Airbase adds spend support for international subsidiaries

Airbase, a corporate spend management startup, announced this morning that it now supports subsidiaries in different countries for U.S.-based businesses. As more companies lean into remote work, and a great many startups are founding themselves on multiple continents, the new capability could boost Airbase’s effective total addressable market.

The product news is interesting, but more so when we consider Airbase’s feature decisions in the larger context of the corporate spend management space itself. Startups competing in the market offer customers corporate cards and a software suite to help them manage spend more generally, along with other functionality that varies based on the provider in question.

TechCrunch has spilled much ink in recent months tracking Airbase competitors Ramp and Brex, for example, as they raise capital and look to differentiate their products to better serve their target markets. They are doing so by both pricing decisions and feature choices.

Image Credits: Airbase

Airbase, while perhaps less well-known than its rivals, was early to the decision to charge for its software in addition to deriving interchange revenues from its business. Brex added a paid package of software at an SMB-friendly price point. Ramp is sticking to its zero-cost guns for now.

Now with support for international subsidiaries and currencies for U.S.-based companies, Airbase is executing against its vision to provide spend management services for companies from inception through IPO, founder and CEO Thejo Kote told TechCrunch an interview.

In more detailed terms, Airbase supports payouts to some 200 countries, as well as support for moving money around more generally in a more constrained geographic area.

The product news fits into Airbase’s goal of supporting companies even as they scale. Other competitors in its market have a greater SMB focus, it appears. Not that that is a diss; offering corporate spend services as a free package has proven lucrative for some companies looking to onboard a host of smaller enterprises. Divvy did so and sold for more than $1 billion. And Ramp and Brex are pricing their services to be well within the reaches of smaller firms.

Airbase does offer a free tier, but more as a method of attracting customers that could scale into large accounts in time, it explained. Those larger accounts are the startup’s goal. Kote said during a conversation that his company now has a number of customers paying six figures per year for its software, a change from when the company raised $60 million earlier this year, when such account sizes were rarer.

By adding more capabilities for multinational companies, Airbase may be able to land more large customers, which, in turn, would generate both software and interchange incomes for the startup.

Kote also disclosed new growth metrics for Airbase, though in relative instead of absolute terms. The startup has scaled annual recurring revenue — a metric that calculates annualized subscription software sales at a company — by 3.5x in the last 12 months, he said, and 2x in the last half-year. Kote also disclosed that his company is “approaching” $2 billion in annualized payment volume through its service, up 5x in the last 12 months.

Now in the process of digesting its Series B, Airbase has graduated from baby startup metrics, and we’ll expect something a bit harder the next time we cover the company.

Still, as Airbase looks to support larger companies longer, we’re seeing an interesting divergence between the corporate spend startups battling for North American market share. With three major players charging nothing, a little and a lot, it isn’t hard to guess where each will focus their product efforts in customer terms.

#airbase, #brex, #corporate-spend, #ramp, #startups, #tc

Extra Crunch roundup: Pre-pitch tactics, Warby Parker S-1, Israel’s fintech ecosystem

Forget what you’ve heard: There are many shortcuts to success.

Tapping into someone else’s experience is a tried-and-true method, which is why two-time Y Combinator participant Chris Morton wrote a guest post for Extra Crunch with advice for founders hoping to be accepted by the famed accelerator.

Morton, who has also reviewed thousands of YC applications, shares his thoughts on when to submit an application, what to do if you miss the deadline and whether you’ll need to relocate if accepted.

“Remember that your application should be good enough to get an interview, not win a prize,” says Morton. “Go back to work instead of spending more time perfecting an application.”


Full Extra Crunch articles are only available to members
Use discount code ECFriday to save 20% off a one- or two-year subscription


Robert Katai

Image Credits: Robert Katai under a license.

In an interview with reporter Anna Heim, Romania-based marketer Robert Katai discussed some of the methods he uses to help clients refine their content and branding strategies.

“Today, content creation is free — everybody can do it. The hard part is how you distribute and amplify that.”

Katai also shared his impressions of Romania’s startup ecosystem, suggestions for maintaining top-of-mind status with customers, and reinforced the often-overlooked need to continually repurpose content to grab mindshare.

Like our other growth marketing interviews, there’s no paywall.

Thanks very much for reading Extra Crunch this week! I hope you have a fantastic weekend.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

Why global investors are flocking to back Latin American startups

Image Credits: Bryce Durbin / TechCrunch

Latin America’s increasingly dynamic venture capital scene has been making headlines of late. To learn more about why investors are so enthusiastic, senior reporter Mary Ann Azevedo spoke to several who are actively engaged with the region:

  • Shu Nyatta, managing partner, SoftBank
  • Ethan Choi, partner, Accel
  • Julie Ruvolo, director of venture capital, LAVCA
  • Bill Cilluffo, partner, QED Investors
  • Ana Cristina Gadala-Maria, principal, QED Investors
  • Ross Darwin, principal, Owl Ventures

“I am not surprised by all the activity,” Mary Ann writes. “However, I am a bit taken aback by the sheer number of rounds, the caliber of firms leading them and the sky-high valuations.

“It seems that the region is finally, and deservedly, being taken seriously. This is likely just the beginning.”

Corporate venture capital follows the same trend as other VC markets: Up

Corporations are not remaining on the sidelines of the fiery 2021 venture capital game, Alex Wilhelm and Anna Heim note in The Exchange.

After parsing data from CB Insights and Stryber and chatting with a handful of investors, Alex and Anna concluded that the corporate venture capital market looks a lot like other VC markets.

“Perhaps this should not be a surprise,” they write. “We’ve seen non-venture funds flow into the later stages of startup land, pushing VCs toward earlier-stage and more venture-y deals. Why would CVCs be immune to the same trend?”

Ramp and Brex draw diverging market plans with M&A strategies

Image Credits: Bryan Mullennix (opens in a new window) / Getty Images

Corporate spending management startup Brex raised a $300 million Series C and acquired Buyer just a week after rival Brex announced it had acquired Israeli fintech Weav.

Ryan Lawler and Alex Wilhelm dug into the Ramp-Brex rivalry, and what those acquisitions say about their diverging strategies.

“From a high level, all of the recent deal-making in corporate cards and spend management shows that it’s not enough to just help companies track what employees are expensing these days,” they write.

“As the market matures and feature sets begin to converge, the players are seeking to differentiate themselves from the competition.”

Boston’s startup market is more than setting records in scorching start to year

Alex Wilhelm and Anna Heim interviewed VCs and corralled data to present a detailed picture of Boston’s startup funding scene.

“Boston is benefiting from larger structural changes to at least the U.S. venture capital market, helping close historical gaps in its startup funding market and access funds that previously might have skipped the region,” they write.

“And local university density isn’t hurting the city’s cause, either, boosting its ability to form new companies during a period of rich investment access.”

Europe’s quick-commerce startups are overhyped: Lessons from China

Image of a motorcycle courier speeding down a street.

Image Credits: Andrew Holt (opens in a new window) / Getty Images

Half of the companies offering instant grocery delivery in Europe were founded last year as the pandemic reshaped most aspects of our existence.

To date, they’ve raised about $2 billion, but Picus Capital’s Alexander Kremer says startup lessons from China suggest that “instant delivery is not the magic bullet to crack the dominance” of old-school grocery players.

“If the performance of online grocery platforms in China (a market five to seven years ahead of Europe in terms of online retail) is anything to go by, a range of B2C business models would be more likely to displace the traditional grocery retailers.”

D2C specs purveyor Warby Parker files to go public

For The Exchange, Alex Wilhelm examines the S-1 filing from Warby Parker, “a consumer hardware company with two main sales channels, largely attractive economics, falling losses and rising adjusted profitability. You could even argue that it handled the pandemic well, despite COVID-19’s negative impact on its operations.”

But how are its growth prospects?

Dear Sophie: Can I still get a green card through marriage if I’m divorcing?

lone figure at entrance to maze hedge that has an American flag at the center

Image Credits: Bryce Durbin/TechCrunch

Dear Sophie,

I received a conditional green card after my wife and I got married in 2019. Recently, we have made the difficult decision to end our marriage. I want to continue living and working in the United States.

Is it still possible for me to complete my green card based on my marriage through the I-751 process or do I need to do something else, like ask my employer to sponsor me for a work visa?

— Better to Have Loved and Lost

Using AI to reboot brand-client relationships

Artificial intelligence robot arm and businessman completing gear jigsaw puzzle (teamwork).

Image Credits: Getty Images under an alashi (opens in a new window)license.

