YC-backed Ziina raises $7.5M seed led by Avenir Growth Capital and Class 5 Global

Cash is the predominant method of sending and receiving payments in the Middle East. If you owe someone a cup of coffee or a trip over a long period, repaying via cash is your best bet. This is one problem out of many financial issues that haven’t been addressed in the region.

The good news is that startups are springing up to provide solutions. Last month Telda, a now two-month-old startup in Egypt, raised an impressive sum as pre-seed to offer digital banking services. Today, Ziina, another startup based in Dubai, has closed $7.5 million in seed funding to scale its peer-to-peer (P2P) payment service across the Middle East and North Africa.

Ziina has managed to enlist top global investors and fintech founders in the round. Avenir Growth and Class 5 Global led this latest tranche of financing. Wamda Capital, FJ Labs, Graph Ventures, Goodwater Capital, Jabbar Internet Group, Oman Technology Fund’s Jasoor Ventures, and ANIM also participated.

The founders who took part include Checkout CEO Guillaume Pousaz via his investment fund Zinal Growth; Krishnan Menon, BukuKas CEO, as well as executives from Paypal and Venmo. This adds to a roster of executives and early employees from Revolut, Stripe, Brex, Notion, and Deel that joined Ziina’s round.

According to the company, it has raised over $8.6 million since launching last year. This includes the $850,000 pre-seed raised in May 2020 and $125,000 secured after going through Y Combinator’s Winter batch early this year.

Ziina was founded by Faisal Toukan, Sarah Toukan, and Andrew Gold. It’s the latest addition to the Middle East’s bubbling fintech ecosystem and is capitalising on the region’s rapid adoption of fintech friendly regulation.

The company allows users to send and receive payments with just a phone number —no IBAN or swift code required as is the de facto method in the UAE and some parts of the Middle East. It also claims to be the country’s first licensed social peer-to-peer application “on a mission to simplify finance for everyone.”

After meeting during a hackathon in the U.S., Faisal and Gold began exchanging ideas on how to build wallets, wanting to mirror the successes platforms like WePay, Paytm have had. At the time, VCs seemed to be interested in how the wallets ecosystem intersected with banking.

“The lines between wallets and banking have become really blurred. Every wallet has a banking partner, and people who use wallets use them for their day-to-day needs,” CEO Faisal Toukan said to TechCrunch.

On the other hand, Sarah, who is Faisal’s sister, was on her personal fintech journey in London. There, she attended several meetups headlined by the founders of Monzo and Revolut. With her knowledge and the experience of the other two, the founders decided that solving P2P payments issues was their own way of driving massive impact in the Middle East.

So how far have they gone? “We launched a beta for the market but it’s restricted for regulatory reasons and basically to keep ourselves in check with the ecosystem,” Toukan remarked. “Since then, we’ve gotten regulated. We’ve got a banking partner, one of the three largest banks in the UAE, and we’ve set a new wallet a month from now. That’s also what we were working throughout our period in YC. So it’s been quite an eventful year.”

The fintech sector in MENA is growing fast; in terms of numbers, at a CAGR of 30%. Also, in the UAE, it is estimated that over 450 fintech companies will raise about $2 billion in 2022 compared to the $80 million raised in 2017. Fintechs in the region are focused on solving payments, transfers, and remittances. Alongside its P2P offering, these are the areas Ziina wants to play in, including investment and cryptocurrency services.

According to Toukan, there’s no ease of making online investments, and remittances are done in exchange houses, a manual process where people need to visit an office physically. “So what we’re looking to do is to bring all these products to life in the UAE and expand beyond that. But the first pain point we’re solving for is for people to send and receive money with two clicks,” the CEO affirmed.

Starting with P2P has its own advantages. First, peer-to-peer services is a repeat behavioural mechanism that allows companies to establish trust with customers. Also, it’s a cheaper customer acquisition model. Toukan says that as Zinna expands geographically — Saudi Arabia and Jordan in 2022; and Egypt and Tunisia some years from now — as he wants the company’s wallet to become seamless across borders. “We want a situation where if you move into Saudi or Dubai, you’re able to use the same wallet versus using different banking applications,” he added

To be on the right side of regulation is key to any fintech expansion, and Toukan says Ziina has been in continuous dialogue with regulators to operate efficiently. But some challenges have stemmed from finding the right banking partners. “You need to make a case to the banks that this is basically a mutually beneficial partnership. And the way we’ve done that is by basically highlighting different cases globally like CashApp that worked with Southern Bank,” he said.

