Despite rising costs and increasing competition from rivals like Tencent, Chinese Internet giant Sina narrowed its first-quarter net loss to $13.2 million from $13.7 million a year earlier, the company reported today. Sina’s net revenue increased 19 percent year-over-year to $126 million, strengthened by stronger-than-expected non-advertising revenue.

The company’s Sina Weibo is China’s largest microblogging service, with over 46 million daily users. Last month, e-commerce giant Alibaba Group bought a 18 percent stake in Sina Weibo for $586 million, a deal that valued the site at over $3 billion.

Sina hopes that the Alibaba deal will allow it to strengthen advertising revenue despite the slowdown in ad sales that has hit all major Chinese Internet companies, including Baidu and Tencent. Sina’s ad sales dropped 15 percent in the first quarter from the previous quarter to $94.3 million.

Adjusted non-advertising revenue, which includes revenue share from Web games and membership fees on Sina Weibo, increased 17 percent to $27 million, more than the range of $21 million to $23 million range forecast by the company.

“As we start 2013, we are making good progress in transitioning from a PC-centric to a mobile-centric Internet company with new product launches and improved monetization,” said Sina chairman and CEO Charles Chao in the earnings release. “In April, we formed a strategic alliance with Alibaba Group to catapult us into social commerce. By partnering with Alibaba, Weibo is well positioned to play a key role in the future of e-commerce, particularly in mobile commerce as we explore ways to search, share and buy the goods and services of the millions of merchants on Taobao and Tmall.”

Article courtesy of TechCrunch

SeedAsia, an equity crowd-funding site based in China, has just launched. The company is offering stakes in selected early-stage startups to the public.

“It’s kind of a hybrid between Kickstarter and private investment,” said co-founder Tom Russell. The startups to be listed would have ideally gone through some some sort of incubation program and would have shown promise. They can apply offer between $50,000 and $1.5 million in equity through SeedAsia’s platform.

SeedAsia takes a 5 percent cash commission from the startup and another 5 percent of the investor’s equity. It is currently considering charging a management fee next year, said Russell.

Potential investors need to apply and be screened, and SeedAsia has set the minimum investment commitment at $2,000 per member. “It costs about $20,000 to $30,000 at minimum to be an angel investor, so this lowers the entry barrier for people,” he said.

SeedAsia is the first equity crowd-funding site to launch in the region, although the equity funding trend has been taking off in the US, where there are apparently over 200 such sites. One of them, FundersClub, recently cleared US regulators, paving the way for more such sites to flourish.

Hong Kong-headquartered Decision Fuel is the first fund to be listed on SeedAsia. The company offers a mobile platform to deliver short consumer surveys. It had $1.25 million in seed funding in 2011, according to AngelList, and counts clients such as P&G, Nike, Colgate. It has already gathered more than 14 million survey responses for its clients, it said.

Russell said the crowd-funding scene is a lot less developed in Asia than it is in the West. The culture is such that potential investors are still more keen on property than in an online startup, he said. Cultural differences also persist. “The local Chinese developers don’t like being transparent with their ideas and sharing, while Westerners don’t understand why the Chinese aren’t as transparent. The truth is, you have big players like Tencent that can copy you easily, which is why people aren’t as open with sharing here.”

SeedAsia has taken on some advisors to raise investor confidence in its portfolio clients. Inporia and Hive7 founder, Max Skibinsky, is one, and Oscar Ramos has been brought in too. Ramos founded Chinese seed fund, DaD Asia.

Article courtesy of TechCrunch

500 Startups today is announcing the next 28 companies to take part in its Accelerator program, unleashing a largely international class of startups who have come to Mountain View to accelerate their startup progress. There are 28 companies in this Accelerator class, and as usual there’s a bunch of diversity there. (And, as has become tradition, the class made a ghetto fabulous music video to accompany the announcement.)

