Tech’s Year in Review: Pandemic Spotlight

tech-year-in-review-pandemic

By Sharon Lewis and Reethu Ravi

This article is the first of a four-part Tech’s Year in Review series reviewing developments across industries in 2020. This first installation discusses some industries spotlighted by the COVID-19 pandemic, namely edtech, logistics and supply chains, fintech, ecommerce, and cybersecurity.

The year 2020 has been a tumultuous one for the tech and startup industry. When the World Health Organization declared COVID-19 a pandemic in March, everything changed almost overnight, leaving companies across the globe scrambling for survival. While some sectors such as edtech benefited from the pandemic, several others (such as the travel sector) bore the brunt.

In this article, we explore the major events in the fintech, edtech, ecommerce and new retail, logistics and supply chain, and cybersecurity sectors.

Edtech

edtech-year-in-review
Image courtesy of Element5 Digital on Unsplash.

Good news first: with education moving online amid the global pandemic, edtech platforms have experienced a massive boost. There is growing demand for e-learning platforms, along with increasing incorporation of Artificial Intelligence (AI) and Machine Learning (ML) into smart learning. Publicly-listed edtech companies like Chegg and 2U became stock market darlings, with many of them reaping higher revenues and trading higher in the first half of 2020.

Yuanfudao Becomes World’s Biggest Edtech Unicorn

With fresh funding of US$2.2 billion across two tranches of a Series G round, China-based edtech startup Yuanfudao became the world’s most valuable edtech startup in October. The latest financing nearly doubled the Beijing-headquartered startup’s March valuation from $7.8 billion to $15.5 billion, taking over Indian edtech company Byju’s to claim the top spot.

In September, the startup had raised $1.2 billion in its Series G1 round led by Tencent. This was followed by the second tranche of financing, led by DST Global in October, leading to Yuanfudao raising another $1 billion.

APAC edtech companies raise US$2B

Yuanfudao’s $1 billion fundraise in March was a first for this industry, but it was only the beginning of what ended up being an unprecedented investment boom for edtech.

APAC edtech companies have raised around $2.2 billion in disclosed funding, with nearly $2 billion raised by six companies alone. This includes Singapore-headquartered education startup Eruditus, India’s second-most valued startup Vedantu, China’s Wanxue Education, Chinese edtech startup Huohua Siwei, Byju’s, and Yuanfudao.

A year of mergers and acquisitions

This year saw several mergers and acquisitions in the edtech industry. Byju’s, which is currently valued at around $11 billion after it raised an undisclosed amount from three new investors in September, acquired Mumbai-based 18-month-old coding platform WhiteHat Jr for a whopping US$300 million in August. As of now, WhiteHat Jr operates as a separate entity.

The same month, Byju’s also acquired immersive learning startup LabInApp for an undisclosed amount.

Similarly, in an acquisition-spree, another India-based online learning startup Unacademy acquired Mastree, PrepLadder, CodeChef, Kreatryx, and Coursavy.

What to expect in 2021

According to a report, the global edtech market is expected to hit US$404 billion by 2025.

The pandemic also saw edtech companies quickly adapt to cater to millions of students who had to switch to virtual classes. In 2021, the trend can be expected to continue, with companies branching into new technologies.

Some of these include virtual and augmented reality to provide an experimental learning experience for students, blockchain technology to securely store data, AI and ML to assist in grading, testing, identifying issues, personalized and adaptive learning, and robotics for amplified practical education, among others.

Logistics and supply chain

logistics-year-in-review
Image courtesy of Chuttersnap on Unsplash.

The pandemic disrupted the global supply chain. At the same time, stay-at-home orders changed consumer demand patterns and increased their reliance on delivery services. Thus, the logistics industry needed to make drastic changes. While several companies were able to quickly adapt to these new demands by integrating modernized workflows, new technologies, and techniques into their operations, some others fell short.

According to the World Economic Forum (WEF), “the urgent need to design smarter, stronger and more diverse supply chains has been one of the main lessons of this crisis.”

