Temu, a shopping app from Chinese e-commerce giant Pinduoduo, is having quite the run as the No. 1 app on the U.S. app stores. The mobile shopping app hit the top spot on the U.S. App Store in September and has continued to hold a highly-ranked position in the months that followed, including as the No. 1 free app on Google Play since December 29, 2022. More recently, Temu again snagged the No. 1 position again on the iOS App Store on January 3 and hasn’t dropped since — even outpacing competitor Shein’s daily installs in the U.S.
Offering cheap factory-to-consumer goods, Temu provides access to a wide range of products, including fast fashion, and pushes users to share the app with friends in exchange for free products, which may account for some of its growth. However, the large majority of its new installs come from Temu’s marketing spend, it seems.
When TechCrunch covered Temu’s rise in November, the app had then seen a little more than 5 million installs in the U.S., according to data from app intelligence firm Sensor Tower, making the U.S. its largest market. Now, the firm says the app has seen 5 million U.S. installs this January alone, up 19% from 4.2 million in the prior 22 days from December 10 through December 31.
According to Sensor Tower estimates, Temu has managed to achieve a total of 19 million lifetime installs across the U.S. App Store and Google Play, more than 18 million of which came from the U.S.
The growth now sees Temu outpacing rival Shein in terms of daily installs. In October, Temu was averaging around 43,000 daily installs in the U.S., the firm said, while Shein averaged about 62,000. In November, Temu’s average daily installs grew to 185,000 while Shein’s climbed to 70,000 and last month, Temu averaged 187,000 installs while Shein saw about 62,000.
The shopping app’s fast rise recalls how the video entertainment platform TikTok grew to become the most downloaded app worldwide in 2021, after years of outsized growth. The video app topped 2 billion lifetime downloads by 2020, including sister app Douyin in China, Sensor Tower said. Combined, the TikTok apps have now reached 4.1 billion installs.
Like Temu, much of TikTok’s early growth was driven by marketing spend. The video app grew its footprint in the U.S. and abroad by heavily leveraging Facebook, Instagram, and Snapchat’s own ad platforms to acquire its customers. TikTok was famously said to have spent $1 billion on ads in 2018, even becoming Snap’s biggest advertiser that year, for instance.
By investing in user acquisition upfront, TikTok was able to gain a following which then improved its ability to personalize its For You feed with recommendations. Over time, this algorithm became very good at recognizing what videos would attract the most interest thanks to this investment, turning TikTok into one of the most addictive apps in terms of time spent. As of 2020, kids and teens began spending more time watching TikTok than they did on YouTube. And earlier this month, Insider Intelligence data indicated all TikTok users in the U.S. were now spending an average of nearly 1 hour per day on the app (55.8 minutes), compared with just 47.5 minutes on YouTube, including YouTube TV.
While Temu is nowhere near TikTok’s sky-high figures, it appears to be leveraging a similar growth strategy. The company is heavily investing in advertising to acquire users, which it uses to personalize the shopping experience. One of Temu’s key features, in fact, is its own sort of For You page that encourages users to browse trending items “Selected for You.” In addition to gamification elements, Temu also puts heavy emphasis on recommending shops and products on its home page, which is informed by its user data.
But the app’s growth doesn’t seem to be driven by social media. While the Temu hashtag (#temu) on TikTok is nearing 250 million views, that’s not really a remarkable number for an app as big as TikTok where something like #dogs has 120.5 billion views. (Or, for a more direct comparison, #shein has 48.3 billion views.) That suggests Temu’s rise isn’t necessarily powered by viral videos among Gen Z users or influencer marketing, but rather more traditional digital advertising.
According to Meta’s ad library, for instance, Temu has run some 8,800 ads across Meta’s various platforms just this month. The ads promote Temu’s sales and its extremely discounted items, like $5 necklaces, $4 shirts, and $13 shoes, among other deals. These ads appear to be working to boost Temu’s installs, allowing the app to maintain its No. 1 slot on the App Store’s “Top Free” charts, which are heavily influenced by the number of downloads and download velocity, among other things.
