend in revenue from Q1 through Q4.

The same overview also shows that Bitmain is exploring an IPO with a valuation between $40-50 billion. That would represent a significant uptick from its most recent valuation, and is almost certainly dependent on the vitality of the broader blockchain ecosystem.

Several of Bitmaincompetitors have filed for IPO since the beginning of 2018, but most of them are significantly smaller in size. For example, Hong Kong-basedCanaan Creative filed for an IPO in May, and the latest was that it was aiming for $1 billion to $2 billion in fundraising with 2017 revenue of US$204 million.

When contacted for this story, Bitmain declined to comment on the specific numbers TechCrunch has acquired.

A brief overview ofBitmain

Bitmain is the worlddominant producer of cryptocurrency mining chips known asASICs, or Application-Specific Integrated Circuit. It was founded by Jihan Wu and Micree Zhang in 2013, and the company is currently headquartered in Beijing.

As the story goes, back in 2011, when Wu read Satoshi Nakamotowhitepaper on Bitcoin, he emptied his bank account to buy them. Back then, one bitcoin could be purchased for less than a dollar. And by 2013, Wu and Zhang decided to build an ASIC chip specifically for bitcoin mining and founded Bitmain. Wu was just 28 at the time.

Cryptocurrency mining is the process of checking and adding new transactions to bitcoinimmutable ledger, called the blockchain. The blockchain is formed by digital blocks, where transactions are recorded. The act of mining is essentially using math to solve for a cryptographic hash, or a unique signature if you will, to identify new blocks.

The general mining process requires massive processing power and incurs hefty energy costs. In exchange for those expenses, miners are rewarded with a number of bitcoins for each block they add onto the blockchain. Currently, in the case of Bitcoin, the reward for every block discovered is 12.5 bitcoins. At the current average trailing bitcoin price of approximately $6,500, that$81,250 up for grabs every 10 minutes, or $11.7 million dollars a day.

Bitmain has several business segments. The first and primary one is selling mining machines outfitted with Bitmainchips that are usually a few hundred to a few thousand dollars each. For example, the latest Antminer S9 model is listed as $3,319. Secondly, you can rent Bitmainmining machines to mine cryptocurrencies.

Third, you can participate to mine bitcoin as part of Bitmainmining pool. A mining pool is a joint group of cryptocurrency miners who combine their computational resources over a network. Bitmaintwo mining pools, BitmainAntPool and BTC.com, collectively control more than 38 percent of the worldBitcoin mining power per BTC.com at the moment.

The future of Bitmain is closely tied with the crypto market

Bitcoin mining is a massive business with influence over energy prices across the world. (LARS HAGBERG/AFP/Getty Images)

Despite its rapid rise to success, Bitmain is ultimately dependent on the price of cryptocurrencies and overall crypto market fluctuations. When there is a bull crypto market, investors would be willing to give a different valuation multiple to the company than if it were in a bear market. In a bear market, the margins are reduced for both the company as well as for its customers, as the economics of mining cryptocurrencies are no longer as compelling. For example, at the end of 2014, Mt. Gox, a famous Bitcoin exchange at the time, was hacked, spurring a crash in cryptocurrency prices.

Subsequently, Bitmain went through a bitcoin drought as Bitcoin prices hit low points, and its ASIC chips did not see much demand. It was not appealing to miners to pay for expensive electricity bills to mine a digital currency that was falling in value. But fast-forward to now; we have gone through several bull and bear crypto market cycles. According to Frost - Sullivan, in 2017, Bitmain is estimated to have ~67 percent of the market share in bitcoin mining hardware, and generated 60 percent of computing power.

Canaan Creative IPO filing. Company A is Bitmain.

One of the fundamental challenges facing any cryptocurrency mining manufacturer such as Bitmain is that the valuation of the company is largely based off the price of cryptocurrencies. The market in the first half of 2018 has shown that no one really knows when bitcoin prices and the cryptocurrency market will start picking up again. Additionally, according to Frost - Sullivan, the ASIC-based blockchain hardware market, which is the market segment that includes Bitmain and Canaan, will see its compound annual growth rate (CAGR) slow to around 57.7 percent annually between 2017 to 2020, down from 247.6 percent between 2013 and 2017.

Nonetheless, it seems that Bitmain has planned well ahead to prepare for these macro risks and exposures. The company has raised significant private funding and has been expanding its business into mining new coins and creating new chips outside of cryptocurrency applications.

First, with itexisting mining rigs, Bitmain can essentially broaden into all SHA256-related coins. So coins such as Bitcoin, Bitcoin Cash and Litecoin can all be mined on Bitmainequipment. The limitation here is largely how fast they can build up more mining equipment and mining centers. The company has broadened its geographic reach by developing new mining centers. Most recently, Bitmain revealed that it will build a $500 million blockchain data center and mining facility in Texas as part of its expansion into the U.S. market, aiming for operations to begin by early 2019.

Secondly, Bitmain is also looking to launch their own AI chips by the end of 2018. Interestingly, the AI chips are called Sophons, originated from the key alien technology in the famous trilogy, the Three-Body Problem, by Liu Cixin. If things go as planned, BitmainSophon units could be training neural networks in data centers around the world. BitmainCEO Wu once said that in five years, 40 percent of revenues could come from AI chips.

Lastly, Bitmain has been equipping itself with cash. Lots of it, from a number of the top and largest investors in Asia. Two months ago, China Money Network reported that Bitmain raised a Series B round, led by Sequoia Capital China, DST, GIC and Coatue in a $400 million raise, putting the company at a value of $12 billion. Just last week, Chinese tech conglomerate Tencent and JapanSoftBank, another tech giant whose 15 percent stake in Uber makes it the drive-hailing applargest shareholder, also joined the investor base.

For Bitmain, there are many reasons to stay private as a company, including keeping its quarterly financials private as well as dealing with market fluctuations and the ongoing volatility and uncertainty in the cryptocurrency world. However, the con is that early employees may not get liquidity in their stock options until much later.

Wu has said that a Bitmain IPO would be a &landmark& for both the company and the cryptocurrency space. However, with the current rich crypto private market financing, itnot so bad of an idea to continue to raise private money and stay out of the public eye. Once Bitmainfinancials become more diversified and cryptocurrency becomes more widely adopted worldwide, the world may then be ready for this $10 billion revenue blockchain company.