Now that the company has moved past that challenge, it’s in full swing to launch. Presently, Ziina has thousands of users who transacted more than $120,000 on the platform this past month. In addition, there are over 20,000 users on its waiting list to be onboarded post-launch.

Ziina has already built a team with experience across tech companies like Apple, Uber, Stanford, Coinbase, Careem, Oracle, and Yandex. It plans to double down on hiring with this new investment and customer acquisition and establishing commercial partnerships.

#africa, #careem, #checkout, #dubai, #egypt, #finance, #funding, #guillaume-pousaz, #jabbar-internet-group, #middle-east, #mobile, #monzo, #payments, #paypal, #paytm, #saudi-arabia, #tc, #tunisia, #united-arab-emirates, #venmo, #yandex

Wayflyer raises $76M to provide ‘revenue-based’ financing to e-commerce merchants

Wayflyer, a revenue-based financing platform for e-commerce merchants, has raised $76 million in a Series A funding round led by Left Lane Capital.

“Partners” of DST Global, QED Investors, Speedinvest and Zinal Growth — the family office of Guillaume Pousaz (founder of Checkout.com) — also put money in the round. The raise comes just after Wayflyer raised $100 million in debt funding to support its cash advance product, and 14 months after the Dublin, Ireland-based startup launched its first product.

With an e-commerce boom fueled by the COVID-19 pandemic, Wayflyer is the latest in a group of startups focused on the space that has attracted investor interest as of late. The company aims to help e-commerce merchants “unlock growth” by giving them access to working capital (from $10,000 up to $20 million) so they can improve cash flow and drive sales. For example, more cash can help these merchants do things like buy more inventory in bulk so they can meet customer demand and save money. 

In a nutshell, Wayflyer uses analytics and sends merchants cash to make inventory purchases or investments in their business. Those merchants then repay Wayflyer using a percentage of their revenue until the money is paid back (plus a fee charged for the cash advance). So essentially, the merchants are using their revenue to get financing, hence the term revenue-based financing. The advantage, Wayflyer says, is that companies make repayments as a percentage of their sales. So if they have a slow month, they will pay back less. So, there’s more flexibility involved than with other mechanisms such as traditional bank loans.

Co-founder Aidan Corbett believes that in a crowded space, Wayflyer’s use of big data gives it an edge over competitors.

Corbett and former VC Jack Pierse spun Wayflyer out of a marketing analytics company that Corbett had also started, called Conjura, in September 2019.

“Jack came to me and said, ‘You should stop using our marketing analytics engine to do these big enterprise SaaS solutions, and instead use them to underwrite e-commerce businesses for short-term finance,’ ” Corbett recalls.

And so he did.

“We just had our heads down and started repurposing the platform for it to be an underwriting platform,” Corbett said. It launched in April 2020, doing about $600,000 in advances at the time. In March of 2021, Wayflyer did about $36 million in advances.

“So, it’s been a pretty aggressive kind of growth,” Corbett said.

Over the past six months alone, the company has seen its business grow 290% as it has deployed over $150 million of funding across 10 markets with a focus on the U.S., the United Kingdom and Australia. About 75% of its customers are U.S. based.

Wayflyer plans to use its new capital toward product development and global expansion with the goal of entering “multiple” new markets in the coming months. The company recently opened a sales office in Atlanta, and also has locations in the U.K., the Netherlands and Spain.

To Corbett, the company’s offering is more compelling than buy now, pay later solutions for consumers for example, in that it is funding the merchant directly and able to add services on top of that.

“There’s a lot more opportunity for companies like ourselves to differentiate because essentially, we focus on the merchants. And when we underwrite the merchant by getting data from the merchant, there’s a lot of additional services that you can put in on top,” Corbett explained. “Whereas with buy now, pay later, you get information on the consumer, and there’s not as much room to add additional services on top.”