Of course, having a high number of downloads doesn’t necessarily mean Temu’s app will maintain a high number of monthly active users. Nor does it mean those users won’t churn out of the app after their initial curiosity has been abated. Still, Temu’s download growth saw it ranking as the No. 1 “Breakout” shopping app by downloads in the U.S. for 2022, according to data.ai’s year-end “State of Mobile” report. (Data.ai calculates “Breakout” apps in terms of year-over-year growth across iOS and Google Play.)
Because Temu’s growth is more recent, the app did not earn a position on the Top 10 apps in 2022 in either the U.S. or globally in terms of downloads, consumer spend, or monthly active users, on this report. Instead, most of those spots still went to social media apps, streamers, and dating apps like Bumble and Tinder. The only retailer to find a spot on these lists was Amazon, which was the No. 7 app worldwide by active users and the No. 8 most downloaded in the U.S.
Temu’s marketing investment may not pay off as well as TikTok’s did, though, as other discount shopping apps saw similar growth only to later fail as consumers found that, actually, $2 shirts and jeans were deals that were too good to be true. Wish famously fumbled as consumers grew frustrated with long delivery times, fake listings, missing orders, poor customer service, and other things consumers expect from online retail in the age of Amazon.
Temu today holds a 4.7-star rating on the U.S. App Store, but those ratings have become less trustworthy over the years due to the ease with which companies can get away with fake reviews. Dig into the reviews further and you’ll find similar complaints to Wish, including scammy listings, damaged and delayed deliveries, incorrect orders and lack of customer service. Without addressing these issues, Temu seems more likely to go the way of Wish, not TikTok, no matter what it spends.
A network of knockoff apparel stores exposed 330,000 customer credit cards
If you recently made a purchase from an overseas online store selling knockoff clothes and goods, there’s a chance your credit card number and personal information were exposed.
Since January 6, a database containing hundreds of thousands of unencrypted credit card numbers and corresponding cardholders’ information was spilling onto the open web. At the time it was pulled offline on Tuesday, the database had about 330,000 credit card numbers, cardholder names, and full billing addresses — and rising in real-time as customers placed new orders. The data contained all the information that a criminal would need to make fraudulent transactions and purchases using a cardholder’s information.
The credit card numbers belong to customers who made purchases through a network of near-identical online stores claiming to sell designer goods and apparel. But the stores had the same security problem in common: any time a customer made a purchase, their credit card data and billing information was saved in a database, which was left exposed to the internet without a password. Anyone who knew the IP address of the database could access reams of unencrypted financial data.
Anurag Sen, a good-faith security researcher, found the exposed credit card records and asked TechCrunch for help in reporting it to its owner. Sen has a respectable track record of scanning the internet looking for exposed servers and inadvertently published data, and reporting it to companies to get their systems secured.
But in this case, Sen wasn’t the first person to discover the spilling data. According to a ransom note left behind on the exposed database, someone else had found the spilling data and, instead of trying to identify the owner and responsibly reporting the spill, the unnamed person instead claimed to have taken a copy of the entire database’s contents of credit card data and would return it in exchange for a small sum of cryptocurrency.
A review of the data by TechCrunch shows most of the credit card numbers are owned by cardholders in the United States. Several people we contacted confirmed that their exposed credit card data was accurate.
TechCrunch has identified several online stores whose customers’ information was exposed by the leaky database. Many of the stores claim to operate out of Hong Kong. Some of the stores are designed to sound similar to big-name brands, like Sprayground, but whose websites have no discernible contact information, typos and spelling mistakes, and a conspicuous lack of customer reviews. Internet records also show the websites were set up in the past few weeks.
Some of these websites include:
If you bought something from one of those sites in the past few weeks, you might want to consider your banking card compromised and contact your bank or card provider.
It’s not clear who is responsible for this network of knockoff stores. TechCrunch contacted a person via WhatsApp whose Singapore-registered phone number was listed as the point of contact on several of the online stores. It’s not clear if the contact number listed is even involved with the stores, given one of the websites listed its location as a Chick-fil-A restaurant in Houston, Texas.
Internet records showed that the database was operated by a customer of Tencent, whose cloud services were used to host the database. TechCrunch contacted Tencent about its customer’s database leaking credit card information, and the company responded quickly. The customer’s database went offline a short time later.