The group is more than 70 percent international, with 20 companies coming from outside the U.S. That’s no big surprise, as about 15 percent of the 500 Startups portfolio in general is made up of companies outside the U.S., but over the last several batches, the accelerator has skewed heavily toward overseas and non-Silicon Valley companies.

This class includes startups from Brazil, Chile, China, Ghana, India, Israel, Japan, Jordan, Mexico, Spain, Switzerland, Taiwan, Ukraine and Vietnam. With Dropifi (Ghana), as well as Dakwak and Tamatem (both from Jordan), the 500 Startups Accelerator has added its first companies from Africa and the Middle East.

Notably, this batch was the first which was chosen entirely through applications posted to AngelList, so it no doubt includes a few startups that 500 Startups founding partner and Sith Lord Dave McClure probably wouldn’t have heard about otherwise.

The program began mid-April, and 500 Startups expects to have its Demo Days in Mountain View, San Francisco, and New York City sometime in July. In the meantime, enjoy the music video they put together to announce themselves, below. Oh, and here’s the list of startups:

• AppSocially – Make your app’s Viral Loop awesome with an API that lets you track activity and conversion – allowing you to take action using customer data.
• BinPress – We increase adoption of open source in SMBs and enterprises.
• BoxC – We make buying directly from sellers in China as fast and safe as buying from Amazon.
• Credii – We arm businesses with all the intelligence they need to make smart software and service choices.
• Dakwak – Effortless website translation technology.
• Dropifi – An intelligent replacement for mailtos
  and dumb contact forms. It makes customer support more effective, increases lead generation and generates valuable business insights.
• Feast – The online cooking school for the common man. It offers simple cooking guides that teach impressive techniques and recipes with an online community where you can ask questions and get feedback as you cook.
• Floqq – Makes it easy for anyone anywhere to learn the skills they need.
• Flyer – We empower commercial real estate agencies to create beautiful property flyers online.
• Geekatoo – We offer local and onsite tech support at a great value. Customers receive competing bids on tech support needs from verified providers.
• GreenGar – Seamless realtime collaboration on mobile devices. We’re building a platform that enables apps to intuitively connect people together.
• InstaGIS – Geographic information system that allows retail stores to target their audiences.
• KiteReaders – Publishing platform for publishers & authors to create, distribute, and market their children’s picture books for iBooks, Kindle, and Nook.
• Koemei – Algorithmic transcription of videos for search and accessibility, helping education and large enterprises gain value from their video investments.
• Mayvenn – Empowers the 95 percent of African American salons that do not retail products. Our mobile commerce solution eliminates a salons inventory cost and opens a new revenue stream for their business.
• PinMyPet – Social-based software for monitoring and improving the experience between pets and owners. It works with powerful, small and low-cost hardware for realtime health and location detection.
• POPAPP – App to fast sketch app prototypes.
• PriceBaba – PriceBaba is a product (re)search engine that lets you shop in your vicinity.
• Reesio – Turns the real estate transaction process into one beautiful flow for agents, clients, and third parties.
• School Admissions – Making school admissions and education tension-free. Disrupting the process of choosing the right school for your child and parents.
• Seat 14A – A complete and affordable ensemble for the discerning man every week.
• SeMeAntoja – We empower restaurants to accept orders online.
• Sverve – Sverve is a self-service influencer marketing platform for small businesses. We connect small businesses with female social media influencers to promote their products and services on the social web.
• Tamatem – Tamatem is a mobile gaming development studio and publisher focused on creating culturally relevant games for the huge unaddressed Arabic gaming market.
• TRDATA – We are the Bloomberg for emerging markets. We collect accurate real-time market information from remote places from scattered and illiquid markets.
• Tushky – Self-service online platform to monetize free time by offering interesting activities.
• WHILL – Next generation of personal mobility for wheelchair users and the elderly.