Marketing automation can help boost key metrics, but it can also be a disservice to brands by perpetually devaluing goods and services, ShareThis’ Michael Gorman writes in a guest column.

Companies with a narrow focus on driving conversions are missing the bigger picture: AI can help create richer experiences that identify consumer actions and intent while also improving customer experiences.

“We live in a world rich with data, and insights are growing more vibrant every day,” he writes.

Israel’s maturing fintech ecosystem may soon create global disruptors

Abstract of israel map network, internet and global connection concept, Wire Frame 3D mesh polygonal network line, design sphere, dot and structure. Vector illustration eps 10. (Abstract of israel map network, internet and global connection concept, W

Image Credits: Thitima Thongkham (opens in a new window) / Getty Images

Fintech startups based in Israel raised more than $1.8 billion in 2019, but in Q1 2021, companies in the category raised $1.1 billion.

Facilitating a wide range of services, more than a dozen fintech unicorns have already emerged in a country that has a population slightly smaller than Los Angeles County, many of them started by entrepreneurs who lacked financial backgrounds.

“So what is it about Israeli-founded fintech startups that stand out from their scaling neighbors across the pond?” asks Flint Capital’s Tel Aviv-based investor, Adi Levanon.

Forbes jumps into hot media liquidity summer with a SPAC combo

For The Exchange, Alex Wilhelm takes stock of Forbes’ SPAC combination during a week when POLITICO was snatched up for more than $1 billion by Axel Springer and just a few months after BuzzFeed went public via a blank-check company.

“Is it the most exciting debut? No,” he writes.

“But it does highlight that with enough sheer gumption, one can take a magazine business into the digital age and keep aggregate revenue growing. That’s worth something.”

Are B2B SaaS marketers getting it wrong?

A square peg forced into a round hole. 3D render with HDRI lighting and raytraced textures.

Image Credits: mevans (opens in a new window) / Getty Images

Technical jargon is one of the most annoying aspects of technology marketing.

Sadly, it tends to perpetuate itself: Marketers are terrified of making a wrong move, so they tend to copy what everyone else is doing.

If you want to attract customers and drive higher conversions, cut the jargon.

“Do everything you can to be immediately understood and you’ll have a much better chance of cutting through the noise and pushing clear and persuasive benefits in a way no prospect can resist,” advises Konrad Sanders, CEO of The Creative Copywriter.

#andreessen-horowitz, #axel-springer, #brex, #buzzfeed, #ec-roundup, #extra-crunch-roundup, #finance, #saas, #startups, #tc, #venture-capital, #warby-parker, #y-combinator

The pure hell of managing your JPEGs

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

Natasha and Alex and Grace and Chris were joined by none other than TechCrunch’s own Mary Ann Azevedo, in her first-ever appearance on the show. She’s pretty much the best person and we’re stoked to have her on the pod.

And it was good that Mary Ann was on the show this week as she wrote about half the dang site. Which meant that we got to include all sorts of her work in the rundown. Here’s the agenda:

And that’s a wrap, for, well, at least the next 5 seconds.
Equity drops every Monday at 7:00 a.m. PDT, Wednesday, and Friday morning at 7:00 a.m. PDT, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

#boston, #brazil, #brex, #design, #dropbox, #equity, #equity-podcast, #fintech, #flink, #fundings-exits, #grammarly, #latam, #latin-america, #noredink, #nubank, #playbook, #ramp, #startups

Ramp and Brex draw diverging market plans with M&A strategies

Earlier today, spend management startup Ramp said it has raised a $300 million Series C that valued it $3.9 billion. It also said it was acquiring Buyer, a “negotiation-as-a-service” platform that it believes will help customers save money on purchases and SaaS products.

The round and deal were announced just a week after competitor Brex shared news of its own acquisition — the $50 million purchase of Israeli fintech startup Weav. That deal was made after Brex’s founders invested in Weav, which offers a “universal API for commerce platforms”.

From a high level, all of the recent deal-making in corporate cards and spend management shows that it’s not enough to just help companies track what employees are expensing these days. As the market matures and feature sets begin to converge, the players are seeking to differentiate themselves from the competition.

But the point of interest here is these deals can tell us where both companies think they can provide and extract the most value from the market.

These differences come atop another layer of divergence between the two companies: While Brex has instituted a paid software tier of its service, Ramp has not.

Earning more by spending less

Let’s start with Ramp. Launched in 2019, the company is a relative newcomer in the spend management category. But by all accounts, it’s producing some impressive growth numbers. As our colleague Mary Ann Azevedo wrote this morning:

Since the beginning of 2021, the company says it has seen its number of cardholders on its platform increase by 5x, with more than 2,000 businesses currently using Ramp as their “primary spend management solution.” The transaction volume on its corporate cards has tripled since April, when its last raise was announced. And, impressively, Ramp has seen its transaction volume increase year over year by 1,000%, according to CEO and co-founder Eric Glyman.

Ramp’s focus has always been on helping its customers save money: It touts a 1.5% cashback reward for all purchases made through its cards, and says its dashboard helps businesses identify duplicitous subscriptions and license redundancies. Ramp also alerts customers when they can save money on annual vs. monthly subscriptions, which it says has led many customers to do away with established T&E platforms like Concur or Expensify.

All told, the company claims that the average customer saves 3.3% per year on expenses after switching to its platform — and all that is before it brings Buyer into the fold.

#airbase, #api, #brex, #concur, #corporate-spend, #e-commerce, #ec-fintech, #ec-news-analysis, #enterprise, #finance, #financial-services, #fintech-startup, #fundings-exits, #ma, #mergers-and-acquisitions, #paypal, #ramp, #startups, #stripe, #weav

Brex buys Weav, a universal API for commerce platforms, for $50M

Fintech Brex first partnered with Weav, a developer of a universal API for commerce platforms, last summer.

In March, Brex launched Instant Payouts for Shopify sellers using the startup’s technology.

The results were impressive enough that by April, Brex co-founders Henrique Dubugras and Pedro Franceschi participated in Weav’s $4.3 million seed round as strategic angel investors.

Over the past few months, the pair determined that Weav’s technology — and team — was too good to share. So today, the fintech is announcing that it is acquiring one-year-old Weav for $50 million in its first significant acquisition, TechCrunch has learned exclusively.

Interestingly, the deal was forged without the founders of either company having met — which may have been more unusual before the COVID-19 pandemic but is likely more commonplace these days. (Although they have since met.) Brex has previously made ‘acquihires’ but has not previously acquired both a company’s team and technology.

Brex started working with Weav “pretty early on” in the company’s life as a partner, Dubugras said. 

“We were so impressed with [CEO] Nadav [Lidor] and his team, how fast they were building and how good the technology is, that we wanted to expand to a more strategic partnership,” he told TechCrunch. “Then, we started talking about an acquisition.”

TechCrunch talked with Dubugras and Weav CEO and co-founder Lidor to find out the details of the deal, and why it’s significant for both companies.

For one, as part of the acquisition, Brex will be expanding its global presence by building an “innovation hub” and hiring employees in Israel beyond Weav’s nine-person team, which is located in Israel and New York. CEO Lidor will head up Brex’s new Israeli office.

Besides expanding its global reach, the technology that Brex is acquiring will help accelerate the fintech’s connectivity of its platform, Dubugras said. Currently, Brex offers credit cards, business cash accounts, spend management and bill pay software together in a single dashboard for its customers. Its goal is to continue expanding its product and services portfolio to become “a fully-integrated and holistic financial platform for businesses.” 

“Weav’s technology helps make Brex even better for our customers,” he said.

Founded last year by engineers Ambika Acharya, Avikam Agur and Lidor after participating in the W20 YC batch, Weav was among the wave of fintech infrastructure companies that aimed to give fintechs and financial institutions a boost. Specifically, Weav’s embedded technology was designed to give organizations access to “real time, user-permissioned” commerce data that they could use to create new financial products for small businesses.  

Its products will allow customers to connect to multiple platforms with a single API that was developed specifically for the commerce platforms that businesses use to sell products and accept payments. Weav has operated under the premise that allowing companies to build and embed new financial products creates new opportunities for e-commerce merchants, creators and other entrepreneurs. 

Since its inception last year, Weav’s API call volume has grown by 300% each month.

The increased adoption of cloud and SaaS technologies has led to data being stored in a variety of disparate systems. Weav’s API aims to build digital connections that enable automatic sharing and analysis, thus (as mentioned above) allowing commerce platforms to access their customers’ standardized transaction data in real time. This is important to Brex because the premise is that by using Weav, businesses can get financial services and new products “more quickly and precisely.” 