“When we learned of the incident, we immediately contacted the customer who operates the database and it was shut down immediately. Data privacy and security are top priorities at Tencent. We will continue to work with our customers to ensure they maintain their databases in a safe and secure manner,” said Carrie Fan, global communications director at Tencent.
All Raise CEO steps down again
Less than a year after assuming the role, All Raise CEO Mandela SH Dixon has stepped down from her position at the nonprofit. The entrepreneur, who previously ran Founder Gym, an online training center for underrepresented founders, said in a blog post that the decision was made after she realized “being in the field working directly with entrepreneurs everyday” is her passion. Dixon said that she will be exploring new opportunities in alignment with that.
Her resignation is effective starting February 1st, 2023. She will remain an advisor to the Bay Area-based nonprofit.
This is the second chief executive to leave All Raise since it was first founded in 2017. In 2021, Pam Kostka resigned as the helm of the nonprofit to rejoin the startup world as well; Kostka is now an operator in residence and limited partner at Operator Collective, according to her LinkedIn. With Dixon gone, Paige Hendrix Buckner, who joined the outfit as chief of staff nine months ago, will step in as interim CEO. In the same blog post, Buckner wrote that “Mandela leaves All Raise in a strong position, and I’m grateful for the opportunity to continue the hard work of diversifying the VC backed ecosystem.”
Dixon did not immediately respond to comment on the record. It is unclear if All Raise is immediately kicking off a permanent CEO search.
The nonprofit has historically defined its goals in two ways: first, it wants to increase the amount of seed funding that goes to female founders from 11% to 23% by 2030, and, second, it wants to double the percentage of female decision-makers at U.S. firms by 2028.
In previous interviews, Dixon said that the company will work on creating explicit goals around what impact it wants to have for historically overlooked individuals. The data underscores the challenge ahead. Black and LatinX women receive disproportionately less venture capital money than white women; non-binary founders can also face higher hurdles when seeking funding, as All Raise board member Aileen Lee noted in the blog post. The nonprofit has created specific programs for Black and Latinx founders but has not disclosed a specific goal for the cohort yet. These disconnects can be lost if not tracked. All Raise’s last impact report was published in 2020 and they’re working on bringing that analysis back, Lee tells TechCrunch in an interview.
“All Raise is in great hands with Paige as interim leader and we’ve got a lot of exciting things that we’re shaping and scaling,” Lee said. “We have to all continue to link arms to try and continue to make improvements for our industry…we’ve made good progress that we can’t let up.”
Since launch, the nonprofit has raised $11 million in funding, and opened regional chapters in New York, Boston, Los Angeles, Chicago, DC and, soon, Miami.
Payments remain the darling of the fintech space
Welcome to The Interchange! If you received this in your inbox, thank you for signing up and your vote of confidence. If you’re reading this as a post on our site, sign up here so you can receive it directly in the future. Every week, I’ll take a look at the hottest fintech news of the previous week. This will include everything from funding rounds to trends to an analysis of a particular space to hot takes on a particular company or phenomenon. There’s a lot of fintech news out there and it’s my job to stay on top of it — and make sense of it — so you can stay in the know. — Mary Ann
Last week, I dug into CB Insights’ State of Fintech 2022 report. We’ve already discussed ad nauseam that fintech funding is not just down, but also way down.
And I’m not foolish enough to try and make any real predictions about the state of fintech in 2023.
Instead, I’m going to highlight some specific findings of that report that stood out to me and that I didn’t already write about.
Digital lending funding was down 53% to $11.5 billion in 2022. Dollars raised and deal volume in the fourth quarter dropped to their lowest levels since 2020 — with $1.6 billion raised across 121 deals. That’s a big drop even from just the first quarter of 2022, in which we saw $5.3 billion raised across 198 deals.
It’s not too difficult to surmise why this was the case. In 2022, we saw inflation and interest rates climb and startups with loose underwriting standards are no doubt paying the price with increased delinquencies and defaults. So when investors are thinking about where next to put their money, it’s unlikely that digital lending startups are going to be high on their lists, to be honest.
But guess where we saw an even bigger drop in funding? Banking. Globally, banking funding slid by 63%, or nearly two-thirds, according to CB Insights. Oof. In all of 2022, banking startups raised $9.4 billion across 299 deals. That compares to $25.3 billion raised across 447 deals in 2021.
