Jimmy Soni’s book tells the story of how an ensemble of entrepreneurs, including Elon Musk and Peter Thiel, helped the online payment system prevail.
Im #DealMonitor für den 8. Februar werfen wir einen Blick auf die wichtigsten, spannendsten und interessantesten Investments und Exits des Tages in der DACH-Region. Alle Deals der Vortage gibt es im großen und übersichtlichen #DealMonitor-Archiv.
+++ Die amerikanische Private-Equity-Gesellschaft Carlyle und der Bezahlgigant PayPal investieren 100 Millionen US-Dollar in Shopware. Das Software-Unternehmen aus dem westfälischen Schöppingen, das von den Brüder Sebastian und Stefan Hamann gegründet wurde, bietet ein modulares Online-Shopsystem an. Das frische Kapital soll in “die internationale Expansion von Shopware und die Entwicklung neuer Produkte” fließen. “Die Gründer werden nach der Transaktion weiter eine deutliche Mehrheit an dem Unternehmen halten und bleiben Co-CEOs”, teilt das Unternehmen weiter mit. Shopware beschäftigt derzeit 350 Mitarbeiter:innen.
+++ DN Capital, Headline, Cherry Ventures, Soravia, Kreos Capital, TruVenturo und Scope Hanson investieren 45 Millionen US-Dollar in Numa, früher als Cosi bekannt. Das Berliner Startup, das 2019 von Kaufda-Macher Christian Gaiser, Dimitri Chandogin, Gerhard Maringer und Inga Svinhufvud Laudiero gegründet wurde, vermietet Zimmer und Apartments an Kurzzeitreisende. Das Berliner Startup funktioniert dabei wie eine klassische Hotelkette – allerdings ohne Frühstück und ohne Rezeption. Der österreichische Projektentwickler Soravia, Cherry Ventures, Headline und mehrere Business Angels investierten zuvor bereits rund 25 Millionen Euro in das Unternehmen.
+++ Eneco, Sparta Capital und die Altinvestoren investieren 10 Millionen Euro in Sunvigo. Die Deutsche Kreditbank AG (DKB) stellt dem Unternehmen zudem 5 Millionen Euro Fremdkapital zur Verfügung. Das Startup aus Köln, das 2020 von Michael Peters, Bastian Bauwens und Vigen Nikogosian gegründet wurde, setzt seinen Kunden eine kostenlose Solaranlage aufs Dach. Im Gegenzug bietet Sunvigo seinen Kunden einen Stromvertrag an. Der High-Tech Gründerfonds (HTGF), Übermorgen Ventures und Co. investierten zuvor bereits 3 Millionen Euro in Sunvigo. Mehr über Sunvigo
+++ Metaplanet aus Estland, Ahren Innovation Capital aus London und Vsquared Ventures sowie Altinvestoren wie Project A Ventures investieren in Micropsi Industries. Das Berliner Startup, das 2014 von Ronnie Vuine, Priska Herger und Dominik Welland gegründet wurde, entwickelt eine auf KI-basierende Software für den Einsatz an Industrierobotern. “Wir machen Produktionsstätten produktiver, Arbeitsplätze ergonomischer und Lieferketten resilienter”, teilt das Unternehmen in eigener Sache mit. Bis Ende 2020 flossen schon rund 12 Millionen Euro in Micropsi Industries. Metaplanet hält nun 13,6 % am Unternehmen. #EXKLUSIV Mehr im Insider-Podcast
+++ Der Berliner Food-Investor FoodLabs, früher als Atlantic Food Labs bekannt, investiert nach unseren Informationen gemeinsam mit diversen Berliner Angel-Investoren – darunter Felix Jahn, Robert Maier und Philipp Kreibohm – in ChefCoco. Das Berliner Startup, das 2021 von Shaminder Dhillon und Hemant Kumar gegründet wurde, setzt auf Mahlzeiten, die ein persönlicher Koch zubereitet.”Simply enter your health and taste preferences and get personalised meals delivered daily”, schreibt das Unternehmen. FoodLabs hält nun 20 % am Unternehmen. #EXKLUSIV Mehr im Insider-Podcast
+++ 468 Capital, LEA Partners und APX investieren nach unseren Informationen in askui. Das Startup aus Karlsruhe, das 2021 von Jonas Menesklou und Dominik Klotz gegründet wurde, kümmert sich um die Automatisierung von UI-Tests. Auf der Website heißt es: “Bring vision to your code and automate any technology and any use case by automating operating systems instead of applications”. 468 Capital und LEA Partners halten nun jeweils 12,2 % am Unternehmen. #EXKLUSIV Mehr im Insider-Podcast
+++ Der Versicherer Signal Iduna investiert in Penta. “Über die Höhe der Beteiligung haben die Partner Stillschweigen vereinbart” – berichtet das Handelsblatt. Über das Startup, das 2014 von Luka Ivicevic und Lav Odorovic gegründet wurde, können Unternehmen ein Geschäftskonto beantragen. ABN AMRO Ventures, finleap, HV Capital, RTP Global, Presight Capital, S7V und VR Ventures investierten bereits rund 60 Millionen Euro in Penta.
MERGERS & ACQUISITIONS
+++ Jetzt offiziell: Das amerikanische Unternehmen TripActions übernimmt – wie bereits im Insider-Podcast berichtet – Comtravo, eine Buchungsplattform für Geschäftsreisen. “Durch die Übernahme von Comtravo gewinnt die TripActions Gruppe an lokalem Fachwissen sowie an Technologie wie z.B. einer nahtlosen Bahn-Integration oder Angeboten von Billigfluggesellschaften”, teilt das Unternehmen, “All-in-One-Lösung für Reise-, Firmenkarten- und Spesenmanagement” mit. Das Berliner Startup Comtravo, das 2015 von Michael Riegel, Jannik Wässa und Marko Schilde gegründet wurde, sammelte in den vergangenen Jahren von Investoren wie M12, Endeit Capital, Creandum, Project A und btov Partners mehr als 35 Millionen Euro ein. Nach unseren Informationen zahlt TripActions 60 Millionen Euro für Comtravo.
+++ Der schweizerische Bekleidungskonzern Calida übernimmt das Wäsche-Startup Erlich Textil. Das D2C-Unternehmen aus Köln, das 2016 von Sarah Grohé und Benjamin Sadler gegründet wurde, erwirtschaftete 2021 einen Umsatz von 7 Millionen Euro. “Der reine Online-Händler (D2C) zeichnete sich in den vergangenen Jahren durch ein kontinuierliches Wachstum und eine skalierbare digitale Infrastruktur aus. Mit seinen Wäscheprodukten schafft erlich textil nachhaltige Alternativen auf dem Unterwäschemarkt, teilt das Unternehmen mit.
Tech Venture Growth Fonds
+++ Der Hamburger Finanzdienstleister Brightpoint Capital, hinter dem Maren Eckloff-Böhme und Mario Oelkers (beide früher Headline) stecken, legen mit dem Tech Venture Growth Fonds (TVGF), einen sogenannten Fund of Funds (FoF), also einen Fonds, der in andere Fonds investiert auf. “Der ‘Tech Venture Growth Fund’ dürfte mindestens eine halbe Milliarde Euro einsammeln. Informierte Kreise gehen sogar von bis zu einer Milliarde aus”, schreibt das Handelsblatt zum neuen Investor. Der Dachfonds TVGF könnte somit bald zum wichtigen Geldgeber von Venture-Capital-Firmen wie Headline Lakestar, HV Capital, Project A und Earlybird werden. Fond of Fonds-Kapitalgeber erlebten zuletzt einen kleinen Boom: AlphaQ Venture Capital und Equaition gingen kürzlich an den Start. Multiple Capital, der 2018 von Ertan Can gegründet wurde, legte zudem zuletzt seinen zweiten Fonds, in dem 20 Millionen Euro sind, auf.
Startup-Jobs: Auf der Suche nach einer neuen Herausforderung? In der unserer Jobbörse findet Ihr Stellenanzeigen von Startups und Unternehmen.
Foto (oben): azrael74
PayPal is facing a class-action lawsuit alleging that the digital payments company violated racketeering laws by freezing customer funds without offering an explanation.
When users contacted PayPal about the frozen funds, they were told they had violated the company’s “acceptable use policy” but weren’t told how that violation had occurred, the lawsuit says. What’s more, it alleges that in at least one instance, PayPal said that a user would “have to get a subpoena” to find out why.
“PayPal violates its own Agreement by failing to provide adequate notice to users whose accounts have had holds placed on them,” the lawsuit says. When PayPal does let users know it placed a hold on their funds, “it does not inform such users why such funds are being held, how they can obtain a release of the hold, and/or how they can avoid future holds being placed on their accounts.”
The payments firm squelched talk that it was seeking the social media platform “at this time.” A deal might have been worth about $45 billion.
If completed, it would be the largest consumer internet deal of the past decade.
It’s the first day of Disrupt, so things are a bit busy here at TechCrunch. In honor of that fact, entries from The Exchange concerning NFT volume viz recent marketplace valuations and how an accelerating pace of change helps startups by exposing more market voids will have to wait.