“We want to build this all-in-one finance platform,” Dubugras told TechCrunch. “That was already the direction we were headed with the partnership but this acquisition helps us so that we can build a better integration across all our financial products, and we can do more, and a lot faster than what we were originally planning.”

For example, he added, Brex integrates with platforms such as Shopify. With the acquisition of Weav, it intends to build more lending, visualization and insights products for its customers.

“The Weav team will basically manage any third-party integration,” Dubugras said, “so that Brex can be your financial operating system no matter where your data is. You can have everything in one place.” 

Lidor admits that Weav did not expect to be exiting so soon after founding. But the companies found themselves on the same page, he said.

 “Our goal has always been to connect businesses, creators, and other entrepreneurs with fintech to expand financial access, and this aligns with Brex’s mission,” Lidor added. “After working with Henrique and Pedro, we realized they couldn’t be a better partner. We too were so impressed with the Brex team, and had a great time learning from them, and building with them.”

The company did not disclose its valuation at the time of its $4.3 million seed round earlier this year. The $50 million price tag represents a “healthy multiple for all involved,” Dubugras said.

The expansion into Israel is also exciting to the Brex team, which went remote last year amid the COVID-19 pandemic with operations in the United States, Canada and Brazil.

Founded in 2017, San Francisco-based Brex earlier this year was valued at $7.4 billion after raising a $425 million Series D led by Tiger Global. The company has raised $1.2 billion in debt and equity financing, according to Crunchbase data.

Earlier this year, the company announced it had put together a new service called Brex Premium that costs $49 per month. 

“The number of premium subscribers that we now have definitely blew away our expectations,” Dubugras said.

In February, Brex was the latest fintech to apply for a bank charter.

The company, which sells a credit card tailored for startups, with Emigrant Bank currently acting as the issuer, had submitted an application with the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions (UDFI) to establish Brex Bank.

Earlier this month, the company said it would voluntarily withdraw its bank charter and federal deposit insurance applications. 

“This will permit us to modify and strengthen our application and resubmit at a later date,” the company said. “We appreciate the support and thoughtful guidance from the Utah DFI and FDIC.”

#acquisition, #brex, #exit, #finance, #fintech, #fundings-exits, #henrique-dubugras, #israel, #ma, #nadav-lidor, #payments, #startup, #startups, #tc, #weav

This $250 million growth fund will divert half its profits to historically black colleges and universities

There’s been a lot of talk about racial equality in the year since George Floyd was murdered in Minneapolis, but achieving it is far easier said than done given the current state of affairs. Consider: according to the U.S. Government Accountability Office, historically Black colleges and universities have $15,000 on average in endowment per student, while comparable non-HBCUs have $410,000 on average in endowment per student.

That matters, a lot. While higher learning institutions are almost universally focused on diversifying their student base, HBCUs are largely responsible for the nation’s Black middle class, and the larger the endowment, the stronger the school and its ability to support its educators, researchers, and in the case of public HBCUs, its public service mission. Venture capitalist Jamison Hill says that his own father, who attended North Carolina A&T State University in Greensboro, has long maintained that “if it weren’t for that experience, there’s no way he could have gone on to get a high-paying job, where he met my mother, who laid the foundation for the success of our family.”

Hill, who most recently spent more than six years with Bain Capital Ventures, is now doing something to protect that legacy, along with a kind of dream team that features Laura Weidman Powers, who has cofounded or led numerous impact-focused startups and nonprofits, including Code2040; and Luci Fonseca, who helped establish the Institute for Black Economic Mobility at McKinsey & Co. and has focused on impact investing at Salesforce Ventures, among her other roles.

All three have joined the four-year-old venture firm Base10 Partners to invest a new, $250 million growth-stage fund — the firm’s first later-stage vehicle — and fully half the profits from that fund will be directed to HBCUs to create student scholarships and support university endowments.

It’s a brilliant play on the part of Base10, a Bay Area outfit that closed its second early-stage fund last year with $250 million in capital commitments. Called the Advancement Initiative, the fund has already managed to work checks into eight high-fliers — Attentive, Nubank, Brex, Plaid, Aurora Solar, Wealthsimple, CircleCI, and KeepTruckin.

In each case, the fund participated in heavily oversubscribed rounds, but given its mission, the companies’ founding teams made room for its capital, as did other investors. (As an added sweetener, Base10 has promised to create scholarships in the name of each of these portfolio companies to fund the education of HBCU STEM students. Think: The Plaid Scholarship, The Brex Scholarship, and so forth.)

A fresh take on how the venture world can help close the racial inequality gap in the U.S., it could conceivably prove even more effective than other initiatives, including that of LPs who are increasingly pushing VCs to diversify their investing ranks.

The fund could be particularly impactful if it inspires copycat efforts. HBCUs confer nearly half of all STEM degrees for African-American students, says Base10, yet all 107 HBCU endowments combined are equal to just 7% of Stanford’s roughly $30 billion endowment.

So how will it work? For now, says Hill, the idea is to operate the fund as any growth-stage fund, meaning the overarching criteria is to back companies with the potential to produce outsize returns, no matter the skin color of their founders. Ultimately, however — “our hope is that this is not one and done,” says Hill — the idea is to drive change even further by layering in requirements about who can receive a check from the outfit.

As for the fund’s returns, some will flow directly back to particular HBCUs because they are limited partners in the Advancement Initiative fund, including the private university Howard University in Washington, D.C. and Florida A&M University in Tallahassee, Florida.

Indeed, while the fund’s LPs also include earlier Base10 backers, along with organizations that serve minority communities and impact- and mission-oriented foundations, the Advancement Initiative was particularly focused on “removing any barriers to HBCUs investing,” says Weidman Powers, adding that it invited them to invest with “no fees, no minimums, no real closing date.”

The rest of the returns being set aside from HBCUs will be poured into a donor-advised fund that’s focused on increasing financial inclusion for the many institutions that do not currently have endowments large enough to support a private market strategy.

Given the late-stage of the companies it is backing — and the buzzy deals into which it’s getting — it’s likely, too, there will be profits.

“We’ve found that a lot of companies are very willing to have a conversation with us,” says Fonseca, who says the idea is to plug between $10 million an $20 million into each of the fund’s portfolio companies. “The toughest part is just getting in front of the CEO,” she adds. “Once we get in front of that person and we tell that story, we tell them the vision, they’re immediately sold.”

#attentive, #aurora-solar, #bain-capital-ventures, #base10-partners, #brex, #code2040, #laura-weidman-powers, #nubank, #tc, #venture-capital

LatAm-focused corporate spend startup Clara raises $30M months after its last round

This morning Clara announced that it closed a new, $30 million funding round and secured a $50 million revolving debt facility.

The startup, which provides corporate cards to Mexican companies, raised funds earlier this year when it was busy launching its product. Since then, growth has proven rapid for the Mexico City-based company.

TechCrunch learned that the company is valued around $130 million after this latest investment, according to sources familiar with its latest fundraising. The round added DST and monashees to Clara’s cap table; prior investor General Catalyst also contributed funds to the deal.

We spoke with Gerry Giacomán Colyer, a co-founder at the startup and its CEO, about why Clara raised more capital so quickly after it last closed a financing round. The short gist is that the company’s growth, and market, allowed it to raise easily. And that the startup has pretty big plans, so having more capital with which to hire is welcome.

Per Giacomán Colyer, since he last spoke to this publication the transaction volume (GTV) that Clara supports has grown by 100x. His company is managing 2x week-over-week growth at times, which is super rapid. That’s precisely the sort of usage growth that venture capitalists covet; and as Clara makes revenue from interchange fees that stem from transaction volume, the startup is likely seeing its revenue advance at roughly the same rate as its GTV.

That Clara was able to raise more capital is unsurprising. Not only is it growing quickly in its home market with designs on Brazil in the future, a U.S.-based player in the same space recently sold for north of $2 billion. Divvy’s sale was likely a shot in the arm for not only Clara, but also Brex and Ramp, two other well-known players in the larger corporate spend world.

Clara’s success in Mexico makes it likely that related startups also targeting markets that lack a modern corporate spend solution will see strong venture capital interest; I would not be surprised if we heard from a number of other companies attacking geographies with favorable interchange economics with a similar model, as it has proven to be so lucrative.

TechCrunch asked Giacomán Colyer about who his company is targeting in terms of customers; Brex famously got its start working with high-growth startups before moving to work with a broader array of companies. Clara is working with startups in the Mexican market, the company said, but also with larger firms as well. Its CEO said that its underwriting model is set up to support more traditional cash-flow modeling.