For example, a six-week shutdown in China in February to curb the spread of COVID-19 hit manufacturers who lacked flexibility in their supplier base. According to WEF, this will likely result in global firms diversifying their supply chains in the future, benefiting manufacturing hubs such as Vietnam, Mexico, and India.

The logistics supply shock was followed by a demand shock, which was largely met by consumer staple supply chains. The crisis also posed a valuable opportunity for logistics companies to adopt some significant breakthroughs and attract tech-savvy customers.

Major fundings, mergers and acquisitions

Early this year, Ninja Van, a Singapore-based logistics startup received its biggest funding round of US$279 million.

Indonesia-based trucking and warehousing tech startup Waresix closed its Series B round of funding in September to garner a total of US$100 million over the year. Meanwhile in December, Waresix acquired Trukita, a leading logistics technology startup, for an undisclosed amount.

U.S. business and financial software company Intuit acquired Singapore-based TradeGecko, a software-as-a-service company that develops online inventory and order management software for small businesses, for US$80 million.

In October, Thailand-based Flash Express, a full service ecommerce logistics provider announced that it had closed a Series D funding round of US$200M. The following month, Alibaba-backed Xpressbees, an Indian logistics firm, raised $110 million in a new financing round.

Hong Kong-based on-demand logistics company Lalamove raised US $515 million in Series E funding in December, bringing the company’s total raised so far to around $976.5 million, according to Crunchbase data.

What to expect in 2021

The global logistics market size is projected to grow from US$2.7 billion in 2020 to US$3.2 billion by 2021.

According to the 2020 State of Logistics Report by the Council of Supply Chain Management Professionals (CSCMP), when the economy starts to recover, it will “likely be uneven and staggered.”

“It is abundantly clear logistics have a driving role in assuring resilient supply chains,” said Michael Zimmerman, co-author of the report, adding that the logistics practitioners will need to become even more agile as they navigate recovery into 2021.

The pandemic has been a wake up call for companies to adopt digital and automated technologies over human-to-human transactions. In the coming year, several technology trends are expected to take a foothold.

Internet of Things combined with 5G, wider adoption of blockchain to bring transparency into the supply chain, improve security,  nd minimize disruptions, better AI/ML platforms, autonomous trucking, robotic automation, and circular supply chains are some of the trends we can expect in 2021.

Fintech

fintech-year-in-review
Image courtesy of Nathan Dumlao on Unsplash.

As Internet technologies continue to radically transform the world, financial systems are undergoing vast and rapid change. With the 2020 pandemic, several sectors were propelled forward while some others retained the limelight. The year was also big for global players in fintech, some making power moves while others were put on the back foot.

Cryptocurrency

It’s been a big year for decentralized finance (DeFi), and particularly so for Bitcoin.

The cryptocurrency broke its 2017 record of US$19,782 after rallying to $19,892 in November this year on some exchanges. It set a new record on December 16 when it rallied up to $20,817.80 on CoinDesk. And surpassing all expectations, the cryptocurrency reached $34,000 on some exchanges on January 2, 2021. The rally represents a surge of over 400% since Bitcoin’s crash in the middle of this year, where it dropped to around $3500.

Bitcoin also crossed a historic landmark in May this year, when a Bitcoin halving took place. This is its third halving since the cryptocurrency was introduced in 2009. Mining rewards per block mined came down to 6.25 bitcoins, from 12.5 bitcoins in 2016.

Digital payments

Another fintech segment that has crossed landmarks is digital payments. The pandemic introduced a need for contactless services and consequently saw such services experience a sharp rise in adoption. A McKinsey study reports that all forms of electronic consumer-to-business payments and peer-to-peer payments have been strengthened.

Cash used in total transactions by volume have decreased overall since 2010. China, South Korea, the U.K., Sweden and the Netherlands have shown the greatest drop in the span of the decade.

The study suggests that by the end of 2020, the share of payment transactions worldwide via cash will see a decrease equal to nearly five times the annual decrease in cash usage in recent years.