But we do have time this morning for a little incredulity, so let’s indulge.
The Exchange explores startups, markets and money.
There’s some merit to the idea; after all, Klarna has shown a strong ability to raise huge sums of capital while private.
Why not just keep at it? In short, because the company has to either go public or sell itself to a larger company at some point. Given that we’ve already seen PayPal and Square cut checks to buy BNPL volume, the list of potential acquirers for Klarna is not as long as you might think. The company, flush with billions in private-market funding, will need to go public. It’s a simple question of when.
Which makes the following all the more surprising. Via CNBC:
“The volatility in the market right now makes me nervous to IPO to be honest,” Siemiatkowski told CNBC’s Karen Tso at the London Tech Week conference on Monday. “I think it would be nice to IPO when it’s a little bit more sound. And right now it doesn’t feel really sound out there.”
Huh. Color us confused.
The public market for BNPL companies actually feels pretty damn strong at the moment.
Affirm, for example, is a BNPL company publicly listed in the United States. In Q2 2021 (Q4 fiscal 2021 for the company), Affirm reported gross merchandise volume of $2.5 billion, and revenues of $261.8 million. Those figures were up 106% and 71%, respectively. Affirm also posted a net loss of $128.2 million in the quarter, and $430.9 million in red ink during its most recent fiscal year (the 12 months ending June 30, 2021).
PayPal has been talking about its “super app” plans for some time, having recently told investors its upcoming digital wallet and payments app had been given a go for launch. Today, the first version of that app is officially being introduced, offering a combination of financial tools including direct deposit, bill pay, a digital wallet, peer-to-peer payments, shopping tools, crypto capabilities and more. The company is also announcing its partnership with Synchrony Bank for its new high-yield savings account, PayPal Savings.
These changes shift PayPal from being largely a payments utility that’s tacked on other offerings here and there, to being a more fully fleshed out finance app. Though PayPal itself doesn’t aim to be a “bank,” the new app offers a range of competitive features for those considering shifting their finances to neobanks, like Chime or Varo, as it will now also include support for paycheck Direct Deposits through PayPal’s bank partners, bill pay and more.
By enabling direct deposit, PayPal users can get paid up to two days earlier, which is one of the bigger draws among those considering digital banking apps over traditional banks.
In addition to shifting their paychecks to Payal, customers’ PayPal funds can then be used for things that are a part of daily life, like paying their bills, saving or shopping, for example.
The enhanced bill pay feature lets customers track, view and pay bills from thousands of companies, including utilities, TV and internet, insurance, credit cards, phone and more, PayPal says. When bill pay first arrived earlier this year, it offered access to (single-digit) thousands of billers. Now, it will support around 17,000 billers. Customers can also discover billers through an improved, intelligent search feature, set reminders to be notified of upcoming bills and schedule automatic payments for bills they have to pay on a regular basis. The bills don’t have to only be paid from funds currently in the PayPal account, but can be paid through any eligible funding source that’s already linked to their PayPal account.
Via a Synchrony Bank partnership, PayPal Savings will offer a high-yield savings account with a 0.40% Annual Percentage Yield (APY), which is more than six times the national average of 0.06%, the company says. However, that’s lower than top rivals in the digital banking market offer, like Chime (0.50%), Varo (starts at 0.20%, but users can qualify to get 3.00% APY), Marcus (0.50%), Ally (0.50%), ONE (1.00% or 3.00% on Auto-Save transactions), and others. However, the rate may appeal to those who are switching from a traditional bank, where rates tend to be lower.
PayPal believes its high-yield offering will be able to compete not based on the APY alone, but on the strength of its combined offerings.
“We know that about half of customers in the United States don’t even have a savings account, much less one with a very competitive rate,” notes PayPal SVP of Consumer, Julian King. “So all in all, we think that by bringing together the full set of solutions on the platform, it’s a really competitive offering for an individual.”
The app has also been reorganized to accommodate the new features and those yet to come.
It now features a personalized dashboard offering an overview of the customer’s account. The wallet tab lets users manage Direct Deposits and connect funding sources like bank accounts and debit and credit cards alongside the ability to enroll in PayPal’s own debit, credit and cash cards. And a finance tab provides access to the high-yield savings and the previously available crypto capabilities, which allows users to buy, hold and sell Bitcoin, Ethereum, Bitcoin Cash and Litecoin.
The payments tab, meanwhile, will hold much of PayPal’s traditional feature set, including peer-to-peer payments, international remittances, charitable and nonprofit giving, plus now bill pay and a two-way messaging feature that allows users to request payments or say thank you after receiving a payment — whether that’s between friends and family or between merchants and customers. This addition could bring PayPal more in line with PayPal-owned Venmo, which already offers the ability to add notes to payments and make comments.
Messaging also ties into PayPal’s new Shopping hub, which is where the company is finally putting to good use its 2019 $4 billion Honey acquisition. Honey’s core features are now becoming a part of the PayPal mobile experience, including personalized deals and exclusive rewards.
PayPal users will be able to browse the discounts and offers inside the app, then shop and transact through the in-app browser. The deals can be saved to the wallet for future use, so they can be applied if shopping later in the app or online. Customers will also be able to join a loyalty program, where they can earn cashback and PayPal shopping credit on their purchases. The company says these personalized deals will improve over time.
“We’ll use AI and [machine learning] capabilities to understand what kind of shopping deals are most interesting to customers and continue to develop that over time. They’ll just get smarter and smarter as the product gets more usage,” notes King. This will include using the data about the deals a customer likes, then bringing similar deals to them in the future.
Also new in the updated mobile app is the addition of PayPal’s crowdsourced fundraising platform, the Generosity Network, first launched late last year. The network is PayPal’s answer to GoFundMe or Facebook Fundraisers, by offering tools that allow individuals to raise money for themselves, others in need, or organizations like small businesses or charities. The network is also now expanding to international markets with Germany and the U.K. to start, with more countries to come.
As PayPal has said, the new app is laying the groundwork for other new products in the quarters to come. The biggest initiative on its roadmap is a plan to enter the investment space, to rival other mobile investing apps, like Robinhood. When this arrives, it will support the ability to buy stocks, fractional stocks and ETFs, PayPal says.
It will also later add support for paying with QR codes, like Venmo, and tools for using PayPal to save while in stores.
The updated app is rolling out starting today in the U.S. as a staggered release that will complete in the weeks ahead. However, PayPal Savings won’t be available immediately — it will arrive in the U.S. in the “coming months,” as will some of the shopping and rewards tools.
Psychedelics companies are all the rage right now. Compass Pathways is working with the magic mushroom compound psilocybin to treat depression. It’s has raised $290 million in total. Atai Life Sciences — backed by PayPal co-founder Peter Thiel — brought in $258 million from its IPO. In the tech space, this has not gone unnoticed and the same business models that have been used in other platforms for health and wellness startups are coming to psychedelics.
The latest is Journey Clinical, based out of NYC, which has raised a $3 million seed round led by San Francisco VC firm Fifty Years. Also participating were Neo Kuma Ventures, Palo Santo, PsyMed Ventures, Lionheart Ventures, Christina Sass co-founder of Andela, Edvard Engesæth, MD co-founder of Nurx and, Hans Gangeskar co-founder of Nurx.
Journey joins other startups in the space looking at psychedelic-assisted psychotherapy, where ketamine is used to treat depression, anxiety, PTSD, and trauma, known as ketamine-assisted psychotherapy (KAP). Miami-based startup NUE Life Health raised a $3.3 million seed round for the same purpose back in June. There is also Field Trip and Mindbloom playing in this space.
These startups are pushing at an open door on depression and anxiety. Pre-COVID-19, the National Center for Health Statistics estimated some 50 million Americans were fighting the afflictions. The pandemic has of course exacerbated this issue, with those figures doubling, by some estimates.
It’s still an early market. Journey says the market landscape for legal psychedelic therapies is very disparate, with over a million licensed mental health professionals lacking the infrastructure to offer these treatments as they lack access to prescribing clinicians. On the flip side, patients struggle to find psychotherapists who can prescribe psychedelics as treatment.
Journey says it has a “decentralized clinic model” that allows psychotherapists to offer legal psychedelic therapy treatments in their practice, starting with ketamine. The way it works is that Journey takes care of the pharmacology side, while psychotherapists that sign up to the platform take care of the psychotherapy of the patient. The treatment plans are then customized to meet the patient’s needs.
Jonathan Sabbagh, co-founder and CEO, was previously diagnosed with PTSD, but after discovering psychedelics, he went back to school to study clinical psychology, and went on to co-found Journey. He said: “We are on the verge of a paradigm shift in the field of mental health. Psychedelic-assisted psychotherapies are one of the most promising new means of treatment available; they will allow clinicians to tackle the growing global mental health crisis we are facing.”
Speaking to TechCrunch he added: “When we asked what was the main bottleneck for therapists to offer KAP to their patients, the #1 response was access to a prescribing doctor. Our alpha test group confirmed that guaranteeing access to a trained medical team and building a robust care management system would solve an essential bottleneck of mainstream adoption for KAP.”