There were so many challenger banks born in recent years, it is not surprising that that segment became oversaturated. My guess is that we’ll see a real survival of the fittest in 2023 and beyond. Heck, even decacorn Chime has struggled, as evidenced by its round of layoffs in the fourth quarter.
Meanwhile, payments remain the darling of the fintech space, with the segment leading in total funding and deals in the fourth quarter of 2022. About $3.4 billion was raised across 188 deals in the payments space in Q4 — nearly double the $1.8 billion raised across 62 deals by banking startups in the same three-month period. With more businesses and consumers opting to pay for things digitally, even in a post-pandemic world, this is hardly surprising.
And lastly, wealth tech made an impressive showing in terms of investor interest. Wealth tech companies brought in $1.7 billion across 164 deals in the fourth quarter. I think this reflects increased effort on the part of all generations to think ahead when it comes to their money, and not just live for short-term gratification.
Anisha Kothapa, CB Insights’ lead fintech analyst, believes that last year’s funding numbers reflected more of a correction than a bubble.
While of course I still believe fintech is in its early innings, I do also think that people went a little too crazy, too fast in 2021 and a lot of companies that probably shouldn’t have gotten funded did. So whether it’s a correction or a bubble is hard to say really. Either way, let’s hope 2023 brings with it greater due diligence, less ego and more viable business models.
We certainly don’t need a repeat of last year.
Beleaguered fintech startup Bolt revealed a new brand last week that involved the launch of a multimedia campaign featuring this commercial that will stream on Hulu, Peacock, ESPN, ABC, NBC, and other networks, as well as a meme generator “for any internet user to play around with to discover their own shoppergänger,” a company spokesperson told me via email. The company will soon be “rolling out an influencer campaign where creators will dive into #dolltok by building narratives around their #shoppergangers (dolls customized to their own unique shopper personas) in their miniature worlds,” according to the spokesperson. AdAge speculates that the fintech startup is using memes in an effort to “connect with Gen Z.”
From Axios: “Retail trading platform Robinhood is launching an independent media brand called Sherwood that will be led by veteran tech editor and media entrepreneur Joshua Topolsky. The entity will build on the success of Robinhood’s popular daily markets newsletter, Snacks, and will serve as a branding and customer acquisition tool. Sherwood Media has been set up as an independent LLC that will exist as a subsidiary of Robinhood, in part to ensure that the content produced within Sherwood remains editorially independent.”
Snafus can happen even when incumbents and fintechs partner. Reports The Charlotte Observer: “Bank of America experienced delays in online transactions conducted via Zelle for much of the day Wednesday (Jan. 18), but those problems were resolved by the afternoon, the bank said. On outage tracker DownDetector.com, irate customers reported missing funds and unexpected negative balances due to problems with the digital payment network.”
How can fintech startups outlast the VC winter? Peter Hazlehurst, co-founder and CEO of BaaS startup Synctera, shares his thoughts in this TC+ article here.
Reports CFO Dive: “Wilmington N.C.-based nCino announced CFO David Rudow will be leaving the cloud banking provider effective Jan. 31 as the company will lay off about 7% of its workforce, or 117 employees, according to Wednesday press release and a company spokesperson. Chief corporate development and strategy officer Greg Orenstein will move into its CFO seat.”
Nihar Bobba has “dipped” out of Wharton to join fintech-focused venture firm Better Tomorrow Ventures as a principal, according to this tweet. He had been a venture partner there since last March, according to his LinkedIn profile.
Anyone who has tried to buy a new car recently will appreciate this. Publicly traded Upstart, an artificial intelligence (AI) lending marketplace, has added two new applications to its Auto Retail platform — digital finance and online sales — to offer dealerships “a seamless online to in-store car-buying experience, from search to signing.” To hear more rant on this topic and other fun stuff, listen to this week’s Equity Podcast.
A recent panel discussion among VCs Mercedes Bent of Lightspeed Venture Partners, Victoria Treyger of Felicis Ventures and Jillian Williams of Cowboy Ventures hosted by TC editor and StrictlyVC founder Connie Loizos touched on a number of hot topics in the world of fintech. As Connie writes: “If you’re a fintech founder, investor or regulator, you might want to catch the full conversation — which also touches on regulation, talent in the industry and crypto” in the video linked here.