Top funding rounds

Fintech startups also made waves this year, starting with Go-Jek. The superapp, which has a payments division, raised two Series F tranches this year for a total of $1.5 billion, taking its total Series F funding pool close to $3 billion. It also raised $150 million in a corporate round from Telkomsel this year.

Rival Grab, with whom Go-Jek is reportedly discussing an M&A, also pulled its weight with a $856 million Series I, followed by an additional $200 million through an undisclosed venture round.

Stripe, Affirm, Klarna, Revolut, Robinhood, and Chime are just some of the companies to have locked in big checks this year. Along with Go-Jek and Grab, these startups alone raised well over $4 billion this year.

In total, fintech startups raised nearly $23 billion in venture capital funding this year, as compared to $25 billion in 2019 (data according to Crunchbase). That’s very close competition, considering how COVID-19 has impacted funding channels for startups this year.

Ant Group’s downer

The Ant IPO became a much-talked-about event for 2020, initially for the wild anticipation around its listing, and later for its anticlimactic demise. The company was expected to go public in what was going to be the biggest IPO in history. Forty-eight hours before the listing, Chinese regulators called the IPO off.

An ill-timed speech by Ant Group Founder Jack Ma just days before the IPO is seen as one of the underlying reasons. The speech, delivered at the Bund Summit in Shanghai, criticized China’s heavy regulations on financial companies.

However, expert Drew Bernstein argues that it’s not that simple. The fact of the matter, he told Jumpstart in a previous interview, is with Ant Group’s sheer size and reach in China, the country’s government needed to play it safe and avoid putting its financial systems at risk. For Ant Group and other fintechs in China, this means that the playbook just got thinner.

This reflects an upcoming shift in the regulatory environment in China. Fintechs and other companies can expect to face stricter rules as China starts to plug in the loopholes. Not only will this help to improve the overall business climate in the country, but it will also help Chinese companies prepare themselves better for global markets.

What to expect in 2021

As the world moves into the new year, the rapid rise of fintech indicates that the financial industry is not shying away from tech integrations. Data, cloud and Internet technologies will continue to spur the industry ahead, transforming historical industries such as insurance and credit.

Moreover, banks have started to shed some of their traditional processes for digitization and fintech partnerships. This is unlikely to stop either. At the same time, regulators are dialing up the vigilance, tempering the excitement surrounding fintech even as it continues to gather steam.

Ecommerce and New Retail

ecommerce-year-in-review
Image courtesy of Roberto Cortese on Unsplash.

The year has been unprecedented for ecommerce companies. COVID-19 lockdowns, the need for contactless services, availability of essential goods, and social distancing have opened a gulf of opportunities within this sector.

The share of ecommerce in total retail has spiked this year for the U.S. and the U.K., and online orders increased across regions in H1 2020, including in Europe, North America, and the APAC region. By some estimates, digital shopping has shifted five years’ worth of business away from physical stores in 2020. In another study, over 50% of participants from China, Brazil, Turkey and Korea noted that they were shopping online more often after the pandemic.

While some of the changes in ecommerce and online buying behavior brought about by COVID-19 may be long-lasting, here’s a snapshot of the highlights this year.

  • Automated grocery stores gathered attention this year, with Amazon opening its cashierless Amazon Go store in February. COVID-19’s pressures only helped to prove the use case, which is not restricted to big chains.
  • Mobile shopping opened up even further as an ecommerce opportunity. Mobile shopping already dominated traffic and sales over desktop. This year, it surpassed holiday shopping levels, and helped ecommerce achieve growth that would have taken at least four years.
  • With the boom in online retail, delivery services became a focal point. From food and groceries, to medicines and even pick-and-drop services, several companies made the pivot to last mile delivery services to hedge their business models during the pandemic.
  • Omnichannel retail also gained significance. COVID-19 drove home the need to have a multichannel retail presence. 66% of spenders worldwide have become omnichannel shoppers.