Journey has two revenue streams. Psychotherapists pay them a $200 monthly membership fee which gives them access to a number of services including and access to the prescriber, an EHR (achieved through a white label), a KAP training (training materials created by a specialized training company), a profile on Journey’s directory, and a community of peers. Patients pay journey for medical services. They pay $250 for the intake consultation and $150 for follow-up consultations.
Ela Madej, Founding Partner at Fifty Years, said: “I dream of a world where those of us affected by trauma, anxiety, or depression don’t have to fall into learned helplessness. We’re lucky that powerful psychedelic treatments for the mind exist, but they need to be delivered responsibly, with proper screening, protocols, and follow-up. We’ve been incredibly impressed by Journey Clinical’s ambitious plan to empower psychotherapists to better treat their existing patients.”
The team also comprises Kyle Lapidus MD, Ph.D., who has over 20 years as a board-certified psychiatrist and has extensive experience working with ketamine; and Brigitte Gordon DNP a professor at Columbia University and also works for the Multidisciplinary Association for Psychedelic Studies (MAPS.)
The confluence of tech and finance has produced a nascent soft social credit system. Digital currency may be the only way out.
Are founders in fundraising mode short-sighted when it comes to working with Chinese venture funds?
Runa Capital’s Asia business development manager Denis Kalinin studied data from iTjuzi, a database of Chinese venture capitalists, and found:
“…Chinese funds invested around $250 billion in 2020 (three times higher than the figure reported in Crunchbase). This figure puts Chinese VC investments only 30% lower than investments by U.S. funds, but three times that of U.K. funds and 12.5 times more than German funds.”
The pandemic, geopolitical tensions and other factors led many Chinese venture funds to pare back their international investments, but that’s largely “because during COVID, China’s economy recovered much faster than other countries’,” writes Kalinin.
His analysis covers multiple angles: Chinese investments in Europe are catching up with those in Asia and the United States, half of China’s top cross-border investors are CVCs, and investors are particularly interested in fintech, deep tech and digital health at the moment.
“Chinese investors can bring value to foreign startups, but you need to study their expertise and how it can be useful for you.”
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Today at 2 p.m. PT/5 p.m. ET on Twitter Spaces, Managing Editor Danny Crichton and immigration law attorney Sophie Alcorn will discuss whether remote work is making H-1B visas less critical for international founders.
It’s a provocative question: If remote teams are becoming the norm, tech hubs are decentralizing and investors are comfortable cutting checks after a Zoom call, how important is it to do business as a startup inside the U.S?
It’s sure to be an interesting conversation; to get a reminder, please follow @TechCrunch on Twitter.
Thanks very much for reading Extra Crunch this week!
Senior Editor, TechCrunch
Toast looks toward $18B valuation in upcoming IPO
Toast released an early IPO price range of $30 to $33 per share on Monday, and Alex Wilhelm digs into the S-1/A filing to “better understand how to value vertical SaaS startups that are pursuing a payments-and-SaaS business approach.”
Is the restaurant software startup worth the $18 billion valuation it’s aiming for?
3 keys to pricing early-stage SaaS products
Every founder who launches an enterprise software startup has to figure out the “right” pricing model for their products.
It’s a consequential decision: Per-seat licenses are easy to manage, but what if customers prefer a concurrent licensing model?
“Early pricing discussions should center around the buyer’s perspective and the value the product creates for them,” says Ridge Ventures partner Yousuf Khan, who previously worked as a CIO.
“Of course,” he notes, “self-evaluation is hard, especially when you’re asking someone else to pay you for something you’ve created.”
Is India’s BNPL 2.0 set to disrupt B2B?
India’s mom-and-pop businesses are experiencing a digital transformation that’s creating new e-commerce opportunities; smartphones have replaced paper records, and a new government-backed instant payments system is disrupting how value is exchanged.
But instead of importing legacy credit systems, buy now, pay later systems are the “next step for solving the digital B2B puzzle,” writes Anubhav Jain, co-founder and CEO of Rupifi.
What to make of Freshworks’ first IPO price range
Freshworks, which develops and offers a variety of business software tools, set an IPO price range of $28 to $32 per share on Monday, meaning its valuation could reach nearly $10 billion, Alex Wilhelm writes.
“It appears that the Freshworks IPO is pretty reasonably priced as is, though a boost to its price range is not out of the question if public market investors decide that they are bullish on its future growth prospects. We just don’t see dramatic upside.”
ish on its future growth prospects. We just don’t see dramatic upside.”
Here’s what your BNPL startup could be worth
The multibillion-dollar exits of Japanese startup Paidy (to PayPal) and Australian buy now, pay later company Afterpay (to Square) “provided hard market proof that what BNPL startups are building has value beyond simple operating results,” Alex Wilhelm writes in The Exchange.
He breaks down the value of Afterpay, Paidy and Klarna using a simple metric: What would you pay for $1 of BNPL GMV?
3 methodologies for automated video game highlight detection and capture
Video game livestreaming is booming.
Twitch has an average of almost 3 million concurrent viewers; by comparison, on the night of the 2020 U.S. presidential election, CNN’s livestream averaged 1.1 million.
The most successful streamers use their ad revenue and sponsorship money to hire video editors and social media teams to make them look good, but new automated tools are giving part-time streamers the ability to spotlight their best moments as well.
Have ‘The Privacy Talk’ with your business partners
A data breach costs a company an average of $3.8 million, Marc Ellenbogen, Foursquare’s general counsel, notes in a guest post, adding up to a “concrete financial incentive to having The Privacy Talk.”
What is it?
If you think the talk doesn’t apply to you, think again.
Advanced rider assistance systems: Tech spawned by the politics of micromobility
In an effort to “reassure local administrations that micromobility is safe, compliant and a good thing for cities,” scooter operators are “implementing technology similar to advanced driver assistance systems (ADAS) usually found in cars,” Rebecca Bellan writes.
She breaks down how the tech could help prevent unwanted behavior and explores the cost for scooter operators and opportunities for startups.
It’s a two-Exchange Tuesday, everyone. First up, we’re talking fintech valuations. Next up, we’re digging into Atlanta.
Last week’s news that PayPal intends to buy Japanese startup Paidy marked the second major acquisition of a buy now, pay later (BNPL) company this year. PayPal’s news followed an even larger deal by Square for the Australian BNPL company Afterpay.
The multibillion-dollar exits provided hard market proof that what BNPL startups are building has value beyond simple operating results; major fintech platforms are willing to shell out large sums for their revenues and possible strategic value.
The Exchange explores startups, markets and money.
Because both deals happened in 2021, they provide two data points for the value of BNPL companies operating at scale. And because both Square and PayPal provided some information to their investors concerning their transactions, we have a little bit of comparative work to do.
Let’s do a little math and figure out how much PayPal and Square investors are paying for transaction volume across both platforms. Then, we’ll peek at what Affirm is worth along similar lines. We’ll wrap with a look at Klarna’s numbers to see if there’s anything we can dig up there.
What would you pay for $1 of BNPL GMV?
Square’s Afterpay deal is worth some $29 billion, a huge sum. It isn’t hard to see why the U.S. consumer- and business-focused fintech is willing to write so large a check — Afterpay does volume.
Security operations teams face a daunting task these days, fending off malicious hackers and their increasingly sophisticated approaches to cracking into networks. That also represents a gap in the market: building tools to help those security teams do their jobs. Today, an Israeli startup called Rezilion that is doing just that — building automation tools for DevSecOps, the area of IT that addresses the needs of security teams and the technical work that they need to do in their jobs — is announcing $30 million in funding.
Guggenheim Investments is leading the round with JVP and Kindred Capital also contributing. Rezilion said that unnamed executives from Google, Microsoft, CrowdStrike, IBM, Cisco, PayPal, JP Morgan Chase, Nasdaq, eBay, Symantec, RedHat, RSA and Tenable are also in the round. Previously, the company had raised $8 million.
Rezilion’s funding is coming on the back of strong initial growth for the startup in its first two years of operations.
Its customer base is made up of some of the world’s biggest companies, including two of the “Fortune 10” (the top 10 of the Fortune 500). CEO Liran Tancman, who co-founded Rezilion with CTO Shlomi Boutnaru, said that one of those two is one of the world’s biggest software companies, and the other is a major connected device vendor, but he declined to say which. (For the record, the top 10 includes Amazon, Apple, Alphabet/Google, Walmart and CVS.)
Tancman and Boutnaru had previously co-founded another security startup, CyActive, which was acquired by PayPal in 2015; the pair worked there together until leaving to start Rezilion.
There are a lot of tools out in the market now to help automate different aspects of developer and security operations. Rezilion focuses on a specific part of DevSecOps: large businesses have over the years put in place a lot of processes that they need to follow to try to triage and make the most thorough efforts possible to detect security threats. Today, that might involve inspecting every single suspicious piece of activity to determine what the implications might be.
The problem is that with the volume of information coming in, taking the time to inspect and understand each piece of suspicious activity can put enormous strain on an organization: it’s time-consuming, and as it turns out, not the best use of that time because of the signal to noise ratio involved. Typically, each vulnerability can take 6-9 hours to properly investigate, Tancman said. “But usually about 70-80% of them are not exploitable,” meaning they may be bad for some, but not for this particular organization and the code it’s using today. That represents a very inefficient use of the security team’s time and energy.