For example, if a business requests an advance and either is not approved for one, or doesn’t choose to take it, Wayflyer’s analytics platform is free to anybody who signs up to help them optimize their marketing spend.

“This is a critical driver of value for e-commerce businesses. If you can’t acquire customers at a reasonable price, you’re not going to be around very long. And a lot of early-stage e-commerce businesses struggle with that,” Corbett said.

It also can pair up a merchant with a marketing analytics “specialist” to analyze its marketing performance or an inventory “specialist” to look at the current terms and price a business is getting from a supplier.

“Our focus from the very beginning is really supporting the merchants, not just providing them with working capital,” Corbett said.  

Another way the company claims to be different is in how it deploys funds. As mentioned above, merchants can pay the money back at varied terms, depending on how sales are going. The company makes money by charging a principal on advances, and then a “remittance rate” on revenues until the total amount is paid back.

“We tend to be more flexible than competition in this way,” Corbett said. “Also, some competitors will pay invoices on merchants’ behalf or give them a pre-charged card to use on advertising spend,” Corbett said. “We always give cash into a merchant’s account.” 

Wayflyer recently inked an agreement with Adobe Commerce, a partnership it said would provide a new channel to further amplify its growth with the goal of funding 8,000 e-commerce businesses in the first year of the partnership.

For his part, Left Lane Capital Partner Dan Ahrens said that his firm was impressed by Wayflyer’s “nuanced understanding of what will drive value for their clients.”

“The team’s focus, specialization, and deep analytical expertise within the e-commerce market also drives superior underwriting,” he told TechCrunch. “Their explosive growth has not come about by taking on undue risk. We are big believers that their underwriting will only improve with scale, and that Wayflyer will be able to compound its competitive advantages over time.”

As mentioned, this is an increasingly crowded space. Earlier this month, Settle announced it had raised $15 million in a Series A funding round led by Kleiner Perkins to give e-commerce and consumer packaged goods (CPG) companies access to non-dilutive capital.

#adobe, #atlanta, #australia, #bank, #checkout-com, #distribution, #dst-global, #dublin, #e-commerce, #ecommerce, #economy, #finance, #funding, #fundings-exits, #guillaume-pousaz, #ireland, #kleiner-perkins, #left-lane-capital, #merchant, #netherlands, #qed-investors, #recent-funding, #spain, #startup, #startups, #tc, #underwriting, #united-kingdom, #united-states, #wayflyer

Checkout.com raises $450 million and reaches $15 billion valuation

Payments company Checkout.com is raising once again. The company has closed a $450 million Series C round with Tiger Global Management leading the round — Greenoaks Capital and all existing investors are also participating.

If you’re not familiar with the company, Checkout.com wants to build a one-stop shop for all things related to payments, such as accepting transactions, processing them and detecting fraud. It focuses on large merchants and tries to make its product as customizable as possible so that you integrate it as an infrastructure partner in your product.

The company’s fundraising story in particular is jaw-dropping. The startup was founded in 2012 in London. At first, it grew slowly and methodically. Every time it would generate a bit of revenue, it would hire more people. “We can hire one employee this month. Now we can hire two employees this month,” founder and CEO Guillaume Pousaz said at TechCrunch Disrupt when thinking about the early days of the company.

But Checkout.com kept growing and growing until it raised one of the biggest Series A rounds ever for a European company — $230 million at a $2 billion valuation. Just a year later, Checkout.com added $150 million in funding at a $5.5 valuation.

Checkout.com is now valued at $15 billion based on today’s funding round. According to the startup, it is now the fourth largest fintech company globally.

Checkout.com had 440 employees in January 2020. It finished 2020 with 940 employees. And this year, the company plans to hire an additional 700 people.

While Checkout.com didn’t actually need to raise to stay alive, Pousaz says VC firms are a form of validation. Suddenly, you can talk with big prospects if you’re backed by Insight, DST, Coatue, Tiger Global Management, etc.

And yet, the company needs a lot of money on its bank account to expand to more countries. “Today, we process billions every week,” Pousaz told me in December. “And when you process over a billion euros per week, your cash flow on your bank account increases significantly. So you need to be well capitalized for regulators.”