Article courtesy of TechCrunch

Rightware, a Finnish startup that sells embedded user interface software and performance benchmarking tools to car makers and consumer electronics companies needing to build graphical user interfaces has announced it has closed a $5.2 million Series B round. Investors in the round include Inventure and Nexit Ventures, along with new investor Finnish Industry Investment.

The startup, which was founded in 2009 has offices in Finland, Germany, China, Taiwan and the U.S., and counts Audi AG among the customers for its Kanzi UI creation tool, has raised a total of  €7 million ($9 million) to date, according to CEO Jonas Geust.

He said the Kanzi tool is designed to “close the gap” between the UI designer and the UI engineer, with both being able to work together using the same tool. Kanzi also includes a WYSYWYG feature to help cut development times. “As the design work is proceeding you can see on your target hardware exactly how it’s going to look as the work goes ahead,” he added.

Geust said the new investment will be used to expand Rightware’s global sales, and also to continue developing the tool itself. Rightware is not currently breaking out customer numbers but says it’s seeing “big growth” in uptake of its Kanzi UI — with traction in the automotive sector and consumer electronics companies in Europe, US and Asia.

“We are seeing that we have an explosive growth in the Kanzi UI business unit. We saw already during first quarter of this year… 100% growth and that seems to be continuing month-over-month,” said Geust.

“We are using [the new funding] partly to further develop the Kanzi tool and technology — that’s more an R&D investment — and then the other side of that is to build an even stronger market presence — basically opening sales and technical support offices closer to the customers.”

Geust told TechCrunch that the company believes there will be increasing demand for its tools, thanks to the rise of higher resolution screens. “The underlying theme that we are seeing is first of all that the demand for more advanced graphical or we could call that photo-realistic user interfaces is increasing, as the high definition screens become more of a commodity in different industries. It becomes the default use case that you actually have a very good-looking screen,” he said.

“That also puts higher requirements on the user interface — that it is actually living up to the standard that the hardware can deliver, and that is where we are expecting to see explosive growth in demand for the tool that can actually deliver on that demand.”

Rightware said its Q1 2013 UI business revenues were more than double compared Q1 2012. It expects growth to further accelerate towards the end of the year.

Commenting on the funding round in a statement, Jussi Hattula, Director, Team leader of Growth Capital at Finnish Industry Investment Ltd said: “Rightware leads the embedded UI industry with its innovative technology and market penetration.  The company promotes next-generation applications where integrated 2D & 3D graphics deliver better and faster user experiences. We are excited to be part of this round and to work with the company to fulfill its vision.”

Article courtesy of TechCrunch

Fresh from last week’s Verizon Lumia device launch, Nokia has taken the wraps off a new smartphone in its Windows Phone-based Lumia range at an event in London today. The Lumia 925 is its first flagship for T-Mobile in the U.S. This means that following the Lumia 928 launch on Verizon, and factoring in Nokia’s initial launch of the Lumia 920 on AT&T last year, Nokia now has a flagship Windows Phone ranged on all three major U.S. carriers. Globally the Lumia 925 will be ranged with Vodafone in Europe, coming to markets including Germany, Italy, Spain and the U.K. (priced at €469), and in China with China Mobile and China Unicom. The device will ship in June in Europe, with a U.S. launch slated for soon after.

The Windows Phone 8-based 4G Lumia 925 continues Nokia’s strategy of emphasising the camera smarts of its flagships Windows Phones, including PureView branding, Carl Zeiss optics and an 8.7MP lens with image stabilisation tech inside. But the camera hardware in the 925 is a little different to the 928 and 920, with one extra lens. This sixth lens improves photo performance in bright sunlight, according to Nokia, as well as sharing the low light performance abilities of its fellow flagships. In addition to that new camera hardware, the phone includes new software, called Smart Camera, that’s aimed at extending the photography experience by giving users new ways to capture and share photographs.