“Eight of out ten patches tend to be a waste of time,” Tancman said of the approach that is typically made today. He believes that as its AI continues to grow and its knowledge and solution becomes more sophisticated, “it might soon be 9 out of 10.”
Rezilion has built a taxonomy and an AI-based system that essentially does that inspection work as a human would do: it spots any new, or suspicious, code, figures out what it is trying to do, and runs it against a company’s existing code and systems to see how and if it might actually be a threat to it or create further problems down the line. If it’s all good, it essentially whitelists the code. If not, it flags it to the team.
The stickiness of the product has come out of how Tancman and Boutnaru understand large enterprises, especially those heavy with technology stacks, operate these days in what has become a very challenging environment for cybersecurity teams.
“They are using us to accelerate their delivery processes while staying safe,” Tancman said. “They have strict compliance departments and have to adhere to certain standards,” in terms of the protocols they take around security work, he added. “They want to leverage DevOps to release that.”
He said Rezilion has generally won over customers in large part for simply understanding that culture and process and helping them work better within that: “Companies become users of our product because we showed them that, at a fraction of the effort, they can be more secure.” This has special resonance in the world of tech, although financial services, and other verticals that essentially leverage technology as a significant foundation for how they operate, are also among the startup’s user base.
Down the line, Rezilion plans to add remediation and mitigation into the mix to further extend what it can do with its automation tools, which is part of where the funding will be going, too, Boutnaru said. But he doesn’t believe it will ever replace the human in the equation altogether.
“It will just focus them on the places where you need more human thinking,” he said. “We’re just removing the need for tedious work.”
In that grand tradition of enterprise automation, then, it will be interesting to watch which other automation-centric platforms might make a move into security alongside the other automation they are building. For now, Rezilion is forging out an interesting enough area for itself to get investors interested.
“Rezilion’s product suite is a game changer for security teams,” said Rusty Parks, senior MD of Guggenheim Investments, in a statement. “It creates a win-win, allowing companies to speed innovative products and features to market while enhancing their security posture. We believe Rezilion has created a truly compelling value proposition for security teams, one that greatly increases return on time while thoroughly protecting one’s core infrastructure.”
A Canadian startup called Nuula that is aiming to build a superapp to provide a range of financial services to small and medium businesses has closed $120 million of funding, money that it will use to fuel the launch of its app and first product, a line of credit for its users.
The money is coming in the form of $20 million in equity from Edison Partners, and a $100 million credit facility from funds managed by the Credit Group of Ares Management Corporation.
The Nuula app has been in a limited beta since June of this year. The plan is to open it up to general availability soon, while also gradually bringing in more services, some built directly by Nuula itself and but many others following an embedded finance strategy: business banking, for example, will be a service provided by a third party and integrated closely into the Nuula app to be launched early in 2022; and alongside that, the startup will also be making liberal use of APIs to bring in other white-label services such as B2B and customer-focused payment services, starting first in the U.S. and then expanding to Canada and the U.K. before further countries across Europe.
Current products include cash flow forecasting, personal and business credit score monitoring, and customer sentiment tracking; and monitoring of other critical metrics including financial, payments and eCommerce data are all on the roadmap.
“We’re building tools to work in a complementary fashion in the app,” CEO Mark Ruddock said in an interview. “Today, businesses can project if they are likely to run out of money, and monitor their credit scores. We keep an eye on customers and what they are saying in real time. We think it’s necessary to surface for SMBs the metrics that they might have needed to get from multiple apps, all in one place.”
Nuula was originally a side-project at BFS, a company that focused on small business lending, where the company started to look at the idea of how to better leverage data to build out a wider set of services addressing the same segment of the market. BFS grew to be a substantial business in its own right (and it had raised its own money to that end, to the tune of $184 million from Edison and Honeywell). Over time, it became apparent to management that the data aspect, and this concept of a super app, would be key to how to grow the business, and so it pivoted and rebranded earlier this year, launching the beta of the app after that.
Nuula’s ambitions fall within a bigger trend in the market. Small and medium enterprises have shaped up to be a huge business opportunity in the world of fintech in the last several years. Long ignored in favor of building solutions either for the giant consumer market, or the lucrative large enterprise sector, SMBs have proven that they want and are willing to invest in better and newer technology to run their businesses, and that’s leading to a rush of startups and bigger tech companies bringing services to the market to cater to that.
Super apps are also a big area of interest in the world of fintech, although up to now a lot of what we’ve heard about in that area has been aimed at consumers — just the kind of innovation rut that Nuula is trying to get moving.
“Despite the growth in services addressing the SMB sector, overall it still lacks innovation compared to consumer or enterprise services,” Ruddock said. “We thought there was some opportunity to bring new thinking to the space. We see this as the app that SMBs will want to use everyday, because we’ll provide useful tools, insights and capital to power their businesses.”
Nuula’s priority to build the data services that connect all of this together is very much in keeping with how a lot of neobanks are also developing services and investing in what they see as their unique selling point. The theory goes like this: banking services are, at the end of the day, the same everywhere you go, and therefore commoditized, and so the more unique value-added for companies will come from innovating with more interesting algorithms and other data-based insights and analytics to give more power to their users to make the best use of what they have at their disposal.
It will not be alone in addressing that market. Others building fintech for SMBs include Selina, ANNA, Amex’s Kabbage (an early mover in using big data to help loan money to SMBs and build other financial services for them), Novo, Atom Bank, Xepelin, and Liberis, biggies like Stripe, Square and PayPal, and many others.
The credit product that Nuula has built so far is a taster of how it hopes to be a useful tool for SMBs, not just another place to get money or manage it. It’s not a direct loaning service, but rather something that is closely linked to monitoring a customers’ incomings and outgoings and only prompts a credit line (which directly links into the users’ account, wherever it is) when it appears that it might be needed.
“Innovations in financial technology have largely democratized who can become the next big player in small business finance,” added Gary Golding, General Partner, Edison Partners. “By combining critical financial performance tools and insights into a single interface, Nuula represents a new class of financial services technology for small business, and we are excited by the potential of the firm.”
“We are excited to be working with Nuula as they build a unique financial services resource for small businesses and entrepreneurs,” said Jeffrey Kramer, Partner and Head of ABS in the Alternative Credit strategy of the Ares Credit Group, in a statement. “The evolution of financial technology continues to open opportunities for innovation and the emergence of new industry participants. We look forward to seeing Nuula’s experienced team of technologists, data scientists and financial service veterans bring a new generation of small business financial services solutions to market.”
PayPal Holdings, the U.S. fintech company, announced an acquisition of Paidy, a Japanese buy now, pay later (BNPL) service platform, for approximately $2.7 billion (300 billion yen), mostly in cash, to enhance its business in Japan.
The transaction completion including the regulatory approval is expected in the fourth quarter of 2021.
After the acquisition, the Japan-based company will continue to operate its existing business and maintain the brand while the leaders, Paidy’s president and CEO Riku Sugie and founder and executive chairman of Paidy Russel Cummer, keep their positions.
Japan is the third largest e-commerce market in the world, and so this is a significant move by PayPal to gain more market share both in the country and the region, specifically in the area of providing deferred payment services as an alternative to credit cards.
PayPal has long played nice with payment cards – users can upload details of their cards to PayPal and use it as a kind of digital wallet to manage how they pay for things online through it – but it got its start actually as a payment platform in itself, where people could pay into and out of PayPal accounts. Paidy is, in that sense, a strengthening of PayPal’s first-party rails, providing a way to ‘own’ that flow of money on its own infrastructure, not involving the card networks.
Paidy is basically a two-sided payments service, acting as a middleman between consumers and merchants in Japan. Using machine learning it determines the creditworthiness of a consumer related to a particular purchase, and then it underwrites those transactions in seconds, guaranteeing payments to merchants. Consumers then make deferred payment to Paidy for those goods.
Paidy’s platform, which offers a monthly payment installment service branded ‘3-Pay’, enables shoppers to make purchases online and then pay for them each month in a consolidated bill at a convenience store or via bank transfer.
“Paidy pioneered buy now, pay later solutions tailored to the Japanese market and quickly grew to become the leading service, developing a sizable two-sided platform of consumers and merchants,” said Peter Kenevan, vice president, head of Japan at Paypal.
Paidy has more than 6 million registered users, and the plan is to integrate PayPal and other digital and QR wallets with Paidy Link to connect further online and offline merchants.
In April 2021, the Japan-based company launched Paidy Link, allowing users to link digital wallets with their Payidy account. PayPal was the first digital wallet partner to integrate with Paidy Link.
“PayPal was a founding partner for Paidy Link and we look forward to looking together to create even more value,” Sugie said in a statement.
“Japan has been a vibrant environment for our growth to date and we’re honored to have our team’s hard work and potential recognized by a global leader. Together with Paypal, we will be able to further achieve our mission of taking the hassle out of shopping,” Cummer said.
Linktree, the popular “link in bio” service with more than 16 million users, is partnering with PayPal to expand its recently launched “Commerce Links” tools for direct payment on Linktree globally. The Melbourne-based startup says creators in over 200 countries where PayPal operates can now accept payments through the transaction tools.