Technically, there isn’t a single bank account that holds the company’s cash. Checkout.com is regulated in the U.K., but also in France, Brazil, Singapore, Hong Kong, etc. And the company is working on adding India, the Philippines. And it turns out you need cash on your balance sheet in the Philippines if you want to get a license from the local regulator — it doesn’t matter if you have a ton of money sitting in your bank account in London. That’s why raising capital can be helpful.

But why do investors want to hand over more and more money? “At any point you have a lot of visibility on what your next year is going to look like,” Pousaz told me. “It’s something that investors like because you can show them your pipeline and all your customers in your pipeline. If you forecast on the pipeline, it gives you a good idea of how much you’re going to generate in the coming year.

“For instance, I could tell you right now that we’ll grow by at least 80% in 2021,” he added. And that’s only based on clients who are currently in the process of integrating Checkout.com. The company already tripled its payment processing volume in 2020 compared to 2019.

In many ways, Checkout.com tries to forecast like a public company. It isn’t focused on runway as it is EBITDA profitable. Instead, it tries to reinvest a lot of its revenue in the company. “We don’t generate $50 million in EBITDA, far from it. But we generate double-digit million dollars,” Pousaz told me.

With today’s funding round, the company will open two new offices in the U.S. In addition to San Francisco, Checkout.com will have offices in New York and Denver.

#checkout, #checkout-com, #guillaume-pousaz, #tc

Fintech startups are increasingly focusing on profitability

Fintech startups have been massively successful over the past few years. The biggest consumer startups managed to attract millions — sometimes even tens of millions — of users and have raised some of the biggest funding rounds in late-stage venture capital. That’s why they’ve also reached incredible valuations.

After a few wild years of growth, fintech startups are starting to act more like traditional finance companies.

And yet, this year’s economic downturn has been a challenge for the current class of fintech startups: Some have grown nicely, while others have struggled, but the vast majority of them have changed their focus.

Instead of focusing on growth at all costs, fintech startups have been drawing a path to profitability. It doesn’t mean that they’ll have a positive bottom line at the end of 2020. But they’ve laid out the core products that will secure those startups over the long term.

Consumer fintech startups are focusing on product first, growth second

Usage of consumer products vary greatly with its users. And when you’re growing rapidly, supporting growth and opening new markets require a ton of effort. You have to onboard new employees constantly and your focus is split between product and corporate organization.

Lydia is the leading peer-to-peer payments app in France. It has four million users in Europe with most of them in its home country. For the past few years, the startup has been growing rapidly; engagement drives user signups, which drives engagement.

But what do you do when users stop using your product? “In April, the number of transactions was down 70%,” said Lydia co-founder and CEO Cyril Chiche in a phone interview.

“As for usage, it was obviously very quiet during some months and euphoric during other months,” he said. Overall, Lydia grew its user base by 50% in 2020 compared to 2019. When France wasn’t experiencing a lockdown or a curfew, the company beat its all-time high records across various metrics.

“In 2019, we grew all year long. In 2020, we’ve had very good growth numbers overall — but it should have been amazingly good during a normal year, without the month of March, April, May, November.” Chiche said.

In March and early April, Chiche didn’t know whether users would come back and send money using Lydia. Back in January, the company raised money from Tencent, the company behind WeChat Pay. “Tencent was ahead of us in China when it comes to lockdown,” Chiche said.

On April 30, during a board meeting, Tencent listed Lydia’s priorities for the rest of the year: Ship as many product updates as possible, keep an eye on their burn rate without firing people and prioritize product updates to reflect what people want.

“We’ve worked hard and shipped everything related to card payments, contactless mobile payments and virtual cards. It reflected the huge boost in contactless and e-commerce transactions,” Chiche said.

And it also repositioned the company’s trajectory to reach profitability more quickly. “The next step is bringing Lydia to profitability and it’s something that has always been important for us,” Chiche said.

Let’s list the most frequent revenue sources for consumer fintech startups such as challenger banks, peer-to-peer payment apps and stock-trading apps can be divided into three cohorts:

Debit cards

First, many companies hand customers a debit card when they create an account. Sometimes, it’s just a virtual card that they can use with Apple Pay or Google Pay. While there are some fees involved with card issuance, it also represents a revenue stream.

