Lately, the venture community’s relationship with advertising tech has been a rocky one.
Advertising is no longer the venture oasis it was in the past, with the flow of VC dollars in the space dropping dramatically in recent years. According to data from Crunchbase, adtech deal flow has fallen at a roughly 10% compounded annual growth rate over the last five years.
While subsectors like privacy or automation still manage to pull in funding, with an estimated 90%-plus of digital ad spend growth going to incumbent behemoths like Facebook and Google, the amount of high-growth opportunities in the adtech space seems to grow narrower by the week.
Despite these pains, funding for marketing technology has remained much more stable and healthy; over the last five years, deal flow in marketing tech has only dropped at a 3.5% compounded annual growth rate according to Crunchbase, with annual invested capital in the space hovering just under $2 billion.
Given the movement in the adtech and martech sectors, we wanted to try to gauge where opportunity still exists in the verticals and which startups may have the best chance at attracting venture funding today. We asked four leading VCs who work at firms spanning early to growth stages to share what’s exciting them most and where they see opportunity in marketing and advertising:
Several of the firms we spoke to (both included and not included in this survey) stated that they are not actively investing in advertising tech at present.
TriggerMesh, a startup building on top of the open source Kubernetes software to help enterprises go “serverless” across apps running in the cloud and traditional data centers, has raised $3 million in seed funding.
The round is led Index Ventures and Crane Venture Partners. TriggerMesh says the investment will be used to scale the company and grow its development team in order to offer what it bills as the industry’s first “cloud native integration platform for the serverless era”.
Founded by two prominent names in the open source community — Sebastien Goasguen (CEO) and Mark Hinkle (CMO), based in Geneva and North Carolina, respectively — TriggerMesh’s platform will enable organizations to build enterprise-grade applications that span multiple cloud and data center environments, therefore helping to address what the startup says is a growing pain point as serverless architectures become more prevalent.
TriggerMesh’s platform and serverless cloud bus is said to facilitate “application flow orchestration” to consume events from any data center application or cloud event source and trigger serverless functions.
“As cloud-native applications use a greater number of serverless offerings in the cloud, TriggerMesh provides a declarative API and a set of tools to define event flows and functions that compose modern applications,” explains the company.
One feature TriggerMesh is specifically talking up and very relevant to legacy enterprises is its integration functionality with on-premise software. Via its wares, it says it is easy to connect SaaS, serverless cloud offerings and on-premises applications to provide scalable cloud-native applications at a low cost and quickly.
“There are huge numbers of disconnected applications that are unable to fully benefit from cloud computing and increased network connectivity,” noted Scott Sage, co-founder and partner at Crane Venture Partners, in a statement. “Most companies have some combination of cloud and on-premises applications and with more applications around, often from different vendors, the need for integration has never been greater. We see TriggerMesh’s solution as the ideal fit for this need which made them a compelling investment”.
IT operations collects tons of data across a number of monitoring and logging tools, way too much for any team of humans to keep up with. That’s why there are startups like Loom turning to AI to help sort through it. It can find issues and patterns in the data that would be challenging or impossible for humans to find. Applying AI to operations data in this manner has become known as AIOps in industry parlance.
ServiceNow is first and foremost a company trying to digitize the service process, however that manifests itself. IT service operations is a big part of that. Companies can monitor their systems, wait until a problem happens and then try and track down the cause and fix it, or they can use the power of artificial intelligence to find potential dangers to the system health and neutralize them before they become major problems. That’s what an AIOps product like Loom’s can bring to the table.
Jeff Hausman, vice president and general manager of IT Operations Management at ServiceNow sees Loom’s strengths merging with ServiceNow’s existing tooling to help keep IT systems running. “We will leverage Loom Systems’ log analytics capabilities to help customers analyze data, automate remediation and reduce L1 incidents,” he told TechCrunch.
Loom co-founder and CEO Gabby Menachem not surprisingly sees a similar value proposition. “By joining forces, we have the unique opportunity to bring together our AI innovations and ServiceNow’s AIOps capabilities to help customers prevent and fix IT issues before they become problems,” he said in a statement.
Loom raised $16 million since it launched in 2015, according to PitchBook data. Its most recent round for $10 million was in November 2019. Today’s deal is expected to close by the end of this quarter.
Placer.ai, a startup that analyzes location and foot traffic analytics for retailers and other businesses, announced today that it has closed a $12 million Series A. The round was led by JBV Capital, with participation from investors including Aleph, Reciprocal Ventures and OCA Ventures.
The funding will be used on research and development of new features and to expand Placer.ai’s operation in the United States.