Launched in March, Commerce Links allow users to take payments directly on their Linktree profile without opening a new browser or tab. The new integration lets Linktree customers connect their PayPal account and receive payments from their followers or customers via PayPal, a debit card or a credit card. Linktree notes users can also access information regarding their transactions, payment conversion rate and more. The company says the available relevant data is meant to help creators manage their digital presence.
“As the creator economy grows, creators want new ways to collect payments and support from their audience with as little friction as possible,” said Linktree co-founder and CEO Alex Zaccaria in a statement. “We are excited to be collaborating with PayPal to further expand our solutions to our users globally and enable them to further manage and monetize their digital presence.”
There are two types of Commerce Links that creators can use to take payments from their followers and customers: A “Support Me Link” allows Linktree users to collect payments and donations from their visitors, while “Request Links” lets customers and followers request goods and services from creators directly from their Linktree profile.
Linktree says its collaboration with PayPal is the latest in a series of creator-focused efforts. The partnership announcement comes days after Linktree announced its acquisition of automated music link aggregation platform Songlink/Odesli. Linktree is integrating Songlink/Odesli into its newly launched “Music Link” feature, which automatically displays the same song or album across all music streaming services to let users listen to content on their preferred platform.
Founded in 2016, Linktree now competes with several “link in bio” platforms, including Shorby, Linkin.bio and Beacons. In March, Linktree announced it raised $45 million in Series B funding. The funding round was co-led by Index Ventures and Coatue, with participation from returning investors AirTree Ventures and Insight Partners.
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.
OnlyFans’ decision to ban sexually explicit content is reigniting an important and overlooked conversation around tech companies, content guidelines and sex work. However, the implications of this discussion go beyond just one platform and one marginalized group.
It’s indicative of a broken ecosystem for content creators where platforms have outsized control over the ways in which creators are allowed to share content and engage with their followers and fans. In response, creators are decentralizing, broadening their reach to multiple platforms and taking their audiences with them.
In doing so, creators also have the opportunity to define what rights they want to be built into these platforms.
History repeats itself
Creators being shut out of the individual platforms is nothing new. Many are comparing OnlyFans’ policy change to Tumblr’s move to ban adult content in 2018. This has been an ongoing issue for YouTube as well — several communities, including a group of LGBTQ YouTubers, have accused the platform of targeting them with their demonetization algorithm.
Many of these platforms, including OnlyFans, point to their payment partners’ policies as a barrier to allowing certain forms of content. One of the earliest major controversies we saw in this arena was when PayPal banned WikiLeaks in 2010.
While each of these events have drawn the ire of creators and their followers, it’s indicative of an ecosystemwide problem, not necessarily an indictment of the platforms themselves.
After all, these platforms have provided the opportunity for creators to build an audience and engage with their fans. But these platforms have also had to put policies in place to shield themselves from regulatory and reputational risk.
The core of the issue is that creators are beholden to individual platforms, always vulnerable to changing policies and forced to navigate the painful migration of their audiences and monetization from platform to platform.
That doesn’t mean that that all guidelines and policies are bad — they play a role to foster and govern a positive and safe community with thoughtful guidelines — but it should not come at the cost of harming and de-platforming the creators who fuel these platforms with content and engagement. The core of the issue is that creators are beholden to individual platforms, always vulnerable to changing policies and forced to navigate the painful migration of their audiences and monetization from platform to platform.
And, at the end of the day, it takes away from their ability to create meaningful content, engage with their communities and earn a reliable living.
As creators have lost more and more control to platforms over time, some have begun exploring alternative options that allow independent and direct monetization from their audience in a distributed way.
The direct-to-fan monetization model is already displacing the traditional ad-based, platform-dictated model that creators relied on for years. During my time at Patreon, I saw how putting control and ownership in the hands of creators builds a more sustainable, fair and vibrant creator economy. Substack has given writers a similarly powerful financial tool, and over the past few years, there has been an ever-growing number of companies that serve creators.
The challenge is that many of these companies rely on the existing systems that hamstrung the platforms of the past, and have business models that require take rates and revenue shares. In many ways, the creator economy needs new infrastructure and business models to build the next phase of creator and fan interaction.
With the right application, crypto can help rewrite the playbook of how creators monetize, engage with their fans and partner with platforms. Its peer-to-peer structure reflects the direct-to-fan relationship and allows creators to own the financial relationship with their audience instead of relying on tech giants or payment partners as middlemen. Beyond that, crypto allows creators to maintain ownership and control over their brands and intellectual property.
Additionally, many crypto projects allow participants to have a voice in the value proposition, strategic direction, operational functions and economic structures of the project via DAOs or governance tokens. In this way, creators can join projects and set the direction in a way that aligns with how they want to engage with their communities.
Creators are especially positioned to benefit from community-governed projects given their ability to motivate and engage their own communities. We are in the early phases of crypto adoption, and creators have a huge opportunity to shape the future of this paradigm shift. With social tokens, creators can mint their own cryptocurrencies that allow for a shared economy that creators and fans can grow together and use to transact directly across different platforms.
NFTs are another category that have exploded in popularity this year, but the industry is just scratching the surface of the utility that they will have. Creators and crypto projects are figuring out ways to make NFTs go beyond collectibles; NFTs provide an engaging and functional digital tool for creators to give their fans their time (through video calls or AMAs) or access to other exclusive benefits.
Creators are just beginning to discover the power that crypto provides. As the user experience of crypto-based platforms continues to become more intuitive, crypto will become ubiquitous. Before that point, creators should think about what rights they need (and can demand) from the decentralized services they use.
A creators’ bill of rights
Be it within crypto or not, creators finally have the leverage to determine their rights. While I believe that creators should be the ones leading this conversation, here are a few jumping off points:
- Ability to move freely across platforms: Reliance on individual platforms is at the heart of many of the issues that creators face. By allowing creators to take their fans with them wherever they go, many of the problems we’ve seen even with direct-to-fan monetization can be solved.
- Direct financial relationships between creators and fans: At the heart of the OnlyFans matter is creators’ inability to own their financial relationships with fans. Even if direct financial relationships aren’t feasible on every platform, creators should have options to own those relationships and dictate their own terms.
- Creator-led decision-making: Historically, platforms have given creators minimal control over platformwide decisions and policies. Creators should have direct input and even be able to vote on various platformwide measures.
- Quality over quantity: Platforms and their algorithms are structured to reward quantity and force creators down a path of burnout and hyperspeed content creation. Both creators and fans are looking for a more deep and engaging interaction and incentivizing this behavior will ensure a more vibrant and sustainable creator ecosystem.
- Low (or zero) take rates: Big tech platforms take nearly 100% of revenue from creators. Creators (and their fans) should be earning the majority of platform revenue.
- Equity access or revenue sharing: Big tech platforms have built empires on the labor of creators. Instead of dictating ad revenue payout to creators, decentralized platforms should allow creators to have true “skin in the game” by being able to own a piece of the pie outright or benefit from the overall growth of the ecosystem. This alignment of interests will be a major shift from the capital-labor split we see today.
- Transparency and consultation: Creators should have full view into what they can or can’t do and a seat at the table as policies are being created and adapted. Platforms’ content moderation decisions and the algorithms behind demonetization are often opaque, broadly applied and decided without consulting the creators they will impact. They should also have visibility into the size of the overall revenue pie and their share.
- Ability for reform and rehabilitation: We are all human, and there might be moments that a creator knowingly or unknowingly goes outside of the guidelines set by a platform. Creating a space for creators to rehabilitate their content will create a more trusting and collaborative relationship between creators and platforms.
We’ll leave it to creators to dictate their terms — they’ve been cut out of this conversation for far too long. That said, I’m confident that Rally and many other key participants in the Web 3.0 ecosystem would be open to supporting this effort to create an environment that works for creators and their fans.
San Francisco-based Postman, which operates a collaborative platform for developers to help them build, design, test and iterate their APIs, said on Wednesday it has raised $225 million in a new financing round that values it at $5.6 billion, up from $2 billion a year ago.
The startup’s new financing round — a Series D — was led by existing investor New York-headquartered Insight Partners. New investors including Coatue, Battery Ventures, and BOND also participated in the new round, which brings total raise across rounds to over $430 million. Existing investors Nexus Venture Partners and CRV also participated in the new round.
APIs provide a way for developers to connect their applications to other internal and external applications. But it’s a space that until the past decade not many firms have attempted to streamline. (Developers relied on — and many continue to do so — open source CLI tools such as curl and HTTPie. That said, Postman now has a number of competitors including Stoplight, and A16z and Tiger Global-backed Kong.)
Abhinav Asthana, a former intern at Yahoo, faced this frustration first hand and built a Chrome extension for himself and friends.
Little did he know just how many developers and firms needed it, too.
The six-year-old startup’s product, which began its journey in India, is today used by over 17 million developers and over 500,000 organizations including Microsoft, Salesforce, Stripe, Shopify, Cisco, and PayPal.