The camera software on the device includes a burst mode which allows up to 10 shots to be captured at a time. The software also has three new capture modes that take advantage of this burst feature, namely: Best Shot, for composing a composite shot from the best elements of several images; Action Shot for snapping a series of stills of action shots, such as sports, that can then be edited and shared as a sequence; and Motion Focus, a Lytro-style mode that allows the snapper to pick different elements to be in or out of focus after the shot has been taken. Nokia confirmed to TechCrunch that the latter featured is the first bit of software to make use of technology Nokia acquired when it bought imaging company Scalado last July.

“Whatever you do you can go back and edit again and again,” said Jo Harlow, head of Nokia’s smart devices unit — pictured above left, with SVP of product design chief Stefan Pannenbecker at the London launch. “The Nokia smart camera is our latest uniqie experience for our Nokia Lumia portfolio.”

The Smart Camera software is exclusive to the Lumia 925 initially but will be pushed out as an over-the-air update called Amber to Windows Phone 8-based Lumias in Q3, the company said. Nokia looks to be trying to bolster its efforts against Samsung here, which included a raft of new camera features on its flagship Galaxy S4 device, such as Dual-Shot and Drama Shot. The lack of Instagram for Windows Phone continues to hamper Nokia’s photo-focused efforts however, but also today it announced a partnership with Oggl, Hipstamatic’s new photo community app — noting that since Oggl has a relationship with Instagram, users will be able to access the latter service via that app.

Design wise, the Lumia 925 is the first Lumia device to include metallic trim. A silver aluminium band runs around its four edges, and doubles as the phone’s antenna — taking its cues from the iPhone’s design (but with “rigorous testing” to ensure no repeat of antennagate, according to Nokia). The mobile maker’s trademark polycarbonate clads the back of the device, so there’s a two-tone look and feel.

Nokia says the plastic back is designed to make it feel nicer and grippier in the hand. It may also be about keeping the weight down (to 139g), since heavy handsets is something Nokia has been criticised for. It certainly felt lightweight and slender during a brief hands on. Handset colour options are muted rather than the usual bold Lumia offerings, with black, white and grey options for the plastic back. Wireless charging shells, sold separately, can reintroduce the usual Lumia splashes of yellow, cyan and red.

Under the hood there’s a 1.5GHz Dual-Core Snapdragon chip, and 1GB of RAM. On board memory is 16Gb plus 7MB free cloud storage on Microsoft’s SkyDrive. The 4.5 inch AMOLED display has a resolution of 1280 x 768. Dimensions are 129 x 70.6 x 8.5mm. The 2000mAh battery is good for up to 12.8 hours of talk time on 3G, or up to 6.6 hours video playback, according to Nokia.

A ‘true PureView’ Windows Phone device — codenamed EOS — has been rumoured for several months, and the Lumia 925 looks to be that device. However it certainly does not include the 41MP sensor and pixel oversampling techniques featured in the Symbian-based 808 PureView. It seems unlikely that bona fide PureView technology will ever make it to Windows Phone, not least because it’s something of a camera pro curiosity, rather than a consumer-friendly mainstream feature. Rather Nokia is extending the PureView branding — to associate it with a range of camera-centric features, not just that original huge sensor.

Harlow closed the presentation by hinting at further new device launches from Nokia “later this summer”. “I can’t wait to see you later this summer when we will continue to bring new innovation and new experiences to our Lumia portfolio,” she said.

Article courtesy of TechCrunch

Gartner has just released its Q1 figures for mobile handset sales, and the key takeaway is that Android continues to steal the show, led by handset maker Samsung. Google’s mobile platform now accounts for nearly 75% of all handset sales, a jump of almost 20 percentage points on a year ago, and equating to 156 million devices sold in the three-month period. Smartphones sales grew by 63 million units to 210 million for the quarter, making up nearly half of all mobile phone sales overall, at 425 million. With the number of mobile handset sales up by a mere 0.7% on a year ago, it’s clear that higher-end devices are very the much growth engine for the mobile industry at the moment.