So far Clara has largely attracted customers via word-of-mouth, and is working to bolster its referral system. But now that it has lots more capital, it will be interesting to see if the startup builds out a more aggressive go-to-market motion.

And more than just equity capital, the debt that Clara also secured as part of its recent funding round will help it underwrite customers without having to work off of its own balance sheet. Giacomán Colyer said that even after the capital costs associated with the facility, Clara’s economics are still good. Interchange is a flexible beast, it seems.

To that end, TechCrunch asked Giacomán Colyer if his company intends to charge for software in time, or merely eat off of interchange. In the United States, Brex is now in camp one, along with Airbase, while Ramp is sticking to camp two. Divvy proved that you can get to nine-figures in top line without charging for software, though having some ARR in the mix along with interchange incomes could provide a margin-boost to interchange top line. Regardless, Clara appears happy to keep to interchange for the time being.

Let’s see how quickly Clara can keep scaling. We’ll check back with the company in a few months.

#airbase, #brex, #clara, #dst-global, #fundings-exits, #general-catalyst, #monashees, #ramp, #recent-funding, #startups, #tc

Brex, Ramp tout their view of the future as Divvy is said to consider a sale to Bill.com

Earlier today recent dog-parent Alex Konrad and fellow Forbes staffer Eliza Haverstock broke the news that Divvy, a Utah-based corporate spend unicorn, is considering selling itself to Bill.com for a price that could top $2 billion. For the fintech sector, it’s big news.

Corporate spend startups including Ramp and Brex are raising rapid-fired rounds at ever-higher valuations and growing at venture-ready cadences. Their growth and its resulting private investment were earned by a popular approach to offering corporate cards, and, increasingly, the group’s ability to build software around those cards that took into account a greater portion of the functionality that companies needed to track expenses, manage spend access, and, perhaps, save money.

The latter category was what Ramp focused on when it launched. It worked. More recently Ramp added expense tracking efforts to its own software suite. And Brex, an early leader in its efforts to get corporate cards into the hands of smaller, and more nascent businesses, has also built out its software efforts. So much so that the company, in conjunction with its huge recent fundraise, announced that it will begin offering a software package for a monthly fee.

Competitors like Airbase charge for their code, while some, like Divvy, traditionally have not.

Enter Bill.com. As the software work from the corporate spend startups has improved, it may have begun cutting into the corporate payments and expense software categories. For Bill.com in the payments world, and Expensify in the expense universe, that possible incursion could prove to be a growth-retarding concern. Thus, it makes sense to see Bill.com decide to take on the yet-private corporate spend startups that are playing the field; why not absorb a growing customer base and fend off competition in a single move?

To get a better handle on how the startups that compete with Divvy feel about the deal, TechCrunch reached out to both Ramp CEO Eric Glyman, and Brex CEO Henrique Dubugras. We’ll start with Glyman, who broadly agrees with our read of the situation:

#airbase, #bill-com, #brex, #divvy, #expensify, #fundings-exits, #ramp, #startups

The second shot is kicking in

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

First and foremost, Equity was nominated for a Webby for “Best Technology Podcast”! Drop everything and go Vote for Equity! We’d appreciate it. A lot. And even if we lose, well, we’ll keep doing our thing and making each other laugh. (Note: we are in last place, which is, well, something.)

Regardless, the Equity team got together once again this week to not only go over the news of the week, but also to do a little soul searching. You see, some news broke yesterday, so we figured that we had to talk about it in our usual style. So, here’s the rundown:

  • Do you want to buy TechCrunch? Apparently you can? Albeit probably along with a few billion dollars worth of other assets — whatever is left of Yahoo and AOL — you can now own an NFT. A non-fungible TechCrunch. What is ahead for us? We don’t know. So if you do know, tell us. Until then we’ll just yo-yo gently between panic and optimism, as per usual.
  • We also dug into the latest All Raise venture capital data, and the results were abysmal. 
  • Next up was the news that fintech startups are setting records in 2021, raising more capital than ever before. That brought us to the latest from Brex.
  • And then there was a suspicious trend when three fintech companies focused on teen banking raised in one exhale. We talk Step, Greenlight, and Current.
  • Natasha talked about her last Startups Weekly post, in which she unpacked The MasterClass effect’s impact on edtech.
  • And to close, we discussed the latest cool-kid venture capital funds. Sure memes are cool, but did you know that they can help you raise a $10 million fund? They can!

We are back Monday morning with our weekly kick-off show. Have a great weekend!

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts!

#a16z, #banana-capital, #brex, #credit-card, #current, #edtech, #equity, #equity-podcast, #fintech, #fundings-exits, #greenlight, #health-tech, #masterclass, #startups, #step, #techcrunch, #verizon, #weekend-fund

How Brex more than doubled its valuation in a year

Brex, a fintech company that provides corporate cards and spend-management software to businesses, announced earlier today that it closed a $425 million Series D round of capital at a valuation of around $7.4 billion. The new capital came less than a year after Brex raised $150 million at a $2.9 billion pre-money valuation.

So, how did the company manage to so rapidly boost its valuation and raise its largest round to date? TechCrunch spoke with Brex CEO Henrique Dubugras after his company’s news broke. We dug into the how and why of its new investment and riffed on what going remote-first has done for the company, as well as its ability to attract culture-aligned and more diverse talent.

More customers, more product

Undergirding the company’s financial news today was its announcement of Brex Premium, a software suite that the unicorn intends to charge for. As TechCrunch has written ad nauseam, there has been an interesting rift between corporate spend-management companies regarding whether they charge for the software that they layer around their proffered business plastic. Brex has now crossed this particular Rubicon and joined those that do, at least in some cases.

Brex Premium will run customers $49 per month, which Dubugras described in a call as less expensive than the systems it may replace. For companies looking for integrated bill pay, expense management and the like, it could be a good fit. And the service could bolster Brex’s aggregate revenue run rate with high-margin, recurring software fees that public market investors have long coveted.

On the topic of investors, let’s circle back to Brex’s round. Here’s what we need to know: How quickly has Brex grown in recent months, why did the company choose Tiger as its lead investor (from over $1 billion in demand for the round), and what’s ahead for the company itself?

In order:

Growth

Per Dubugras, from March 2020 to March 2021, Brex grew its revenues and TPV, or total payment volume, by more than 100%. As Brex reached $1 billion in TPV during its first seven months of its existence, again according to its CEO, the company’s aggregate TPV add during that 12-month period was in excess of that figure. Multiples higher, by our reckoning.

That growth explains how Brex was able to double its valuation. It grew quickly. How it did so is worth exploring.

#brex, #fundings-exits, #henrique-dubugras, #startups, #tc

Weav raises $4.3M to knit together a universal API for commerce platforms

Weav, which is building a universal API for commerce platforms, is emerging from stealth today with $4.3 million in funding from a bevy of investors, and a partnership with Brex.

Founded last year by engineers Ambika Acharya, Avikam Agur and Nadav Lidor after participating in the W20 YC batch, Weav joins the wave of fintech infrastructure companies that aim to give fintechs and financial institutions a boost. Specifically, Weav’s embedded technology is designed to give these organizations access to “real time, user-permissioned” commerce data that they can use to create new financial products for small businesses.  

Its products allow its customers to connect to multiple platforms with a single API that was developed specifically for the commerce platforms that businesses use to sell products and accept payments. Weav operates under the premise that allowing companies to build and embed new financial products creates new opportunities for e-commerce merchants, creators and other entrepreneurs. 

Left to right: Co-founders Ambika Acharya, Nadav Lidor and Avikam Agur; Image courtesy of Weav

In a short amount of time, Weav has seen impressive traction. Recently, Brex launched Instant Payouts for Shopify sellers using the Weav API. It supports platform integrations such as Stripe, Square, Shopify and PayPal. (More on that later.) Since its API went live in January, “thousands” of businesses have used new products and services built on Weav’s infrastructure, according to Lidor. Its API call volume is growing 300% month over month, he said.

And, the startup has attracted the attention of a number of big-name investors, including institutions and the founders of prominent fintech companies. Foundation Capital led its $4.3 million seed round, which also included participation from Y Combinator, Abstract Ventures, Box Group, LocalGlobe, Operator Partners, Commerce Ventures and SV Angel. 