When people pay with their card, Visa or Mastercard takes a cut of each transaction. They return a portion to the financial company that issued the card. Those interchange fees are ridiculously small and often represent a few cents. But they can add up when you have millions of users actively using your cards to transfer money out of their accounts.

Paid financial products

Many fintech companies, such as Revolut and Ant Group’s Alipay, are developing superapps to serve as financial hubs that cover all your needs. Popular superapps include Grab, Gojek and WeChat.

In some cases, they have their own paid products. But in most cases, they partner with specialized fintech companies to provide additional services. Sometimes, they are perfectly integrated in the app. For instance, this year, PayPal has partnered with Paxos so that you can buy and sell cryptocurrencies from their apps. PayPal doesn’t run a cryptocurrency exchange, it takes a cut on fees.

#challenger-bank, #checkout-com, #cyril-chiche, #europe, #finance, #fintech, #guillaume-pousaz, #lydia, #neobank, #startups

What makes Checkout.com different from Stripe

While Checkout.com has kept a low profile for many years, the company raised $380 million within a year and reached an impressive valuation of $5.5 billion. It wants to build a one-stop shop for all things related to payments, such as accepting transactions, processing them and detecting fraud.

You might think that it sounds a bit like Stripe. In an interview at TechCrunch Disrupt, I asked founder and CEO Guillaume Pousaz what makes Checkout.com different from Stripe, Adyen and other companies in the payment space. It comes down to a very different philosophy when it comes to product and market approach.

“We only do enterprise. We really only work with the big merchants. There are a few exceptions here and there but it’s mostly enterprise-only and it’s purely online,” Pousaz said.

“I once met [Stripe CEO] Patrick Collison and I joked with him. I said you might have a million merchants, I have 1,200 merchants but I know every single one by name and they all process tens of millions every year. So I think it’s just a different business,” he added later in the interview.

Checkout.com now has a ton of money sitting in its bank account, but it has been a long and slow journey to reach that level. The company has been around for many years and reached profitability in 2012. It has been spending very meticulously over the years.

When talking about the early days of the company, Pousaz said the team grew really slowly. “We can hire one employee this month. Now we can hire two employees this month,” he said.

Today, the company still tries to remain as lean as possible. “It’s really a matter of discipline. All these companies, they raise a lot of money, they spend a lot of money and I don’t challenge that model. For us, embedding that discipline and frugality in the company in how we run it is something that was important to us,” Pousaz said.

“There’s no problem with spending. Just make sure that when you’re spending, you’re wise about it. You just don’t spray and pray. You see this unfortunately too much with tech companies.”

That’s why Checkout.com mostly invests in its own product. Nearly two-thirds of the company is working in product, IT and engineering. Only 13% of the company is working in sales, which is much less than some of its competitors.

But why did Checkout.com raise hundreds of millions of dollars then? “At some point, you need validation. And the validation was really important for us. When you have Insight, DST, Coatue, GIC, Blossom it changes your dimension,” Pousaz said.

When talking about regulators, Checkout.com has licenses in Brazil, the U.K. and France (for contingency), Hong Kong, Singapore, etc. It’s a never-ending process as the company is still working on licenses in other key markets, such as Japan.

“These regulators are super thorough. You don’t pass because you’re a nice guy, you pass because you have the right processes,” Pousaz said.

I challenged that notion and mentioned the Wirecard collapse. He obviously thinks that Wirecard and Checkout.com are in a different position right now.

“All my money is sitting with JP Morgan, it’s pretty simple. There’s no bank account in the Philippines and funny stuff,” Pousaz said. “The Wirecard story is so big that the real question is — go and ask the question to the auditors. Because the auditors that I have, which for the record is PwC, ask me to show them the bank statements and everything. And there are super thorough, it’s a super long process.”

“How did the Wirecard story happen? I don’t know,” he added.

#checkout-com, #disrupt, #disrupt-2020, #disrupt-sf, #disrupt-sf-2020, #europe, #guillaume-pousaz, #startups, #tc

Some of the brightest minds in Europe are joining us at Disrupt

TechCrunch Disrupt is right around the corner. And this year, we’re trying something different — we’re taking Disrupt virtual. That’s why we’re excited to announce that we used this opportunity to invite a slate of incredible European speakers to join TechCrunch on our virtual stage on September 14-18.