Here’s a breakdown of some of the more interesting figures from Gartner.

Although Samsung does not release exact sales figures for its devices, Gartner estimates that the Korean giant is the biggest of them all: it accounted for almost 31% of all smartphones sold in the period, with Apple in number-two with 18%. It’s quite a change from last year, when the two were nearly level, with just 5 percentage points separating them. The widening gap, and Samsung’s growth, will continue into the quarter ahead, it seems, led by the popularity of the company’s newest flagship model. On the other hand, the fact remains that at least some appear to still be holding out for the next iPhone rather than going for the iPhone 5; and Apple meanwhile is still holding back from releasing new, low-cost models that might help it along more in emerging markets and compete more comprehensively against the huge range of Android devices out there.

“We expect the new Galaxy S4 to be very popular despite being more of an evolution than a truly revolutionary device compared to the S3,” writes Anshul Gupta, principal research analyst at Gartner.

The gap between the two biggest brands and number three continues to be a big one, with Samsung very much taking the lead here. “There are two clear leaders in the OS market and Android’s dominance in the OS market is unshakable,” Anshul writes.

Together, Apple and Samsung accounted for 49 million handset sales. This is down by 1.1 million from a year ago, and as the smartphone market continues to grow, the players who are vying to be the next big challengers continues to churn. LG swapped places with Huawei, and is currently at number-three at 4.8 million units (with a strong showing from some of its newer 4G handsets and its lower-cost smartphone range). Huawei’s 4.4 million, however, shows that it continues to press ahead, as does fellow Chinese handset maker ZTE, which rounds out the top-five:

Samsung, unsurprisingly, is also leading in the overall mobile category, which also counts sales of lower-end feature phones. Its share there is now 23.6%, topping 100 million units.

Just as Samsung is widening the gap against Apple in smartphones, it’s doing the same with Nokia in the overall rankings. The Finnish giant is still number-two but with a 14.8% share, a drop of 5 percentage points on last year.

Looking at mobile platform prominence in smartphones, Android’s current 74.4% market share is nothing short of astounding in terms of its increase, particularly considering that at this point there is no sign of it slowing down.

Gartner’s numbers, it should be noted, are some 10% higher than those from Kantar Worldpanel Comtech that were released at the end of April: a sign of the margin of error between different analysts’ estimates resulting from different counting methods. Here are yet more numbers from IDC, which claims that smartphones outshipped feature phones, and Canalys, which was also more bullish than Gartner on smartphone numbers at a 300 million estimate.

Back to Gartner: the 156 million units sold in the quarter is actually almost double what was sold in the same period a year ago. Android is without a doubt riding the very crest of the smartphone wave: Gartner points out that smartphones accounted for 49.3% of sales of mobile phones worldwide, up from 34.8% in Q1 of 2012, and 44% in the fourth quarter of 2012.

Apple continues to grow but at a slower pace, managing to increase its share by a “mere” 5 million. BlackBerry (still called RIM by Gartner: hello rebranding!) continues to drop, indicating that at least so far, its big BB10 attack has yet to bear significant fruit. Microsoft is showing a respectable doubling of growth to nearly 6 million units, but that is pretty tiny when you look back to Android and its 156 million. It shows that a significant amount of work remains to be done by Microsoft and partners like Nokia if it expects to get anywhere within spitting distance of Android, or even Apple.

Still, the cautionary tale of Symbian remains a sign of how fast a handset maker can fall from grace. It’s now at 0.3 percent of sales now that Nokia has discontinued its production of the once market-leading devices — although its share was falling fast even before that.

Gartner points out that Asia is currently the market driver for mobile phone sales worldwide, accounting for more than half of all sales, with China remaining the biggest single market.