The list is big: Postman co-founder and chief executive Asthana told TechCrunch that 98% of the Fortune 500 companies are customers of Postman.
“We are solving a fundamental problem for the technology landscape. Big companies tend to be slower as they have many other things on their plate,” he told me two years ago.
“Every company in every industry in the world today uses APIs and needs an API platform. This trend is only growing with the move to cloud and digital experiences,” he said in an interview with TechCrunch Tuesday.
The startup today leads the market and doesn’t compete with many players. Which would explain the investors’ excitement. The startup, which declined to share its revenue, raised the new round at over 100 multiple of its revenue, according to an investor with knowledge of the matter.
Postman’s platform is crucial for developers, but it was only recently that the startup expanded to create a public marketplace for developers and firms to find ready-made APIs to use.
“The Postman Public API Network connects millions of developers around the world and provides them with a space dedicated to discovering, exploring, and sharing of APIs. This was ultimately driven by our creation of public workspaces, which allows users to connect across different organizations,” Asthana said.
“With the emergence of APIs, we believe that this will usher in the next generation of no-code and ‘citizen developers.’ We encourage a world filled with innovation for everyone with different backgrounds and varying levels of technical experience. More and more, we’re seeing people in sales, marketing, and finance become more comfortable with APIs and become the champions of this technology,” he said.
The startup, which employs over 425 people, plans to deploy the fresh funding to hire more employees across sales, marketing, product, and engineering divisions.
Postman will also “heavily” invest in broadening its product roadmap. “We are expanding the Postman platform across areas that technical users need along with supporting the needs of business users. At a high level, we are investing in supporting workflows for all kinds of APIs — whether they are private APIs, partner APIs, or public APIs,” he said.
Some upcoming items on the roadmap include a new version of the Postman API, support for protocols like gRPC, ProtoBuf, and more extensive capabilities for GraphQL. “We are also focusing heavily on integrations with other vendors in the software development lifecycle like AWS, Git hosting providers like GitHub and GitLab. We are also releasing our Flow Runner tool, a no-code API composition tool to enable anyone to build API driven programs.”
The startup also plans to invest in supporting students through API literacy programs and contribute toward open source projects.
“APIs have quickly become the fundamental building blocks of software used by developers in every industry, in every country across the globe—and Postman has firmly established itself as the preferred platform for developers,” said Insight Partners Managing Director Jeff Horing in a statement.
“Postman has the opportunity to become a key pillar of how enterprises build, deliver products, and seamlessly enable partnerships across the ecosystem. Their continued, rapid expansion and strong management team point to a future for Postman with virtually unlimited possibilities.”
E-commerce roll-up companies are big in the United States, and Wonder Brands wants to be that for Latin America.
The Mexico-based company closed on $20 million in seed funding, co-led by ALLVP and Mountain Nazca, with participation from CoVenture, Victory Park Capital, GFC, QED (Fontes), Korify Capital and Endeavor Catalyst.
Wonder Brands co-founders Nicolás Gonzalez Luna and Federico Malek came together to start the company in January 2021 to acquire digital brands in the MercadoLibre and Amazon ecosystem. It then leverages its technology to scale their operations and grow sales by taking care of the marketing, analytics, supply chain management and working capital needs of the companies. It focuses on companies in the areas of home and garden, sports and fitness, beauty and personal care.
“MercadoLibre has a larger share, but Amazon is entering the region quickly, so there is not one dominating marketplace. MercadoLibre may have half the market, but then it is more balanced between a number of different platforms,” Gonzalez Luna told TechCrunch. “That diversification means operations here are more complex than the classic Amazon seller. Negotiations take longer and require more discussion about who you are to get the trust in you. That’s why we will be doing fewer, but larger deals than our U.S. counterparts.”
Malek’s background is on the commerce side, having worked at Argentinian insurtech company iunigo.com before founding e-commerce fulfillment company Avenida.com, which was acquired by Groupon in 2010. He then worked as Groupon’s managing director in the region. He knew Gonzalez Luna, whose background includes Goldman Sachs where he focused on M&A.
Michael Breitstein, principal at CoVenture, said his firm has made a variety of investments on the debt and equity sides of e-commerce and believes Malek and Gonzalez Luna provide a “great one-two punch” with their backgrounds, as well as the ability to raise capital and build out a platform.
Though there is a lot of competition to acquire digitally native companies in the $1 million revenue range, Malek said Wonder Brands will focus on larger sellers and operators, with a deal target of at least $5 million in revenue. They are also taking a “buy and build” approach rather than the “buy and consolidate” business model many of the other roll-up companies have, he added.
With its approach, the company’s goal is to enable its acquired companies to sell on multiple channels. It provides support in four areas: category management and brand development, marketing and performance, technology to automate processes like inventory and logistics and operations to manage all of the channels needed. For example, in Latin America, inventory has to be consolidated into one warehouse, but then separated depending on the sales channel, Malek.
Acquiring and scaling companies is big business. London-based Hahnbeck Business Systems, an e-commerce M&A firm that tracks funding to FBA (fulfillment by Amazon) acquirers all over the world, reports that e-commerce roll-up companies raised $7.24 billion in disclosed funding to date.
According to the different sources, reports say Latin American e-commerce company MercadoLibre has a market cap of between $70 billion and $94.billion. Meanwhile, marketplace merchants accounted for 55% of units sold on Amazon.com, according to the retailer. In 2020, that accounted for $300 billion in sales, according to Marketplace Pulse estimates based on Amazon disclosures.
The seed financing enables Wonder Brands to invest in building a team to focus on the four support areas and marketing. The company has 20 employees currently and plans to triple that in the next month. The funding is also complementing larger debt facilities that the company has available to acquire brands. Its target is to make six or seven acquisitions this year.
The company is on target to achieve $55 million in revenue by the end of the year and will then move toward $100 million in revenue in the next 12 months, Malek said. It currently operates in Mexico and plans to begin operations in Brazil by the end of 2021.
Traditional MBA programs can be costly, lengthy, and often lack the application of real world skills. Meanwhile, big global brands and companies who need Product Managers to grow their businesses can’t sit around waiting for people to graduate. And the EdTech space hasn’t traditionally catered for this sector.
This is perhaps why Product School, says it has secured $25 million in growth equity investment from growth fund Leeds Illuminate (subject to regulatory approval) to accelerate its product and partnerships with client companies.
The growth funding for the company comes after bootstrapping since 2014, in large part because product managers (PMs) no longer just inside tech companies but have become sought after across almost virtually all industries.
Product School provides certificates for individuals as well as team training, and says it has experienced and upwelling of business since Covid switched so many companies into Digital ones. It also now counts Google, Facebook, Netflix, Airbnb, PayPal, Uber, and Amazon amongst its customers.
“Product managers have an outsized role in driving digital transformation and innovation across all sectors,” said Susan Cates, Managing Partner of Leeds Illuminate. “Having built the largest community of PM’s in the world validates Product School’s certification as the industry standard for the market and positions the company at the forefront of upskilling top-notch talent for global organizations.”
Carlos Gonzalez de Villaumbrosia, CEO and Founder of Product School, who started the company after moving from Spain, said: “There has never been a better time in history to build digital products and Product School is excited to unlock value for product teams across the globe to help define the future. Our company was founded on the basis that traditional degrees and MBA programs simply don’t equip PMs with the real-world skills they require on the job.”
It’s main competitor is MindTheProduct community and training platform, which has also boostrapped.
PayPal-owned Venmo is expanding its support for cryptocurrency with today’s launch of a new feature that will allow users to automatically buy cryptocurrency using the cash back they earned from their Venmo credit card purchases. Unlike when buying cryptocurrency directly, these automated purchases will have no transaction fees associated with them — a feature Venmo says is not a promotion, but how the system will work long term. Instead, a cryptocurrency conversion spread is built into each monthly transaction.
Cardholders will be able to purchase Bitcoin, Ethereum, Litecoin and Bitcoin Cash through the new “Cash Back to Crypto” option, rolling out now to the Venmo app.
Venmo had first introduced the ability for customers to buy, hold and sell cryptocurrency in April of this year, as part of a larger investment in cryptocurrency led by parent company, PayPal. In partnership with Paxos Trust Company, a regulated provider of cryptocurrency products and services, Venmo’s over 70 million users are now able to access cryptocurrency from within the Venmo app.
The cash back feature, meanwhile, could help drive sign-ups for the Venmo Credit Card, by interlinking it with the cryptocurrency functionality. Currently, Venmo cardholders can earn monthly cash back across eight different spending categories, with up to 3% back on their top eligible spending category, then 2% and 1% back on the second highest and all other purchases, respectively. The top two categories are adjusted monthly, based on where consumers are spending the most.
To enable Cash Back to Crypto, Venmo customers will navigate to the Venmo Credit Card home screen in the app, select the Rewards tab, then “Get Started.” From here, they’ll agree to the terms, select the crypto of their choice, and confirm their selection. Once enabled, when the cash back funds hit the customer’s Venmo balance, the money is immediately used to make a crypto purchase — no interaction on the user’s part is required.