Launched in 2016, Placer.ai’s SaaS platform gives its clients to real-time data that helps them make decisions like where to rent or buy properties, when to hold sales and promotions and how to manage assets.
Placer.ai analyzes foot traffic and also creates consumer profiles to help clients make marketing and ad spending decisions. It does this by collecting geolocation and proximity data from devices that are enabled to share that information. Placer.ai’s co-founder and CEO Noam Ben-Zvi says the company protects privacy and follows regulation by displaying aggregated, anonymous data and does not collect personally identifiable data. It also does not sell advertising or raw data.
The company currently serves clients in the retail (including large shopping centers), commercial real estate and hospitality verticals, including JLL, Regency, SRS, Brixmor, Verizon* and Caesars Entertainment.
“Up until now, we’ve been heavily focused on the commercial real estate sector, but this has very organically led us into retail, hospitality, municipalities and even [consumer packaged goods],” Ben-Zvi told TechCrunch in an email. “This presents us with a massive market, so we’re just focused on building out the types of features that will directly address the different needs of our core audience.”
He adds that lack of data has hurt retail businesses with major offline operations, but that “by effectively addressing this gap, we’re helpiong drive more sustainable growth or larger players or minimizing the risk for smaller companies to drive expansion plans that are strategically aggressive.”
Others startups in the same space include Dor, Aislelabs, RetailNext, ShopperTrak and Density. Ben-Zvi says Placer. ai wants to differentiate by providing more types of real-time data analysis.
“While there are a lot of companies touching the location analytics space, we’re in a unique situation as the only company providing these deep and actionable insights for any location in the country in a real-time platform with a wide array of functionality,” he said.
*Disclosure: Verizon Media is the parent company of TechCrunch.
Tencent, one of the world’s biggest videogaming companies by revenue, today made another move to help cement that position. The Chinese firm has made an offer to fully acquire Funcom, the games developer behind Conan Exiles (and others in the Conan franchise), Dune and some 28 other titles. The deal, when approved, would value the Oslo-based company at $148 million (NOK 1.33 billion) and give the company a much-needed cash injection to follow through on longer-term strategy around its next generation of games.
Funcom is traded publicly on the Oslo Stock Exchange, and the board has already recommended the offer, which is being made at NOK 17 per share, or around 27% higher than its closing share price the day before (Tuesday).
The news is being made with some interesting timing. Today, Tencent competes against the likes of Sony, Microsoft and Nintendo in terms of mass-market, gaming revenues. But just earlier this week, it was reported that ByteDance — the publisher behind breakout social media app TikTok — was readying its own foray into the world of gaming.
That would set up another level of rivalry between the two companies, since Tencent also has a massive interest in the social media space, specifically by way of its messaging app WeChat . While many consumers will have multiple apps, when it comes down to it, spending money in one represents a constraint on spending money in another.
Today, Tencent is one of the world’s biggest video game companies: in its last reported quarter (Q3 in November), Tencent said that it make RMB28.6 billion ($4.1 billion) in online gaming revenue, with smartphone games accounting for RMB24.3 billion of that.
Acquisitions and controlling stakes form a key part of the company’s growth strategy in gaming. Among its very biggest deals, Tencent paid $8.6 billion for a majority stake in Finland’s Supercell back in 2016. It also has a range of controlling stakes in Riot Games, Epic, Ubisoft, Paradox, Frontier and Miniclip. These companies, in turn, also are making deals: just earlier this month it was reported (and sources have also told us) that Miniclip acquired Israel’s Ilyon Games (of Bubble Shooter fame) for $100 million.
Turning back to Funcom, Tencent was already an investor in the company: it took a 29% stake in it in September 2019 in a secondary deal, buying out KGJ Capital (which had previously been the biggest shareholder).
“Tencent has a reputation for being a responsible long-term investor, and for its renowned operational capabilities in online games,” said Funcom CEO Rui Casais at the time. “The insight, experience, and knowledge that Tencent will bring is of great value to us and we look forward to working closely with them as we continue to develop great games and build a successful future for Funcom.”
In retrospect, this was laying the groundwork and relationships for a bigger deal just months down the line.
“We have a great relationship with Tencent as our largest shareholder and we are very excited to be part of the Tencent team,” Casais said in a statement today. “We will continue to develop great games that people all over the world will play, and believe that the support of Tencent will take Funcom to the next level. Tencent will provide Funcom with operational leverage and insights from its vast knowledge as the leading company in the game space.”
The rationale for Funcom is that the company had already determined that it needed further investment in order to follow through on its longer-term strategy.