“More than 226 million mobile phones were sold to end users in Asia/Pacific in the first quarter of 2013, which helped the region increase its share of global mobile phones to 53.1 per cent year-on-year,” writes Anshul Gupta, principal research analyst at Gartner. “In addition, China saw its mobile phone sales increase 7.5% in the first quarter of 2013, and its sales represented 25.7 per cent of global mobile phone sales, up nearly 2 percentage points year-on-year.”

Article courtesy of TechCrunch

Hardware is becoming a big deal, and now it’s easier than ever to start building your hardware startup, thanks to the proliferation of crowdfunding and easier access to materials. One particular startup incubator, called Haxlr8r, is looking to accelerate that trend, with a program that embeds startups right in the thick of China’s booming electronic and manufacturing industry.

Today in San Francisco, Haxlr8r had its second demo day, introducing 10 new hardware-based startups which just spent the last two-and-a-half months building hardware in Shenzhen, China. Part of the appeal of HAXLR8R is that startups looking to build something new can move from idea stage to rapid prototyping thanks to the program’s proximity to all the electronics and factories that are necessary to build the hardware products they want to create.

“As a maker, and as someone who likes building things, it is the best place in the word to build products,” Haxlr8r program director Zach Smith said. Unlike software, where you can build and prototype in the same day, hardware makers need a way to iterate more quickly. “In Shenzhen you have access to high-end prototyping tools.”

Today’s demo day had a diverse group of companies, with everything from WiFi-connected lights to air robots to brain-scanning headbands to, um, mobile phone-controlled sex toys. But these are the three startups were our favorites:

Spark

Spark is designing the WiFi brain which will power the next generation of connected products. It’s created the Spark Core, a small electronic circuit that can be embedded directly into hardware devices, to cost-effectively integrate wireless connectivity into them. In addition to selling its own components, for big OEMs, Spark will enable them to integrate Spark’s design into the core of their own circuit boards.

Along with the Spark Core, the company is launching a cloud platform with an API to enable OEMs to connect their products to services and apps online. Unlike some platforms, which operate a platform as a service, Spark Core is pitched as a “platform as a component.” Instead of paying monthly for a service for a product that OEMs only sell once, the Spark Cloud has a one-time fee associated with each product that connects.

Spark has raised a seed round, and gotten about $250,000 through a campaign on Kickstarter for hobbyists who want to try out its Core and embed it into their own products. That said, it’s raising a Series A round of funding to extend its functionality to more devices.

Vibease

How can you not love the idea of a sex toy that is controlled by your mobile phone? Vibease has not only built a $99, waterproof vibrator, but it’s added built-in Bluetooth connectivity. That allows users to hook up with an app that has a whole bunch of “fantasies” — that is, audio-erotic scenarios that can be listened to and are designed to match the movements and intensity of the device itself.

“Sex is part of our human basic needs, and the reason we love sex so much is because of orgasms,” said founder Dema Tio. “The problem is that not everyone can have an orgasm. Half of all women don’t have orgasms during sex.” Vibease, he believes, gives women the best orgasm experience ever.

The idea is not just to have a vibrator, but also to provide a marketplace for fantasies which sell for $0.99 each. The U.S. sex toy industry is a $15 billion business, and the erotic novel market is a $1.5 billion business. Vibease straddles both of those markets. It sees the fantasy market also as a way to sell more vibrators.

While Vibease is coming to market with its own vibrators at first, the company hopes to open up to other manufacturers by letting them add connectivity with its chip. By licensing their technology to others, it could add the same functionality to other sex toys in the future.

Helios

I’m a sucker for bike startups, especially those who make my ride more safe. As someone who bikes everywhere everyday, I have a bit of a bias on this point, but Helios has built something awesome: The startup has created handlebars that have integrated lights, bluetooth, and GPS connectivity to fundamentally change the way you get around.

Helios handlebars are available in bullhorn or drop bars, with a 50 lumen front light, as well as side lights that have a range of functionality. With Bluetooth built in, the handlebars connect to your mobile phone and provide a number of things you can do with them. For instance, you can set the lights to act as turn signals, or as a visual speedometer so that you know how fast or slow you’re moving, or as ambient lighting that you can set with your phone.