Social commerce and recommerce further shaped the ecommerce space in 2020, although these were trends in the making prior to the pandemic as well.

What to expect in 2021

Although regional disparities will continue to exist, retail ecommerce can expect to ride the high tide into 2021. Digital and automation technologies will continue to hold interest, providing competitive advantages to those companies who develop them.

At the same time, the boom in online shopping does not mean the end of brick-and-mortar stores – far from it, in fact. What it does indicate is that these offline locations will have to reinvent themselves to meet consumer demand for omnichannel purchasing. Advances in cashierless groceries and payments tech have already revealed one dimension of such a transformation.

Finally, sellers will also have to be extremely cautious of the socially and environmentally responsible consumerism, if they haven’t already. COVID-19 asserted some support for local businesses and sustainable products and services. As the world plunges head on into a future disrupted by climate change, it’s time for ecommerce and retail players to play their part.

Cybersecurity

cybersecurity-year-in-review
Image courtesy of Jefferson Santos on Unsplash.

As the world’s systems get a digital and data upgrade, so do the threats they face. Cybersecurity has become one of the most serious concerns plaguing the Internet world, with threats ranging from phishing and ransomware to social engineering. In 2016, cybercrime was expected to cost $6 billion by 2021. If 2020 has been any indicator, the opportunities to reach that number have only increased.

Social media breaches

In July this year, Twitter was put on the defensive by a major hack. Hackers compromised 130 accounts, sending out tweets that promised $2000 for every $1000 in Bitcoin transferred to a specific address.

The hackers only made away with $121,000, but the hack became headline news because of its high-profile targets. These included Joe Biden, Jeff Bezos, Elon Musk, Kim Kardashian, and Apple. Most surprisingly, it turned out that the scam was orchestrated by a 17-year-old Florida teen.

Chinese microblogging platform Sina Weibo also suffered a staggering data breach this year. The personal details of over 538 million users were put on sale on the dark web and discovered in March this year. The hacker claimed to have obtained them from a dump of Weibo’s user database mid-2019.

The data, which included real names, site usernames, gender, and location, went on sale for $250. The price was low because passwords were not available, but the hack still left the phone numbers of 172 million users exposed.

Account credentials of users on the video conferencing platform Zoom also went on sale in April, after over 500,000 of them were acquired through credential stuffing. Some were even given away for free.

The scam was discovered by researchers from cybersecurity firm Cyble. Cyble purchased around 530,000 accounts for just $0.0020 each, obtaining email addresses, passwords, personal meeting URLs, and 6-digit Zoom hosts keys.

Cybersecurity risks due to work-from-home (WFH)

WFH policies put companies across the world on alert as network vulnerabilities were exposed. Phishing attacks surged by 667% in February this year. 60% of workers in the APAC region shifted to personal devices for work (a majority noted the lack of cybersecurity training for WFH). Read more about cybersecurity risks during COVID-19 here.

Remote work also brought about a shift in technologies used in the workplace. These include communication channels, productivity tools, and the large-scale deployment of cloud. It further underlines the need for security measures such as multi-factor authentication, and a proactive company culture regarding cybersecurity as 2021 rolls in.

What to expect in 2021

As Forbes reports, several studies have indicated that 2021 will be a year of enhanced cybersecurity vigilance.

Over half of enterprise executives in one survey aim to increase their cybersecurity budgets next year. About half are also adding full-time cyber staff. Spending on enterprise cybersecurity is expected to grow in healthcare, banking and financial, tech, and media sectors.

Cybersecurity tech will advance too (as will the risks) – enhanced applications of AI/ML, cloud security and password-less authentication will be just some of the highlights in the use of tech to protect against cybercrime.

As the world welcomes the new year, 2020 has also made it acutely aware of the many ways in which daily lives have been changed, some permanently. While COVID-19 has completely disrupted the workings of the world, it has also exposed ways in which life may perhaps be made simpler.

Stay with this series as it continues to explore some more dimensions of change in the forthcoming articles.

Header image by Gerd Altmann from Pixabay

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