A slew of founders and executives also put money in the round, including Brex founders Henrique Dubugras and Pedro Franceschi; Ramp founder Karim Atiyeh; Digits founders Jeff Seibert and Wayne Chang; Hatch founder Thomson Nguyen; GoCardless founder Matt Robinson and COO Carlos Gonzalez-Cadenas; Vouch founder Sam Hodges; Plaid’s Charley Ma as well as executives from fintechs such as Square, Modern Treasury and Pagaya.

Foundation Capital’s Angus Davis said his firm has been investing in fintech infrastructure for over a decade. And personally, before he became a VC, Davis was the founder and CEO of Upserve, a commerce software company. There, he says, he witnessed firsthand “the value of transactional data to enable new types of lending products.”

Foundation has a thesis around the type of embedded fintech that Weav has developed, according to Davis. And it sees a large market opportunity for a new class of financial applications to come to market built atop Weav’s platform.

“We were excited by Weav’s vision of a universal API for commerce platforms,” Davis wrote via email. “Much like Plaid and Envestnet brought universal APIs to banking for consumers, Weav enables a new class of B2B fintech applications for businesses.”

How it works

Weav says that by using its API, companies can prompt their business customers to “securely” connect their accounts with selling platforms, online marketplaces, subscription management systems and payment gateways. Once authenticated, Weav aggregates and standardizes sales, inventory and other account data across platforms and develops insights to power new products across a range of use cases, including lending and underwriting; financial planning and analysis; real-time financial services and business management tools.

For the last few years, there’s been a rise of API companies, as well as openness in the financial system that’s largely been focused on consumers, Lidor points out.

“For example, Plaid brings up very rich data about consumers, but when you think about businesses, oftentimes that data is still locked up in all kinds of systems,” he told TechCrunch. “We’re here to provide some of the building blocks and the access to data from everything that has to do with sales and revenue. And, we’re really excited about powering products that are meant to make the lives of small businesses and e-commerce, sellers and creators much easier and be able to get them access to financial products.”

In the case of Brex, Weav’s API allows the startup to essentially offer instant access to funds that otherwise would take a few days or a few weeks for businesses to access.

“Small businesses need access as quickly as possible to their revenue so that they can fund their operations,” Lidor said.

Brex co-CEO Henrique Dubugras said that Weav’s API gives the company the ability to offer real-time funding to more customers selling on more platforms, which saved the company “thousands of engineering hours” and accelerated its rollout timeline by months.

Clearly, the company liked what it saw, considering that its founders personally invested in Weav. Is Weav building the “Plaid for commerce”? Guess only time will tell.

#abstract-ventures, #angus-davis, #api, #banking, #box-group, #brex, #carlos-gonzalez-cadenas, #commerce-ventures, #e-commerce, #ecommerce, #finance, #financial-services, #financial-technology, #fintech-infrastructure, #foundation-capital, #funding, #fundings-exits, #hatch, #matt-robinson, #money, #online-marketplaces, #operator-partners, #paypal, #plaid, #real-time, #recent-funding, #shopify, #startup, #startups, #stripe, #tc, #thomson, #upserve, #venture-capital, #weav, #y-combinator

Brex raises $425M at a $7.4B valuation, as the corporate spend war rages on

Mere weeks after rival corporate spend startup Ramp announced that it raised a two-part round worth $115 million at a $1.6 billion valuation, this morning Brex disclosed a $425 million Series D led by Tiger Global.

The new capital marks Brex’s largest fundraise to date, and was compiled at a valuation that is more than double its most recent private valuation. According to Crunchbase data, Brex’s mid-2020 Series C valued the company at just over $3.0 billion, including the investment’s $150 million in issued equity.

The dueling rounds raised by Brex and Ramp underscore how active their product category is proving to be. Far from its roots in merely offering perk-laden corporate cards to growing companies, Brex and its myriad rivals — including Utah unicorn Divvy, Airbase, and others — are building software suites around their core plastic efforts to help companies manage all elements of their spending.

A growing rift is showing in how, compared to some rivals, the categories’ largest players, including Brex, Divvy and Ramp, forgo charging for their software, content to eat off other revenue sources including interchange. Airbase, in contrast, charges for its software.

Don’t expect the software arms race between corporate spend startups’ unicorns to lead to more corporate spend startups deriving software revenues in addition to their current income sources; each is growing their spend rapidly enough to warrant more time with their foot on the customer growth pedal over working to juice more per-customer revenue in the short-term.

Ramp, for example, disclosed that it is nearly on a $1 billion spend-managed run rate. Brex, worth a multiple of the younger startup, is presumably above that mark.

TechCrunch reached out to Brex, curious about its 2020 and Q1 2021 growth results. The company provided a statement to TechCrunch, claiming that it is “onboarding thousands of new tech and non-tech customers every month.” Brex also said that it grew its “total customer” figure by 80% in the first quarter, “with total monthly customer additions increasing by 5x.”

That’s precisely the sort of growth that makes late-stage investors excited. TechCrunch is speaking with Brex CEO shortly; more after that call.

#airbase, #brex, #divvy, #ramp, #tc

Ramp looks to raise more capital as the corporate-spend market mints unicorns

Earlier this year Divvy, a Utah-based software company that provides corporate spend management software, raised a $165 million round at a $1.6 billion valuation. It followed its competitor Brex to unicorn-status as the market for financial services software and corporate payment solutions stayed red-hot in 2021 after a blockbuster 2020.

Now Ramp, a competitor to both Divvy and Brex, is looking to raise new capital from Stripe and D1 Capital Partners at a valuation that could top $1 billion. The Information first reported the news, which TechCrunch confirmed with a source familiar with the transactions.

Ramp also competes with startups like Airbase and Teampay, each providing software designed to help companies allow, administer and track corporate cash outflows. The startup category is perhaps best known for its concept of providing company cards to startups and other SMBs, though its market has since matured into financial software designed to provide a central node for internal expense controls.

The pace of investment into startup cohorts has been aggressive. Brex raised $150 million after the pandemic set in, while Ramp raised several times last year before adding a debt facility earlier this year to its financial backstop. Airbase also raised last year, sharing growth metrics as 2020 came to a close. Teampay added $5 million to its 2019-era Series A last year as well.

And in a sign that the model of fintech startups building corporate spend software could prove popular in other markets, a Latin American-focused startup in the space called Clara raised $3.5 million earlier this month.

#airbase, #brex, #divvy, #ramp, #tc, #teampay

Brex applies for bank charter, taps former Silicon Valley Bank exec as CEO of Brex Bank

Brex is the latest fintech to apply for a bank charter.

The fast-growing company, which sells a credit card tailored for startups with Emigrant Bank currently acting as the issuer, announced Friday that it has submitted an application with the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions (UDFI) to establish Brex Bank.

The industrial bank will be located in Draper, Utah, and be a wholly-owned subsidiary of Brex.

The company has tapped former Silicon Valley Bank (SVB) exec Bruce Wallace to serve as the subsidiary’s CEO. He served in several roles at SVB, including COO, Chief Digital Officer and head of global services. It also has named Jean Perschon, the former CFO for UBS Bank USA, to be the Brex Bank CFO.

Last May, Brex announced that it had raised $150 million in a Series C extension from a group of existing investors, including DST Global and Lone Pine Capital.

With that raise, Brex, which was co-founded by Henrique Dubugras and Pedro Franceschi, had amassed $465 million in venture capital funding to-date.

The company said in a statement today that “Brex Bank will expand upon its existing suite of financial products and business software, offering credit solutions and FDIC insured deposit products to small and medium-sized businesses (SMBs).”

Offering credit products to small businesses has become a popular product offering and source of revenue for tech companies serving entrepreneurs, including Shopify and Square in the commerce arena. Likewise, offering business-focused bank accounts, like Shopify Balance, which is currently in development with a plan to launch sometime this year in the U.S.

These financial products can provide additional opportunities for revenue on interest and cost of borrowing for these companies, who might have better insight into the risk profiles of the types of businesses they serve than traditional lenders and FIs.

“Brex and Brex Bank will work in tandem to help SMBs grow to realize their full potential,” said Wallace.

Brex is based in San Francisco and counts Kleiner Perkins Growth, YC Continuity Fund, Greenoaks Capital, Ribbit Capital, IVP, and DST Global as well as Peter Thiel and Affirm CEO Max Levchin among its investors. It currently has over 400 employees, and though it had significant layoffs mid-year in 2020, it cited restructuring rather than financial difficulty as the cause of that downsize.

Other fintechs that have made moves toward bank charters include Varo Bank, which this week raised another $63 million and SoFi, which last October was granted preliminary approval for a national bank charter.