The handlebars also work to deter theft by acting as a tracking device. With GPS built in and a 15-day backup battery, they can enable you to track your bike if it’s been stolen and fure out where it is. For those of us who are paranoid about having our bikes stolen, the setup provides a little piece of mind.

Honorable Mention

Honorable mention goes out Hex Air Robots, which is creating not only an awesome little drone, but also a cool brain and mobile app to easily control it.

Article courtesy of TechCrunch

While there’s a perennial debate on the West Coast about whether and when business cards might become irrelevant, they continue to be at the center of business customs in China and Japan.

It’s just basic etiquette when meeting a new contact to offer your card with two hands and a slight bow.

That’s why it’s natural that a Chinese company — not an American one — might be able to dominate this market and behavior globally. LinkedIn’s Cardmunch had scanned 2 million business cards a year after their 2011 acquisition, and hasn’t released stats since.

But Shanghai’s CamCard boasts 10 million monthly active users, with 50 million registered in total. About half of them are outside of China.

The company is part of a new wave of Chinese startups that are either run by very internationalized Chinese founders or foreigners that are able to build and design consumer products and apps with global appeal.

Intsig, the company behind CamCard, originally launched the app back in 2009 and has quietly grown it since.

They use a freemium model that caters to both consumers and enterprises. On the consumer side, there’s a free version of the app. And then there’s a paid version, which costs about $2.99 in the West or $11.99 in Asia. It feels like price discrimination but Intsig justifies it by saying it’s more technically different to do optical character recognition for Chinese and Japanese and because Asian consumers may be willing to pay more for a business card service.

The paid version has a cloud syncing service that lets people save cards across all of their different devices.

On the enterprise side, companies pay for extra security features to make sure their client and business partner lists stay safe. In China, the vast majority of smartphones are Android devices and Chinese consumers are much more concerned about getting viruses.

As for the parent company itself, Intsig has raised roughly $10 million from investors including Matrix Partners in China and other local investors. The company’s CEO Michael Zhen had a long career at Motorola, where he says he picked up the skills and ideas necessary to start his own company.

I’ve seen one other regional competitor, Japan’s Sansan. They’re an older rival that is transitioning to a smartphone-centric world through a card-scanning app called Eight. Before that, they were actually leasing scanners to local Japanese businesses.

Article courtesy of TechCrunch

QFPay‘s card reader admittedly looks a bit clunkier than its U.S. or European equivalents Square or iZettle.

It looks like a wonky, old calculator. But that’s because Chinese consumers don’t trust merchants easily and a basic phonejack reader without a keypad makes them nervous, says COO Tim Lee. He says consumers are worried that their PINs will get stolen by unscrupulous merchants.

“Aesthetically, it’s not that beautiful,” he said. “Square is very Apple-like and we’d want to have good design, but we are practical for two reasons. We must have a PIN pad in China and secondly, we have limited money so we’d want to build a minimum viable product and then keep on improving.”

Because of these more practical modifications, QFPay is seeing traction that has it processing close to $400 million per year on an annualized basis.

They have 30,000 merchants all over China and recently picked up funding from Sequoia China, although the size of the round is still undisclosed.

Among their clients are better-known names like Groupon-like 55Tuan, which uses QFPay to collect fees from merchants all across China.

QFPay’s model is slightly different than Square’s. For one, they don’t give away their readers for free. They charge 899 renminbi or just under $150 for each one. Competitors like Lakala also charge for their readers at about 199 renminbi a pop.

QFPay’s transaction fees also legally have to be a lot lower than what U.S. and European companies can charge. They don’t charge more than 0.78 percent per transaction, which is one-third of the 2.75 percent that Square charges. That cuts the company’s margins on every swipe, although Lee says that R&D costs are substantially lower in China.  