The feature will not include any transaction fees, as a cryptocurrency conversion spread is built into each monthly transaction. This is similar to how PayPal is handling Checkout with Crypto, which allows online shoppers to make purchases using their cryptocurrency. The cryptocurrency is converted to fiat, but there are not transaction fees.
The feature can also be turned on or off at any time, Venmo notes.
The company views Cash Back to Crypto as a way for newcomers to cryptocurrency to enter the market, without having to worry about the process of making crypto purchases. It’s more of a set-it-and-forget-it type of feature. However, unless users make regular and frequent transactions with their Venmo Credit Card, these cash back-enabled crypto purchases will likely be fairly small.
The company has yet to offer details on how many Venmo credit cardholders are active in the market. So far, PayPal CEO Dan Schulman has only said, during Q1 earnings, that the card “is outpacing our expectations for both new accounts and transactions.” This past quarter, the exec noted that the company was also seeing “strong adoption and trading of crypto on Venmo.”
“The introduction of the Cash Back to Crypto feature for the Venmo Credit Card offers customers a new way to start exploring the world of crypto, using their cash back earned each month to automatically and seamlessly purchase one of four cryptocurrencies on Venmo,” noted Darrell Esch, SVP and GM at Venmo, in a statement. “We’re excited to bring this new level of feature interconnectivity on the Venmo platform, linking our Venmo Credit Card and crypto experiences to provide another way for our customers to spend and manage their money with Venmo,” he added.
The new option will begin rolling out starting today to Venmo Credit Cardholders.
On Sunday Square announced it was gobbling up Afterpay in a deal worth $29 billion at the time of announcement. Alex followed up yesterday with more details on why the deal made sense for Square and Afterpay over here, but we wanted to ask some notable VCs what it means for the startup market.
For context, the Square deal follows a ton of money and interest flowing into the BNPL market. Just this year, VCs have invested in companies like Alma ($59.4 million, January 2021), Scalapay ($48 million, January 2021), Wisetack ($19 million, February 2021), Zilch ($80 million, April 2021) and Dividio ($30 million, June 2021).
Most of the investors we reached out to were generally bullish on the Square and Afterpay integration, but they were less excited about opportunities for other consumer BNPL businesses to emerge.
There’s also interest from some major public companies. After a slow start, PayPal is aggressively pushing BNPL services with merchants that offer it as a payment option. And there are reports that Apple is building its own BNPL offering through Apple Pay.
We reached out to Commerce Ventures founder and GP Dan Rosen, Better Tomorrow Ventures founding partner Jake Gibson, Fika Ventures partner TX Zhuo, and Matthew Harris of Bain Capital Ventures to see what they thought of the deal, as well as what it might mean for the opportunity for other BNPL companies and startups.
The main takeaways? “Buy now, pay later” may be effective at driving retail conversion, but scale matters and long-term margins look slim for BNPL startups.
Now, let’s hear from the venture community.
The venture view
Why is the BNPL market so hot?
Shares of Square are up this morning after the company announced its second-quarter earnings and that it will buy Afterpay, an Australian buy now, pay later (BNPL) player in a $29 billion deal. As TechCrunch reported this morning, Afterpay shareholders will receive 0.375 shares of Square in exchange for their existing equity.
Shares of Afterpay are sharply higher after the deal was announced thanks to its implied premium, while shares of Square are up 7% in early-morning trading.
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Over the past year, we’ve written extensively about the BNPL market, usually from the perspective of earnings from companies in the space. Afterpay has been a key data source, along with the yet-private Klarna and U.S. public BNPL outfit Affirm. Recall that each company has posted strong growth in recent periods, with the United States arising as a prime competitive market.
Most recently, consumer hardware and services giant Apple is reportedly preparing a move into the BNPL space. Our read at the time was that any such movement by Cupertino would impact mass-market BNPL players more than niche-focused companies. Apple has a fintech base and broad IRL payment acceptance, making it a potentially strong competitor for BNPL services aimed at consumers; BNPL services targeted at particular industries or niches would likely see less competition from Apple.
From that landscape, let’s explore the Square-Afterpay deal. We want to know what Afterpay brings to Square in terms of revenue, growth and reach. We also want to do some math on the price Square is willing to pay for the company — and what that might tell us about the value of BNPL and fintech revenues more broadly. Then we’ll eyeball the numbers and try to decide if Square is overpaying for Afterpay.
What Afterpay brings to Square
As with most major deals these days, Square and Afterpay released an investor presentation detailing their argument in favor of their combination. Let’s dig through it.
Square is a two-part company. It has a large consumer business via Cash App, and it has a large business division that offers payments tech and other fintech services to corporate customers. Recall that Square is also building out banking services for its business customers and that Cash App also serves some banking and investing functionality for consumers.
PayPal’s plan to morph itself into a “super app” have been given a go for launch. According to PayPal CEO Dan Schulman, speaking to investors during this week’s second-quarter earnings, the initial version of PayPal’s new consumer digital wallet app is now “code complete” and the company is preparing to slowly ramp up. Over the next several months, PayPal expects to be fully ramped in the U.S., with new payment services, financial services, commerce and shopping tools arriving every quarter.
The company has spoken for some time about its “super app” ambitions — a shift in product direction that would make PayPal a U.S.-based version of something like China’s WeChat or Alipay or India’s Paytm. Similar to these apps, PayPal aims to offer a host of consumer services under one roof, beyond just mobile payments.
In previous quarters, PayPal said these new features may include things like enhanced direct deposit, check cashing, budgeting tools, bill pay, crypto support, subscription management, and buy now/pay later functionality. It also said it would integrate commerce, thanks to the mobile shopping tools acquired by way of its $4 billion Honey acquisition from 2019.
So far, PayPal has continued to run Honey as a standalone application, website and browser extension, but the super app could incorporate more of its deal-finding functions, price tracking features, and other benefits.
On Wednesday’s earnings call, Schulman revealed the super app would include a few other features as well, including high-yield savings, early access to direct deposit funds, and messaging functionality outside of peer-to-peer payments — meaning you could chat with family and friends directly through the app’s user interface.
PayPal hadn’t yet announced its plans to include a messaging component until now, but the feature makes sense in terms of how people often combine chat and peer-to-peer payments today. For example, someone may want to make a personal request for the funds instead of just sending an automated request through an app. Or, after receiving payment, a user may want to respond with a “thank you,” or other acknowledgement. Currently, these conversations take place outside of the payment app itself on platforms like iMessage. Now, that could change.
“We think that’s going to drive a lot of engagement on the platform,” said Schulman. “You don’t have to leave the platform to message back and forth.”
With the increased user engagement, the company expects to see a related bump in average revenue per active account.
Schulman also hinted at “additional crypto capabilities,” which were not detailed. However, PayPal earlier this month increased the crypto purchase limit from $20,000 to $100,000 for eligible PayPal customers in the U.S., with no annual purchase limit. The company also this year made it possible for consumers to check out at millions of online businesses using their cryptocurrencies, by first converting the crypto to cash then settling with the merchant in U.S. dollars.
Though the app’s code is now complete, Schulman said the plan is to continue to iterate on the product experience, noting that the initial version will not be “the be-all and end-all.” Instead, the app will see steady releases and new functionality on a quarterly basis.
However, he did say that early on, the new features would include the high-yield savings, improved bill pay with a better user experience and more billers and aggregators, as well as early access to direct deposit, budgeting tools, and the new two-way messaging feature.
To integrate all the new features into the super app, PayPal will undergo a major overhaul of its user interface.
“Obviously, the [user experience] is being redesigned,” Schulman noted. “We’ve got rewards and shopping. We’ve got a whole giving hub around crowdsourcing, giving to charities. And then, obviously, Buy Now, Pay Later will be fully integrated into it…The last time I counted, it was like 25 new capabilities that we’re going to put into the super app,” he said.
The digital wallet app will also be personalized to the end user, so no two apps are the same. This will be done using both A.I. and machine learning capabilities to “enhance each customer’s experiences and opportunities,” said Schulman.
PayPal delivered an earnings beat in the second quarter with $6.24 billion in revenue, versus the $6.27 billion Wall St. expected, and earnings per share of $1.15 versus the $1.12 expected. Total payment volume from merchant customers also jumped 40% to $311 billion, while analysts had projected $295.2 billion. But the company’s stock slipped due to a lowered outlook for Q3, impacted by eBay’s transition to its own managed payments service.
In addition, PayPal gained 11.4 million net new active accounts in the quarter, to reach 403 million total active accounts.
Despite their rich engineering talent, Blockchain entrepreneurs in the EU often struggle to find backing due to the dearth of large funds and investment expertise in the space. But a big move takes place at an EU level today, as the European Investment Fund makes a significant investment into a blockchain and digital assets venture fund.
Fabric Ventures, a Luxembourg-based VC billed as backing the “Open Economy” has closed $120 million for its 2021 fund, $30 million of which is coming from the European Investment Fund (EIF). Other backers of the new fund include 33 founders, partners, and executives from Ethereum, (Transfer)Wise, PayPal, Square, Google, PayU, Ledger, Raisin, Ebury, PPRO, NEAR, Felix Capital, LocalGlobe, Earlybird, Accelerator Ventures, Aztec Protocol, Raisin, Aragon, Orchid, MySQL, Verifone, OpenOcean, Claret Capital, and more.