Very talented tech journalist Eric Newcomer is still “marveling at JPMorgan’s decision to go public and sue the founder of the student loan company Frank” after purchasing the startup for $175 million and then accusing CEO Charlie Javice “of helping to fake millions of customers in order to induce the bank to buy her company.” (We’re still marveling too!) I 100% agree with him here: “While I applaud JPMorgan for holding an alleged fraudster accountable, the bank certainly looks pretty foolish for failing to notice before buying the company that so many of Frank’s customers had apparently been brazenly faked.” All this leads Eric to ask: “With JP Morgan suing a startup founder, will 2023 be the year of accountability?”
Wholesale marketplace Faire announced last week that it has built what it describes as an “app for brands” to give independent brands a way to manage their businesses — “all from their phones.” So what’s the fintech tie? A spokesperson told me via email: “With this new brand app, customers can manage orders from anywhere at anytime — meaning they will never miss an order resulting in more money being earned.”
Reports Fintech Finance News: Turkish fintech company “Papara . . . [announced] the launch of its insurance arm. Currently live are mobile and pet insurance products, with more to come in the first half of the year….This is the first expansion of Papara’s product suite outside of its core banking and money management products since launching six years ago. It marks the next step in Papara’s mission to become one of Europe’s leading financial SuperApps, providing users with all the accessible and affordable financial services they need in one place.” More here.
The relationship between incumbents and upstarts has long been a complicated one. Cartoonist Ian Foley illustrates the start of the consolidation and M&A process that the fintech market is starting in earnest here.
QED-backed Nigerian fintech TeamApt has made a rebrand by adopting the name of its flagship product, Moniepoint, piloted in 2019 as an agency banking platform that uses POS devices to meet the financial needs of underbanked and unbanked customers in Nigeria.
However, the platform has since metamorphosed into a full business banking solution. While maintaining its agency banking core, Moniepoint began providing small businesses, who still act as agents, with banking and operational tools like working capital, business expansion loans, expense management (business payments cards), accounting and bookkeeping solutions and insurance.
Moniepoint’s interfacing nature between thousands of small businesses and millions of individual customers made it TeamApt’s most well-known brand, among others, that included a white-labeled digital banking product for banks and enterprise software for small business management.
“When we started out in 2015, we were primarily providing back office payment infrastructure for banks and needed an apt team, hence the name TeamApt. Since then, we have evolved significantly and our flagship business banking solution, Moniepoint, has become our core focus and where we see the future,” CEO Tosin Eniolorunda, Moniepoint co-founder and CEO said of the rebrand.
The Moniepoint brand also made the fintech the most money. It currently processes most of the POS transactions in Nigeria with an annualized total payments volume (TPV) of over $170 billion and a customer base of over 600,000 businesses, enabling it to more than double its annual revenues in 2022. The platform also launched a credit offering in 2022, which has already disbursed over $1.4 billion in working capital loans.
Considering all this, it’s easy to see the rebrand as fitting. Moniepoint, now a London-based company, claims to be profitable (it says since 2020). It became QED’s first African investment last July when the U.S. fintech-focused firm led a $50 million+ pre-Series C round that saw Moniepoint’s valuation jump into soonicorn range.
Fundings and M&A
Seen on TechCrunch
Sneak peek: Dayforward, a digital-only, full-stack life insurance startup, will announce this week that it has closed on $25 million in funding led by AXA Venture Partners with participation from existing investors HSCM Ventures, Juxtapose, and Munich Re Ventures. It also has acquired Commercial Travelers Life Insurance in an effort to expand its own life insurance offering nationwide. Founded in 2021, the company touts that its term life insurance offering “guarantees the policyholder’s family will continue to receive their income in the event that the policyholder passes away.” The company’s latest funding round brings its aggregate amount of capital raised to $45 million. The money will go toward scaling its business nationwide, developing new insurance products and “continuing to launch its proprietary solutions through strategic partners.”
That’s it for this week. Thanks, once again, for reading and sharing this. See you next time! xoxo, Mary Ann
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