It represents a great opportunity to learn more about the European tech ecosystem. And if you’re already familiar with the area, it’s a good way to discover what everyone’s thinking on the current situation and where we’re heading.

Available at a time that works best for you, catch these sessions Sept 15-18th from 10:00 AM – 11:00 AM CET. Immediately after each interview, join the speakers for a live Q&A. So come with your questions!

Let me introduce briefly all the speakers we’ve lined up for the special European corner of Disrupt.

Sophia Bendz has been in the news lately. A few years ago, the former global director of marketing for Spotify decided to transition from seasoned operator to venture capitalist. She worked with VC firm Atomico for a while but announced this summer that she is joining Berlin’s Cherry Ventures to focus on seed investments. The move shouldn’t surprise anyone given that Bendz has also been a very active angel investor with 44 deals over the past 9 years.

Carolina Brochado has worked with some of the most successful VC firms and is also on the move. She was made a partner at Atomico in 2016 and took everyone by surprise when she left for SoftBank Vision Fund in 2018. The well-respected investor has now decided to join the growth fund team at EQT.

Suranga Chandratillake spent many years in Silicon Valley working on blinkx, an intelligent search engine for video and audio content that went public and achieved a peak market capitalization in excess of $1 billion. He moved back to the his home country to join Balderton as a General Partner in 2014.

Sophie Hill has been busy building Threads Styling. She’s redefining luxury fashion e-commerce with a radical model. The startup uses a strong editorial strategy to send you recommendations through your favorite chat app on your phone. You can talk with human shopping assistants on WeChat, WhatsApp, Snapchat, Instagram and iMessage. And this no-store e-commerce play has been working really well.

Hussein Kanji is a founding partner of London-based VC firm Hoxton Ventures. In just a few years, Hoxton Ventures became a well-known name with deals in Darktrace, Babylon Health and Deliveroo. Prior to Hoxton Ventures, Kanji worked for Accel, Microsoft and several Silicon Valley-based companies.

Tunde Kehinde is the co-founder of Lidya, a startup that uses AI to lend capital to small companies in fast-growing economies. The startup currently operates in Lagos, Warsaw and Prague. He was also the co-founder of Jumia Nigeria, a company that is now publicly listed in the New York Stock Exchange.

Mette Lykke co-founded one of the biggest fitness and training app out there, Endomondo. She led her company all the way to an acquisition by Under Armour. For the past three years, she’s been the CEO of Too Good To Go, an app with a mission of reducing food waste worldwide. Restaurants and supermarkets can sell the surplus food that would otherwise go to waste through the service. And the startup managed to attract more than 23 million users.

Ilkka Paananen is the co-founder and CEO of Supercell, the Helsinki-based mobile gaming studios that have released super hits, such as Clash of Clans, Hay Day, Boom Beach, Clash Royale and Brawl Stars. The company managed to reach 100 million daily players across its games. When Tencent bought a majority stake in the company, it valued Supercell at around $10.2 billion.

Guillaume Pousaz is the founder and CEO of Checkout.com. While Checkout.com has kept a low profile for many years, the company raised $380 million within a year and reached an impressive valuation of $5.5 billion. It wants to build a one-stop shop for all things related to payments, such as accepting transactions, processing them and detecting fraud.

If you want to hear from one, two or maybe all of the speakers above, join us for Disrupt 2020. The conference is scheduled to run from September 14 through September 19. Buy the Disrupt Digital Pro Pass or a Digital Startup Alley Exhibitor Package today and get access to all the interviews on our main stage, workshops over on the Extra Crunch Stage where you can get actionable tips as well as CrunchMatch, our free, AI-powered networking platform. As soon as you register for Disrupt, you will have access to CrunchMatch and can start connecting with people now. Use the tool to schedule one-on-one video calls with potential customers and investors or to recruit and interview prospective employees.

#carolina-brochado, #guillaume-pousaz, #hussein-kanji, #ilkka-paananen, #mette-lykke, #sophia-bendz, #sophie-hill, #suranga-chandratillake, #tc, #tunde-kehinde