#bank, #brex, #business-software, #california, #ceo, #cfo, #credit-card, #draper, #dst-global, #finance, #greenoaks-capital, #henrique-dubugras, #ivp, #kleiner-perkins, #lone-pine-capital, #max-levchin, #peter-thiel, #ribbit-capital, #san-francisco, #shopify, #silicon-valley-bank, #sofi, #tc, #utah, #varo-bank

Nobl9 raises $21M Series B for its SLO management platform

SLAs, SLOs, SLIs. If there’s one thing everybody in the business of managing software development loves, it’s acronyms. And while everyone probably knows what a Service Level Agreement (SLA) is, Service Level Objectives (SLOs) and Service Level Indicators (SLIs) may not be quite as well known. The idea, though, is straightforward, with SLOs being the overall goals a team must hit to meet the promises of its SLA agreements, and SLIs being the actual measurements that back up those other two numbers. With the advent of DevOps, these ideas, which are typically part of a company’s overall Site Reliability Engineering (SRE) efforts, are becoming more mainstream, but putting them into practice isn’t always straightforward.

Noble9 aims to provide enterprises with the tools they need to build SLO-centric operations and the right feedback loops inside an organization to help it hit its SLOs without making too many trade-offs between the cost of engineering, feature development and reliability.

The company today announced that it has raised a $21 million Series B round led by its Series A investors Battery Ventures and CRV. In addition, Series A investors Bonfire Ventures and Resolute Ventures also participated, together with new investors Harmony Partners and Sorenson Ventures.

Before starting Nobl9, co-founders Marcin Kurc (CEO) and Brian Singer (CPO) spent time together at Orbitera, where Singer was the co-founder and COO and Kurc the CEO, and then at Google Cloud, after it acquired Orbitera in 2016. In the process, the team got to work with and appreciate Google’s site reliability engineering frameworks.

As they started looking into what to do next, that experience led them to look into productizing these ideas. “We came to this conclusion that if you’re going into Kubernetes, into service-based applications and modern architectures, there’s really no better way to run that than SRE,” Kurc told me. “And when we started looking at this, naturally SRE is a complete framework, there are processes. We started looking at elements of SRE and we agreed that SLO — service level objectives — is really the foundational part. You can’t do SRE without SLOs.”

As Singer noted, in order to adopt SLOs, businesses have to know how to turn the data they have about the reliability of their services, which could be measured in uptime or latency, for example, into the right objectives. That’s complicated by the fact that this data could live in a variety of databases and logs, but the real question is how to define the right SLOs for any given organization based on this data.

“When you go into the conversation with an organization about what their goals are with respect to reliability and how they start to think about understanding if there’s risks to that, they very quickly get bogged down in how are we going to get this data or that data and instrument this or instrument that,” Singer said. “What we’ve done is we’ve built a platform that essentially takes that as the problem that we’re solving. So no matter where the data lives and in what format it lives, we want to be able to reduce it to very simply an error budget and an objective that can be tracked and measured and reported on.”

The company’s platform launched into general availability last week, after a beta that started last year. Early customers include Brex and Adobe.

As Kurc told me, the team actually thinks of this new funding round as a Series A round, but because its $7.5 million Series A was pretty sizable, they decided to call it a Series A instead of a seed round. “It’s hard to define it. If you define it based on a revenue milestone, we’re pre-revenue, we just launched the GA product,” Singer told me. “But I think just in terms of the maturity of the product and the company, I would put us at the [Series] B.”

The team told me that it closed the round at the end of last November, and while it considered pitching new VCs, its existing investors were already interested in putting more money into the company and since its previous round had been oversubscribed, they decided to add to this new round some of the investors that didn’t make the cut for the Series A.

The company plans to use the new funding to advance its roadmap and expand its team, especially across sales, marketing and customer success.

#adobe, #battery-ventures, #bonfire-ventures, #brex, #cloud, #computing, #crv, #developer, #enterprise, #funding, #fundings-exits, #harmony-partners, #nobl9, #orbitera, #outsourcing, #recent-funding, #resolute-ventures, #software-development, #startups, #supply-chain-management, #tc

Divvy raises $165M as the spend management space stays red-hot

Today Divvy, a Utah-based startup that focuses on corporate spend management, announced that it has closed a $165 million round at a $1.6 billion valuation. The company said that the new capital was raised from Hanaco, Schonfeld, PayPal Ventures, and Whale Rock, along with a cadre of prior investors.

The new investment is not Divvy’s first megaround of private capital. The well-known startup raised $200 million in April of 2019. TechCrunch reported at the time that that round valued Divvy at around $700 million, making today’s deal a more than 2x increase in valuation for the company.

Divvy exists amongst the current generation of Utah-based tech upstarts that are keeping the state’s tech scene in the broader startup conversation. Podium fits in the same cohort, for example, while Qualtrics feels like it’s from the preceding peer group.

Divvy’s market, the corporate spend management space — broadly corporate cards and software that helps firms manage and limit expenses — is incredibly active today as businesses look to modernize their financial infrastructure. The new capital for Divvy comes after multiple other competitors recently announced fresh funds itself, for example. Let’s take a look at who Divvy is taking on with its new round.

Competition

A few weeks back Ramp, another corporate-cards-and-software startup, announced a $30 million raise and that it had reached $100 million in spend through its service in its first 18 months of business. At the same time Divvy shared with TechCrunch that it had seen 120% customer growth and over 100% growth in platform spend in 2020, compared to 2019. At the time, Brex, which also competes in the corporate spend space, declined to share metrics.

That Divvy was able to raise so much capital given its recent growth rates is not surprising. But that so many companies in its sector are managing similarly-strong to-line expansion stands out. After covering the Ramp round in December and noting Divvy’s metrics at the same time, both Airbase (more here) and Teampay (more here) reached out with numbers of their own.

Teampay reiterated its October-era metrics, that it has seen its annual recurring revenue (ARR) grow by 320% and its total spend grow by 800% since its then year-ago Series A. Airbase noted what it described as 250% growth in ARR — up by 2.5x, in other words — and 700% growth in payment volume (annualized).

Divvy, Teampay, and Airbase are therefore growing like all heck, though in slightly different fashions. Divvy and Ramp offer their corporate spend products and software for free, taking a slice of payment volume through interchange revenues. Teampay and Airbase generate incomes from interchange as well, but also charge for their software. This gives them both spend and software revenues.

Which brings us back to Divvy’s news from today. I normally avoid quoting from releases, but in today’s case a paragraph is worth sharing:

The valuation of $1.6 billion and the addition of key investors validates Divvy’s ambition to modernize financial processes by combining credit, vendor, and spend management into a single platform. With this round of funding, Divvy plans to invest heavily in product development and engineering in order to accelerate their future roadmap.

Divvy is going to invest heavily in product? That makes sense. But to give away its software forever just seems odd. Some of its competitors are charging for theirs! Why not Divvy as well?

We’ll see, but what is clear today is that the capital that has gone into startups in Divvy’s cohort was put into a niche that has shown huge demand. So, expect to hear more from this product area in 2021.

#airbase, #brex, #corporate-expense-management, #divvy, #expense-management, #expenses, #fundings-exits, #ramp, #startups, #tc, #teampay

Ramp raises $30M as the battle to own corporate spend heats up

Corporate spend management startup Ramp has raised $30 million more in a new round, it announced today. TechCrunch covered Ramp’s launch earlier this year, when it also detailed that it had raised around $23 million up to that point.

The startup raised its latest round in August of 2020, with conversations about the deal kicking off in June. The new capital is Ramp’s second priced raise after its August, 2019 seed round worth $8 million and the first after its February, 2020-era $15 million raise. D1 and Coatue were new investors in this new investment, which included some prior backers.

Ramp CEO Eric Glyman called the new equity something akin to a Series A3, noting that it had effectively reused docs from a preceding round, albeit with a new price attached. Venture history purists could argue that Ramp’s new raise was the company’s Series B — the second priced round after its seed — or that it is really a Series C, as the startup’s seed round was as big as a 2000s-era A and was also a priced event.

Whatever.

Ramp did not need the funds. Per Glyman, the startup still had part of its original seed round in the bank when it raised the latest check. That implies that the company had more than $45 million in cash as of August, 2020.

Asked why he raised the capital if it was not needed, the CEO told TechCrunch that its new investors had “pretty unbelievable” investment track records. And Glyman added that the round was attractively priced, limiting dilution. The exec also said that having the new funds helped Ramp hire more aggressively with confidence.

But while the round is interesting to a degree, more intriguing is the space in which Ramp competes. So let’s talk about the power of software, and when the startup and its competitors might start charging more for their deployed code.