QFPay also recently released an API that lets third-party developers create payment experiences. (Square does not currently offer an API.) It’s still early so there just 100 developers on the platform.

The Chinese market has myriad challenges, which could also be good opportunities for QFPay.

For one, penetration for point-of-sale terminals is still quite low. Lee says only about 5 million merchants out of China’s estimated 100 million have proper point-of-sale machines, so QFPay has to do a lot of education on why its products are valuable.

The country is also heterogeneous with different provinces having different business cultures.

“In the north, merchants just have a leisure life. They open the shop and go home at 5 of 6 p.m.,” he said. “But in the Southern provinces, they will stay open until midnight.” The Western provinces are also far less developed than the coasts, with many Chinese merchants still carrying feature phones.

Lee said they started working on the company about six months after Square launched. The company’s management team has experience working for Paypal, Mastercard, HSBC and Western Union; that breadth of experience spans the entire history of digital payments in the country.

They face internal competitors like Lakala and iBoxPay, but Lee says those are consumer-facing solutions. He says they basically target reader sales at consumers that want to pay for utilities and other services through their phones.

But QFPay is aimed at merchants and the company is working on all sorts of software tools to handle CRM, analytics and loyalty products.

Article courtesy of TechCrunch

One interesting thing to watch is how social networking platforms mature divergently as businesses around the world.

Sina Weibo, the public microblogging platform that has had a huge impact on online discourse in China, is veering down a path toward e-commerce and transactions after Alibaba took a stake worth $586 million in it last month. The platform is one of the two more influential social networks in China today, with the other being Tencent’s messaging app WeChat.

But unlike WeChat, Sina Weibo’s growth has slowed over the last year and its parent company Sina has had visible issues in monetizing the platform. (It feels a little bit like the heat Twitter had a few years ago for taking longer to bring in revenue-making products like promoted tweets and in-stream ads.)

“Weibo is pretty mature right now,” said Alibaba CTO Wang Jian in an interview. “It’s not in a fast growth period.”

In the Sina’s last earnings report, the company said Weibo made just under $50 million in revenue, or about 12 percent of overall advertising revenue. But investments in the company contributed to an $8.5 million operating loss for Sina last year.

Now with Alibaba’s investment, it looks like Weibo will take a different money-making path than its Western counterparts, which are more dependent on sponsored stories or in-stream ads.

“I think the best way to monetize Weibo is through e-commerce, not by ads,” Jian said. “That’s what I believe. That’s my personal thought. Weibo has a very good chance to integrate with the Alibaba business.”

It’s a win-win deal. Alibaba, which is veering toward an IPO, is China’s dominant e-commerce company and has an extremely data-driven culture. But it hasn’t been as successful with its own homegrown social networking efforts. At the same time, Sina isn’t widely considered to have the same caliber of technical talent as China’s other flagship Internet companies.

While Jian didn’t give a lot of detail on how they would integrate the two platforms, one could imagine that users could get targeted offers on goods and services related to things they’ve posted status updates about.  

“We just need time to find out how to have a synergy of data between the two companies,” Jian said. “Weibo just gave us a new challenge for that.”

As for Aliyun, the smartphone OS that Jian is overseeing, Jian says that he doesn’t think the platform will fit Weibo — which is sort of hard to believe considering that Weibo is a mobile-centric product.

“I don’t think Aliyun really fits the Weibo deal,” he said.  

While Tencent’s WeChat, which has surged to 190 million monthly active users over the past year, isn’t a direct competitor, Jian says it is in terms of other metrics.

“If you’re thinking about time that people spend on their devices, then you can say it’s a direct competitor. If you look at it from just a media perspective, I don’t think it’s direct competition. Two years ago, everyone spent time on Weibo, and now Weixin (WeChat) is becoming that app. It’s really a time spending problem.”

Article courtesy of TechCrunch