According to a statement issued before it recommended the offer, the company is continuing to build out the “Open World Survival segment” using the Games-as-a-Service business model (where you pay to fuel up with more credits); and is building an ambitious Dune project set to launch in two years.
“Such increased focus would require a redirection of resources from other initiatives, the most significant being the co-op shooter game, initially scheduled for release during 2020 that has been impacted by scope changes due to external/market pressures with increasingly strong competition and internal delays,” the board writes, and if it goes ahead with its strategy, “It is likely that the Company will need additional financing to supplement the revenue generated from current operations.”
The new fund, which is described as “heavily oversubscribed,” sits at $185 million. That’s up from $85 million first time around.
Blossom’s remit remains broadly the same: to be the lead investor in European tech startups at Series A, along with doing some seed deals, too. In particular, the VC will continue to focus on finance, design, marketplaces, travel, developer-focused tools, infrastructure and “API-first” companies.
Its differentiator is pitched as so-called “high conviction” investing, which sees it back fewer companies by writing larger cheques, along with claiming to have close ties to U.S. top tier investors ready to back portfolios at the next stage.
And whilst a “bridge to the valley” is a well worn claim by multiple European VCs, Blossom’s track record so far bares this is out somewhat, even if it nascent. Of the firm’s portfolio, travel booking platform Duffel has received two follow-on investment rounds led by Benchmark and Index Ventures; cybersecurity automation platform Tines received follow-on investment led by Accel Partners; and payments unicorn Checkout.com is also backed by Insight Partners.
In addition, I understand that about half of Blossom’s LPs are in the U.S., and that all of the firm’s original LPs invested in this second fund, which Brown concedes was a lot easier to raise than the first. That’s presumably down to the up round valuations Blossom is already able to tout.
Citing benchmark data from Cambridge Associates and Preqin, Blossom says it sits in the top 5% of funds of 2018/2019 vintage in the U.S. and EU. Although, less than a year old, I would stress that it is still very early days.
More broadly, Brown and Blossom’s other partners — Imran Gohry, Louise Samet and Mike Hudack — argue that the most successful European companies historically are those that were able to attract U.S. investors but that companies no longer need to relocate to the U.S. to seize the opportunity.
“When we looked at the data it was very clear at the growth stage that, outside of Index and Accel, the most successful European outcomes were driven by the combination of European early-stage investors and top-tier U.S. growth investors,” explained Blossom Capital partner, Imran Ghory, in a statement. “From day one we prioritised building those relationships, both to share knowledge but also provide a bridge for European founders to access the best growth capital as they scale”.
LumApps, the cloud-based social intranet for the enterprise, has closed $70 million in Series C funding. Leading the round is Goldman Sachs Growth, with participation from Bpifrance via its Growth Fund Large Venture.
Others participating include Idinvest Partners, Iris Capital, and Famille C (the family office of Courtin-Clarins). The round brings the total raised by the French company to around $100 million.
Founded in Paris back in 2012, before launching today’s proposition in 2015, LumApps has developed what it describes as a “social intranet” for enterprises to enable employees to better informed, connect and collaborate. The SaaS integrates with other enterprise software such as G Suite, Microsoft Office 365 and Microsoft SharePoint, to centralize access to corporate content, business applications and social features under a single platform. The central premise is to help companies “break down silos” and streamline internal communication.
LumApps customers include Airbus, Veolia, Valeo, Air Liquide, Colgate-Palmolive, The Economist, Schibsted, EA, Logitech, Toto, and Japan Airlines, and the company claims to have achieved year-on-year revenue growth of 100%.
“Our dream was to enable access to useful information in one click, from one place and for everyone,” LumApps founder and CEO Sébastien Ricard told TechCrunch when the company raised its Series B early last year. “We wanted to build a solution that bridged [an] intranet and social network, with the latest new technologies. A place that users will love.”
Since then, LumApps has added several new offices and has seven worldwide: Lyon, Paris, London, New York, Austin, San Francisco, and Tokyo. Armed with additional funding, the company will continue adding significant headcount, hiring across engineering, product, sales and marketing. There are also plans to expand to Canada, more of Asia Pacific, and Germany.
“We’re actually looking at hiring 200 people minimum,” Ricard tells me. “We’re growing fast and have ambitious plans to take the product to new heights, including fulfilling our vision of making LumApps a personal assistant powered by AI. This will require a significant investment in top engineering/AI talent globally”.
Asked to elaborate on what machine learning and AI could bring to a social intranet, Ricard says the vision is to make LumApps a personal assistant for all communications and workflows in the enterprise.