Software

Ramp competes for market share in corporate spend management, an active vertical with a number of venture-backed players. That actor density has generated a level of competition that has rewritten the ground rules for getting credit and charge cards into the hands of companies. The table stakes are higher than ever in the niche.

Why? Because issuing credit and debit cards to consumers and corporations has largely been commoditized, causing startups hunting for slices of spend via interchange to build increasingly powerful software suites around their original products; if you can’t entice new customers with fancy cards, how about lots of digital tooling built around spend itself, to help your company manage and limit cash outflows?

The examples of this trend are myriad: Brex built out a cash management solution, for example, and expense management tools. Ramp itself launched expense management software of its own this year, and Divvy has a similar service along with other card-related software tools.

Venture capitalists have poured $55 million into Ramp, by our count, north of $400 million into Brex, not counting debt raised by the unicorn, and more than $250 million into Divvy . So, the game of building increasingly robust software stacks atop corporate cards is one to watch, as the scale of venture bets made on the key players in the space is titanic.

Ramp is dropping new code with its funding news, underscoring the point. The company recently added vendor management tooling, and is now adding reimbursing capabilities so that employees can be paid back for expenses not made on the startup’s cards.

Which of the three has the best software stack? They each think that they do, we reckon.

The result of the efforts by Ramp and its competitors to build out software around their card offerings has been rapid customer growth. Divvy, reached this week concerning its own metrics, told TechCrunch that it has seen its customer number expand 120% in 2020 and total spend on its platform rise 100% this year. Brex declined to share growth metrics.

Ramp announced its own growth figures as part of its news passel, including that it reached $100 million in spend on its platform in the first 18 months following its incorporation (a somewhat non-GAAP time frame, we admit), and that a quarter of the total spend that it has supported for corporations was recorded in the last 30 days.

There appears to be plenty of market for the startups to grow into, just as there is plenty of capital available for them to tap.

To close, a question: When will corporate spend management startups flip the switch, and start to charge for their software suite? Currently the trio make money largely from interchange, collecting a tiny piece of transactions that they power with their cards. This scales well, and keeps friction of signing up new customers low; after all, who doesn’t want a free set of financial tooling?

But, eventually, they will charge for their software. SaaS revenue is simply too highly valued to not go after. At some point. Perhaps that day will mark the end of the corporate spend land logo grab, and the start of the software niche’s maturation. At which point I expect new competitors to sprout up and the cycle to repeat.

#brex, #divvy, #finance, #ramp, #recent-funding, #startups, #tc

Square and PayPal earnings bring good (and bad) news for fintech startups

Earnings season is racing past us, with the big ride-hailing companies’ numbers in, all of the Big Five having wrapped their reporting and lots of SaaS numbers in the market. But amidst all the noise, The Exchange has kept an eye on two companies in particular: PayPal and Square.

We’re not really not concerned with their overall revenue and profit metrics. Instead, we’ve been hunting around in their numbers for hints and notes about what is going on inside of fintech itself. Why? There are a host of hugely-valuable fintech unicorns that have to go public in the future that also share some market space with one or both of our public charges.

What can we learn from looking at what PayPal and Square reported to their own investors?


The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.


Lots, it turns out.

As TechCrunch reported when PayPal dropped its Q3 numbers, the public company had bullish results from its Venmo service, payment processing, and consumer activity metrics. The numbers pointed to strong consumer adoption of fintech services during the pandemic, something that we presumed was not unique to PayPal itself, but was likely indicative of a generally warm environment for consumer fintech services.

Square continued the trend, posting a set of results that contains nearly all positive data for consumer fintech activity — with one critical caveat for Q4 that we’ll get to at the end.

Still, what the majors tell us about the fintech space indicates a warmth in activity that explains why Chime, Robinhood and others have had such fun in 2020, accreting tectonic capital to keep their growth hot.

Digging through Square’s earnings gives us a window into consumer payment activity, card usage, stock purchases and more. Let’s see what we can learn, and to which unicorns it might apply.

A very fintech 2020

Let’s start by talking about the broader fintech market before niching down.

#brex, #finance, #fundings-exits, #paypal, #ramp, #robinhood, #square, #startups, #tc, #the-exchange

Latin America’s digital transformation is making up for lost time

“Gradually, then suddenly.” Hemingway’s words succinctly capture the recent history of tech in Latin America. After more than a decade of gradual progress made through fits and starts, tech in Latin America finally hit its stride and has been growing at an accelerating pace in recent years.

The region now boasts 17 unicorns up from zero just three years ago. For the first time, the most valuable company in the region isn’t a state-controlled oil or mining behemoth, but rather e-commerce platform MercadoLibre.

We are only in the first chapter of this long story, however. When we compare the penetration of tech companies in Latin America to both developed and developing markets, we estimate that the market could grow nearly tenfold over the next decade. The value to be unlocked will be measured in trillions of dollars and the lives improved in the hundreds of millions.

Our venture capital fund, Atlantico, conducts a thorough annual analysis of market data from Latin America in what we call the Latin America Digital Transformation Report. The report consists of hundreds of data-rich slides based off of original studies, surveys and models constructed from a combination of public and proprietary data shared by many of the region’s leading tech companies. This year, for the first time, we have decided to make the report public and here we highlight some of the findings from this year.

Global venture capitalists, the likes of Sequoia, Benchmark and a16z have planted their flags through key investments in companies like Nubank, Wildlife and Loft. Those are not isolated incidents – venture capital investments in the region have nearly doubled annually for the last three years according to the Latin American Venture Capital Association (LAVCA). In order to understand what investors are seeing in the region, we analyzed the market through a simple framework we apply throughout our report.

The starting point for this framework is the socioeconomic foundation in place. The context in which transformation occurs is important in shaping its possible outcome. The same ingredients applied in different contexts and time periods will produce very different results. Thus, we believe that Latin America is unique globally, and the types of companies that will flourish (and to what extent) will be different than in other parts of the world. Trying to shoehorn foreign business models and products is unlikely to yield good results.

In the case of Latin America, it’s key to remember the region boasts a population twice that of the United States and a GDP half that of China’s (but similar on a per capita basis). In short: Latin America is big, a central factor that has the power to attract capital and talent. However, also critical to note is that economic inequality is severe. While a quarter of the region’s population lives in poverty, the wealthy in Mexico City and São Paulo enjoy living standards in line with their peers in New York and London.

This unique mix of large opportunity and critical problems waiting to be solved has provided fertile ground for the gig economy to flourish. Case-in-point: Brazil is Uber’s largest market globally in volume of rides, with São Paulo its largest city. Rappi, a major food delivery player in the region, valued at over $3 billion, grew its sales by 113% over the first five months of the pandemic. When taken together, the largest ride-hailing and food-delivery services in Brazil are already the largest private employer in Brazil, a formidable contribution to reducing high unemployment.

When we track technology company value as a percent of the economy (tech company market cap as a % of GDP) we clearly see that Latin America, at 2.2% penetration, has a ways to go. Our estimate is that it is 10 years behind China (at 27% penetration), which itself is five years behind current U.S. levels (39% penetration).

Image Credits: Atlantico

However, it is important to note that Latin America is making up for lost time. This metric for tech company penetration or share has been growing on average at 65% per year since 2003. In comparison, the growth in U.S. tech company penetration has grown at 11% annually in the same period, while China’s has expanded at 40%.

https://www.atlantico.vc/latin-america-digital-transformation-report

Image Credits: Atlantico

Drivers of digital transformation

Within the socioeconomic context of the region, we advance to looking at the three drivers of change in our framework: people, capital and regulation.

On the people front, the greater visibility of successful role models has catalyzed a desire to follow entrepreneurial footsteps. People like Mike Krieger (co-founder of Instagram), Marcos Galperin (founder/CEO of Mercado Libre) and Henrique Dubugras (founder/co-CEO of Brex) have shown that local talent can go on to build global companies.

In a survey we conducted with nearly 1,700 college students from the top universities in Brazil, 26% of students voiced a desire to work at startups or big tech companies. A whopping 39% expressed plans to start a company in the future, that number rising to 60% when we consider only computer science students. As more and more of the region’s top graduates flock to tech, it gives us confidence in the accelerating growth of the sector over many years to come.

On the capital front, the growth of venture funding in the region has been frequently written about. Last year, it hit a peak of $4.6 billion after doubling from the year before. However, what perhaps is more surprising is that despite this rapid growth, we are still far from the ceiling. When we view venture capital investments as a proportion of GDP, we see Latin America as only one-seventh of the U.S. level and a quarter of the level in India.