This makes it the first EIF-backed fund mandated to invest in digital assets and blockchain technology.
EIF Chief Executive Alain Godard said: “We are very pleased to be partnering with Fabric Ventures to bring to the European market this fund specializing in Blockchain technologies… This partnership seeks to address the need [in Europe] and unlock financing opportunities for entrepreneurs active in the field of blockchain technologies – a field of particular strategic importance for the EU and our competitiveness on the global stage.”
The subtext here is that the EIF wants some exposure to these new, decentralized platforms, potentially as a bulwark against the centralized platforms coming out of the US and China.
And yes, while the price of Bitcoin has yo-yo’d, there is now $100 billion invested in the decentralized finance sector and $1.5 billion market in the NFT market. This technology is going nowhere.
Fabric hasn’t just come from nowhere, either. Various Fabric Ventures team members have been involved in Orchestream, the Honeycomb Project at Sun Microsystems, Tideway, RPX, Automic, Yoyo Wallet, and Orchid.
Richard Muirhead is Managing Partner, and is joined by partners Max Mersch and Anil Hansjee. Hansjee becomes General Partner after leaving PayPal’s Venture Fund, which he led for EMEA. The team has experience in token design, market infrastructure, and community governance.
The same team started the Firestartr fund in 2012, backing Tray.io, Verse, Railsbank, Wagestream, Bitstamp, and others.
Muirhead said: “It is now well acknowledged that there is a need for a web that is user-owned and, consequently, more human-centric. There are astonishing people crafting this digital fabric for the benefit of all. We are excited to support those people with our latest fund.”
On a call with TechCrunch Muirhead added: “The thing to note here is that there’s a recognition at European Commission level, that this area is one of geopolitical significance for the EU bloc. On the one hand, you have the ‘wild west’ approach of North America, and, arguably, on the other is the surveillance state of the Chinese Communist Party.”
He said: “The European Commission, I think, believes that there is a third way for the individual, and to use this new wave of technology for the individual. Also for businesses. So we can have networks and marketplaces of individuals sharing their data for their own benefit, and businesses in supply chains sharing data for their own mutual benefits. So that’s the driving view.”
Fireblocks, an infrastructure provider for digital assets, has raised $310 million in a Series D round of funding that tripled the company’s valuation to $2.2 billion in just over five months.
Sequoia Capital, Stripes and Spark Capital co-led Fireblocks’ latest round, which also included participation from Coatue, DRW VC and SCB 10X – the venture arm of Thailand’s oldest bank – and Siam Commercial Bank. The latter is the third global bank to invest in Fireblocks in addition to the Bank of New York (BNY) Mellon and SVB Capital.
In February, the New York-based startup raised $133 million in a Series C round at a $700 million valuation. The latest financing brings Fireblocks’ total raised since its 2018 inception to $489 million. And as for Fireblocks’ valuation boost, the growth correlates with its increase in customers and ARR this year, according to CEO and co-founder Michael Shaulov.
Since January, Fireblocks has seen its customer base increase to about 500 compared to 150 in January. Its ARR (annual recurring revenue) is also up – by 350% so far in 2021 compared to 2020. Last year, ARR rose by 450% compared to 2019.
“We expect to end the year up 500%,” Shaulov said. “We’ve already adjusted our revenue predictions for 2021 three times.”
Put simply, Fireblocks aims to offer financial institutions an all-in-one platform to run a digital asset business, providing them with infrastructure to store, transfer and issue digital assets. In particular, Fireblocks provides custody to institutional investors and has secured the transfer of over $1 trillion in digital assets over time.
Fireblocks launched out of stealth mode in June of 2019 and has since opened offices in the United Kingdom, Israel, Hong Kong, Singapore, France and the DACH region. Today, it has over 500 financial institutions as customers – a mix of businesses that already support crypto and digital assets and those that are considering entering the space. Customers include global banks, crypto-native exchanges, lending desks, hedge funds, OTC desks as well as companies such as Revolut, BlockFi, Celsius, PrimeTrust, Galaxy Digital, Genesis Trading, crypto.com and eToro among others.
Of those 500 institutions, Fireblocks is working with 70 banks that are looking to join the cryptocurrency space, and start platforming their infrastructure, according to Shaulov. Siam Commercial bank, for example, is using the company’s infrastructure to transform into a blockchain-based bank.
“Our platform creates highly secure wallets for cryptocurrencies and digital assets, where institutions can store their funds or their customer funds, and also get security insurance,” he said.
Fireblocks’ issuance and tokenization platform allows for the creation of asset-backed tokens.
“We handle all the security or compliance, all the policies and workflows,” Shaulov said. “Basically all the complicated stuff you need to do as a business when you want to start working with this new technology. So it’s a bit like ‘Shopify for crypto.’ ”
Sequoia Partner Ravi Gupta is naturally bullish on the company, describing Fireblocks as “the leading back-end infrastructure for crypto products.”
“The team has the potential to build a large, enduring business serving crypto-native companies, consumer fintech companies, and traditional financial institutions alike,” he told TechCrunch. “Their growth has been tremendous, and the quality of their product and customer sentiment are remarkable.”
Fireblocks has also started to see businesses outside of what would be identified as fintech or finance show interest in its platform such as e-commerce websites that are looking to create NFTs on the back of their merchandise.
The Fireblocks platform, Shaulov said, helps spread the expansion of digital asset use cases beyond bitcoin into payments, gaming, NFTs, digital securities and “ultimately allows any business to become a digital asset business.”
What that means is that Fireblocks’ technology can be white labeled for crypto custody offerings, “so that new and established financial institutions can implement direct custody on their own without having to rely on third parties,” the company says.
Shaulov emphasizes Fireblocks’ commitment to staying an independent company after a wave of consolidation in the space. Earlier this year, PayPal announced its plans to acquire Curv, a cryptocurrency startup based in Tel Aviv, Israel. Then in early May, bitcoin-focused Galaxy Digital Holdings Ltd. said it agreed to buy BitGo Inc. for $1.2 billion in cash and stock in the first $1 billion deal in the cryptocurrency industry.
“Consolidation can be painful for clients,” he told TechCrunch. “It’s Important for us that we stay independent and that’s part of the purpose of this round.
The company will also use the funds to increase its engineering and customer success operations, and expand geographically, particularly in the Asia-Pacific region.
“Fireblocks provides the most secure and flexible platform for a wide range of customer needs,” said Sequoia’s Gupta. “It uses world-class multi-party computation technology to secure digital assets in storage and in transit, and has the most flexible platform with controls for product teams to be able to build on and manage Fireblocks effectively.”
The payments space – amazingly – remains up for grabs for startups. Yes dear reader, despite the success of Stripe, there seems to be a new payments startup virtually every other day. It’s a mess out there! The accelerated growth of e-commerce due to the pandemic means payments are now a booming space. And here comes another one, with a twist.
WhenThen has built a no-code payment operations platform that, they claim, streamlines the payment processes “of merchants of any kind”. It says its platform can autonomously orchestrate, monitor, improve and manage all customer payments and payments ops.
The startup’s opportunity has arisen because service providers across different verticals increasingly want to get into open banking and provide their own payment solutions and financial services.
Founded 6 months ago, WhenThen has now raised $6 million, backed by European VCs Stride and Cavalry.
The founders, Kirk Donohoe, Eamon Doyle and Dave Brown are three former Mastercard Payment veterans.
Based “out of Dublin, CEO Donohoe told me: “We see traditional businesses embracing e-comm, and e-comm merchants now operating multiple business models such as trade supply, marketplace, subscription, and more. There is no platform that makes it easy for such businesses to create and operate multiple payment flows to support multiple business models in one place – that’s where we step in.”
He added: “WhenThen is helping ecommerce digital platforms build advanced payment flows and payment automation, in minutes as opposed to months. When you start to integrate different payment methods, different payment gateways, how you want the payment to move from collection through to payout gets very, very complex. I’ve been doing this for over a decade now, as an entrepreneur building different businesses that had to accept collect and pay payments.”
He said his founding team “had to build very complex payment flows for large merchants, airlines, hotels, issuers, and we just found it was ridiculous that you have to continue to do the same thing over and over again. So we decided to come up with WhenThen as a better way to be able to help you build those flows in minutes.”
Claude Ritter, managing partner at Cavalry said: “Basic payment orchestration platforms have been around for some time, focusing mostly on maximizing payment acceptance by optimizing routing. WhenThen provides the first end-to-end payment flow platform to equip businesses with the opportunity to control every stage of the payment flow from payment intent to payout.”
WhenThen supports a wide range of popular payment providers such as Stripe, Braintree, Adyen, Authorize.net, Checkout.com, etc., and a variety of alternative and locally preferred payment methods such as Klarna Affirm, PayPal, BitPay.
“For brave merchants considering global reach and operating multiple business models concurrently, I believe choosing the right payment ops platform will become as important as choosing the right e-commerce platform. Building your entire ecomm experience tightly coupled to a single payment processor is a hard correction to make down the line – you need a payment flow platform like WhenThen,” added Fred Destin, founder of Stride.VC.