“We see a future where this personal assistant can make predictive suggestions based on historical data and actions. Applying AI to prompt authors with suggested content, flagging important items that demand attention, and auto-archiving old content, are a few examples. Managing the massive troves of content and data companies have today is critical”.
Ricard also sees AI playing a big role in data security. “Employees have a high-degree of control with regard to data sharing and AI can help manage what employees can share in the workplace. This is more long-term but it’s where we’re headed,” he says.
“In the short-term, we’re making investments in automating as many workflows as possible with the goal of reducing or eliminating administrative tasks that keep employees from more productive tasks, including team collaboration and knowledge sharing”.
Meanwhile, LumApps says it may also use part of the Series C for M&A activity. “We’re growing fast and we’re looking at different areas for expansion opportunities,” Ricard says. “This includes retail and manufacturing and some business functions like HR, marketing and communications. We don’t have concrete plans to acquire any companies at the moment but we are keeping our options open as acquiring best-in-breed technologies often makes more sense from a business perspective than building it yourself”.
Shyft is announcing that it has raised $15 million in Series A funding to make the moving process less painful — specifically in the situations where your employer is paying for the move.
There other startups are looking to offer concierge-type services for regular moving — I used a service called Moved last year and liked it. But Shyft co-founder and CEO Alex Alpert (who’s spent years in the moving business) told me that there are no direct competitors focused on corporate relocation.
“Even at the highest levels, the process is totally jacked up,” Alpert said. “We saw an opportunity to partner with corporations and relocation management companies to build a customized, tech-driven experience with more choices, more flexibility and to be able to navigate the quoting process seamlessly.”
So when a company that uses Shyft decides to relocate you — whether you’re a new hire or just transferring to a new office — you should get an email prompting you to download the Shyft app, where you can chat with a “move coach” who guides you through the process.
You’ll also be able to catalog the items you want to move over a video call and get estimates from movers. And you’ll receive moving-related offers from companies like Airbnb, Wag, Common, Sonder and Home Chef.
And as Alpert noted, Shyft also partners with more traditional relocation companies like Graebel, rather than treating them as competitors.
The company was originally called Crater and focused on building technology for creating accurate moving estimates via video. It changed its name and its business model back in 2018 (Alpert acknowledged, “It wasn’t a very popular pitch in the beginning: ‘Hey, we’re building estimation software for moving companies.'”) but the technology remains a crucial differentiator.
“Our technology is within 95% accurate at identifying volume and weight of the move,” he said. “When moving companies know the information is reliable, they can bid very aggressively.”
As result, Alpert said the employer benefits not just from having happier employees, but lower moving costs.
The new funding, meanwhile, was led by Inovia Capital, with participation from Blumberg Capital and FJ Labs.
“There’s a total misalignment between transactional relocation services and the many logistical, social, and lifestyle needs that come with moving to a new city,” Inovia Partner Todd Simpson said in a statement. “As businesses shift towards more distributed workforces and talent becomes accustomed to personalized experiences, the demand for a curated moving offering will continue to grow.”
Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
Today we’re taking a moment to discuss the amount of money going into startups building OKR software. After covering WorkBoard’s recent round, I’ve noticed OKR software and services everywhere, even in Twitter ads that I somehow can’t avoid.
But surely there can’t be too many startups focused on OKR-related software and services? To answer that, let’s take a moment to detail out some of the startups in the space and their venture history. Leaning on my own research and some work by G2, this should be an entertaining way to spend our morning. Doubly so as several startups that we’ll discuss below (WorkBoard and Gtmhub, among others) are growing their ARR by several hundred percent each year, at the moment.
We’ll start with the world’s fastest definition of what OKRs are, and then dive in.
Good morning, friends, and welcome back to TechCrunch’s Equity Monday, a short-form audio hit to kickstart your week. Equity’s regular, long-form shows still land each and every Friday, including this entry from just a few days ago.
This morning, coming to you early from the frozen tundra of the American East Coast, it’s Tuesday. That’s because yesterday was a holiday in the United States, so we took the day to work a little bit less than usual. But that doesn’t mean we’d skip an episode, so let’s dive into topics:
And that was all the time that we had. We’re back Friday and Monday.
This morning FloQast, an LA-area startup, announced that it closed a $40 million Series C led by Norwest Venture Partners. The company also told TechCrunch in an interview that it raised a $20 million inside round between today’s investment and its 2017 Series B. Including today’s infusion, the firm has raised a little over $90 million.