#banking, #brazil, #brex, #column, #coronavirus, #covid-19, #ecommerce, #finance, #latin-america, #mexico, #nubank, #tc, #venture-capital

As corporate cards are subsumed into software, Airbase posts rapid growth

A few weeks back, TechCrunch wrote about how Ramp, a corporate credit card startup with a focus on cost control, had added expense management software on top of its company plastic business. Closing out our piece, I wondered if “cards aren’t de facto commoditized by this point,” given the sheer number of companies that are willing to either underwrite, or supply corporate and consumer plastic.

One company in particular agreed with the sentiment, namely Airbase, which we last covered in March when it added $23.5 million to its Series A round, albeit at around triple the valuation of its earlier Series A tranche.

CEO Thejo Kote tells TechCrunch that cards are enablers to software, instead of the main event themselves. The CEO wants to build corporate spend software, not a corporate card business.

Airbase offers corporate cards and a SaaS suite of financial tooling to support corporate accounting departments and employees alike. While the startup does collect revenues from interchange — card-providers gets a tiny slice of transactions that occur on cards they hands out — the majority of its revenues come from its recurring software incomes, it told TechCrunch.

It’s a reasonable perspective, as with the increasing popularity of virtual cards, it’s likely that ‘credit cards’ will become more digital spend points than physical goods that you carry on your person in short order. At that point what will differentiate one set of digital plastic from another? Perhaps the software that is wrapped around it.

Cards as a gateway to software is actually a neat business model, as Airbase gets to make money from both products. A bit like how some SaaS companies are adding payments support in house to add another revenue stream, interchange incomes are a secondary income for Airbase, which Kote considers a B2B SaaS business first.

That doesn’t mean that Airbase isn’t seeing its spend-related revenues grow. According to Kote, Airbase users spent 500% as much in Q2 2020 as they did in Q2 2019, for example. But, at the same time, in the four quarters ending July 31, 2020, Airbase saw its annual recurring revenue (ARR) expand 280%, though the company does count interchange in that figure which some may find a controversial inclusion. The startup also claimed a net retention rate of 126% in the “first two quarters of 2020.” (Ramp has also seen rising spend results, as has Finix, to provide another reference point.)

So things are going well for Airbase, at least in growth terms.

Airbase has plans to keep building its software stack to subsume (support?) more and more of a company’s spend into its product. A more central spend-and-control suite could save some companies time, perhaps making accounting smoother and quicker. And, of course, it would also make Airbase stickier inside of its customers, and thus less likely to see either SaaS or interchange churn.

Fintech at one point meant accessing your bank account information online. Then it meant doing more banking online than in person. Later came waves of spending services and online investing tools. Most recently we’ve seen banking and investing remade digitally, with fees falling and accessibility rising, at least in theory.

So it’s perhaps not surprising that corporate cards are next to be reimagined, with players like Ramp, Brex, Airbase and others trying to figure out what the future of corporate spend looks like, and how best to get as much of the market for themselves as possible. Let’s see who wins.

#airbase, #brex, #finance, #ramp, #startups, #tc

Max Levchin is looking ahead to fintech’s next big opportunities

Max Levchin needs little introduction in the world of tech. As an entrepreneur, he’s been the co-founder of PayPal (now public), Slide (acquired by Google) and Affirm (reportedly about to go public), some of the hottest startups to have come out of Silicon Valley. And as an investor, he’s applied his power of observation and execution also towards helping many others build huge technology businesses.

We sat down with Levchin for a recent session of Extra Crunch Live, where he spoke at length about what he sees as some of the big opportunities in fintech. Here’s an edited version of the conversation. You can watch and listen to the whole discussion — which includes stories about Levchin’s coffee and cycling habits, and how many times he’s seen “The Seven Samurai” (hint: more than once) — here, also embedded below, and you can check out the rest of the pretty cool ECL program here.

How e-commerce failed to evolve since his days at PayPal

Even going as far back as PayPal I think the industry has devolved. I think fintech had the promise of really bringing simplicity, honesty and transparency to the customer. Instead, we ended up putting a really nice user interface on products that are not designed with the user’s best interest in mind. I’m a big fan of throwing shade on credit cards, because I think fundamentally, their business model is remarkably similar to that of payday loans. You are allowed to borrow some money and don’t really know exactly what the terms are. It’s all in the fine print, don’t worry about it and then you just make the minimum payments and you stay in debt. Potentially forever.

#brex, #e-commerce, #ecl, #entrepreneur, #entrepreneurship, #finance, #max-levchin, #payments, #paypal, #square-capital, #square-terminal, #startups, #stripe-capital, #tc

Without desks and a demo day, are accelerators worth it?

As a result of the pandemic, accelerators have moved operations fully remote to abide by social distancing. The shift has forced well-known programs like 500 Startups, Y Combinator and Techstars to go fully online, while encouraging existing venture capital firms to launch new digital-only fellowships like Cleo Capital and NextView Ventures.

Before the pandemic, accelerators could advertise their value by lending desk space once used by Airbnb, Twilio and Brex’s co-founders, plus a glitzy demo day. Now, stripped of their in-person element, the actual value of an accelerator program — and the network they provide — is being tested in new ways.

So a question remains for participating founders: Are they getting the benefits of what they thought they signed up for?

In the Zoom where it happened

The last thing Michael Vega-Sanz wanted to do was was join another Zoom get-together for entrepreneurs. But the car-sharing company he co-founded with twin brother Matthew was in the middle of a pivot, so they joined NextView Ventures’ inaugural remote accelerator program.

“I envisioned an accelerator with awkward happy hours, mass Zoom calls,” Vega-Sanz said. Fast-forward one month into the program, he says it “has been quite the opposite.”

Before joining NextView’s accelerator, Vega-Sanz did an in-person incubator at Babson College in Boston, but there’s “a lot less fluff” in being virtual, he told TechCrunch.

“[With in-person] the reality was you’d go to lunch, and by the time you drove over there and had all your side talk, small talk, chit-chat and actually got into the nitty-gritty of the event, there was a lot of time loss,” he said. “You could have been working for your company during that time.”

If possible, Vega-Sanz still recommends that first-time founders attend a physical accelerator instead of a virtual one for the energy it brings, even with the downside of useless events.

#accelerators, #airbnb, #brex, #cleo-capital, #entrepreneurship, #extra-crunch, #funding, #market-analysis, #michael-seibel, #nextview-ventures, #startups, #tc, #twilio, #venture-capital, #y-combinator

Lo Toney’s product manager playbook for pitch deck success

The cold email worked — you’ve landed a meeting with your dream investor. Hell, you even set aside $40,000 for a pitch deck consultant to make sure your presentation looks suave.

One thing to figure out before you pick out a Zoom background: what information actually goes into those slides?

Lo Toney, founding managing partner at Plexo Capital, has advice for founders looking to raise money: think like a product manager while crafting your pitch deck. Toney has helped shape products at Zynga, Nike and eBay, and currently serves as both a GP and an LP at Plexo Capital, which invests in funds and startups. He’s done a ton of pitching and gotten pitched himself, which is why we invited him to TechCrunch Early Stage 2020.

“The framework of product management is very similar to the same playbook used by an early-stage investor and early-stage investors in the absence of an abundance of data,” Toney said. “They’re really thinking very similar to a product manager to evaluate an opportunity.”

Crafting a solid pitch deck is critical to the success of a startup seeking venture capital. Investors, however, spend less than four minutes on average per deck, and some even tell you that you have half that much time (so either talk fast or pick your favorite slides). Even if you have the business to prove that you’re the next Stripe, if you butcher the story behind the numbers, you could lose the potential to get the capital you need.

Toney said adopting a product manager mindset helps refine what that story looks and feels like.

“The story is not your product. It’s not your company, and it’s not the entrepreneur. It’s how your customer’s world is going to be better when your product has solved their problem,” he said, quoting Rick Klau from GV.

In action, Toney broke down the framework into four key slides: problem, market, solution and, of course, team.

Problem

First up, most investors say they want to see the problem you’re trying to solve up high. Toney is no different.

“I like to see an entrepreneur describing the desired outcome first, and then what are some of those roadblocks that come along the way to that desired outcome?” he asked. Similar to a product manager, founders could illustrate the different challenges that could come to executing a solution on a specific problem.

#brex, #early-stage-2020, #entrepreneurship, #events, #extra-crunch, #fundraising, #henrique-dubugras, #lo-toney, #pitch-deck, #plexo-capital, #prisma, #tc, #techcrunch-early-stage, #venture-capital, #victoria-ransom