The small inside round, however, wasn’t executed because the firm was low on options at the time. Instead, FloQast chose it over larger term sheets, using the cash to help launch a new product. It then raised the round we’re discussing today at a higher valuation. What did FloQast launch, and what impact did that choice have on its business? Let’s talk about what FloQast sells to help us answer both questions.
FloQast sells what it calls “close management software,” which might not mean much if you aren’t read-up on accounting. So, TechCrunch got FloQast CEO Mike Whitmire on the phone to explain it in more detail. According to the technology executive, his company helps “teams collaborate around the month end close, we help them communicate [and] stay on the same page with this process that occurs at the end of every month. And then we provide some light automation around [the] tie-out and reconciliation process, which is one of the steps of actually closing the books.”
Why does all that matter? Because a company can’t report its financial results until its books (accounts) are closed (finalized). So, Whitmire explained, you can’t get to a 10-Q or other bedrock financial report without this sort of work. And given that every company in the world has books that need closing you can see where FloQast fits into the business landscape.
FloQast doesn’t target every business, however. According to Whitmire, when a company reaches “five people in the corporate accounting department” is “where the pain starts to present itself” that FloQast wants to help with. And, in his view, the more complex a business becomes, the larger the need for the sort of help that his company’s software can provide.
You can see where we’re going with this by now. If not, here’s some help: If FloQast’s product works for larger companies, how quickly is its revenue (measured in annual recurring revenue, or ARR) growing, and, more precisely, how quickly is its average annual contract value (ACV) expanding?
Earlier we noted that FloQast decided to raise a small round before its Series C, using that money to launch a new product before raising its later, larger investment. That product, something called “AutoRec,” uses what the company calls “AI” to help reconcile accounts more quickly than would otherwise be possible.
The wager, launching that product before its Series C, paid off. Last year FloQast’s annual contract value (ACV) rose 60%. That gain was driven, according to the CEO, by the “new AutoRec product [helping add] more value” to contracts, and his company focusing more on upper-market customers. Its ACV growth helped FloQast’s growth stay consistent in percentage terms, with the CEO telling TechCrunch that his firm grows like “clockwork,” doubling its ARR on average every year. And, the company’s SaaS metrics look good: Including customer churn, Floqast has net retention of 115%, which is solid.
Summarizing his company’s last year or so, Whitmire said that FloQast “cut [its] cash burn, became very efficient, grew at a similar clip to what we’ve grown historically, maintained our net revenue retention number, and had this massive ACV kick.” It’s not hard to see, then, how FloQast put together its latest round.
So, the LA area really is more than Snap and Bird. You can build big SaaS companies there too.
AppsFlyer has raised a massive Series D of $210 million led by General Atlantic.
Founded in 2011, the company is best known for mobile ad attribution — allowing advertisers to see which campaigns are driving results. At the same time, AppsFlyer has expanded into other areas like fraud prevention.
And in the funding announcement, General Atlantic Manager Director Alex Crisses suggested that there’s a broader opportunity here.
“Attribution is becoming the core of the marketing tech stack, and AppsFlyer has established itself as a leader in this fast-growing category,” Crisses said. “AppsFlyer’s commitment to being independent, unbiased, and representing the marketer’s interests has garnered the trust of many of the world’s leading brands, and we see significant potential to capture additional opportunity in the market.”
Crisses and General Atlantic’s co-president and global head of technology Anton Levy are both joining AppsFlyer’s board of directors. Previous investors Qumra Capital, Goldman Sachs Growth, DTCP (Deutsche Telekom Capital Partners), Pitango Venture Capital and Magma Venture Partners also participated in the round, which brings the company’s total funding to $294 million.
AppsFlyer said it works with more than 12,000 customers including eBay, HBO, Tencent, NBC Universal, Minecraft, US Bank, Macy’s and Nike. It also says it saw more than $150 million in annual recurring revenue in 2019, up 5x from its Series C in 2017.
Co-founder and CEO Oren Kaniel said that as attribution becomes more important, marketers need a partner they can trust. And with AppsFlyer driving $28 billion in ad spend last year, he argued, “There’s a lot of trust there.”
Kaniel added, “It doesn’t really matter how sophisticated your marketing stack is, or whether you have AI or machine learning — if the data feed is wrong … everything else will be wrong. I think companies realize how sensitive and critical this data platform is for them. I think that in the past couple of years, they’re investing more in selecting the right platform.”
In order to ensure that trust, he said that AppsFlyer has avoided any conflicts of interest in its business model — a position that extends to fundraising, where Kaniel made sure not to raise money from any of the big players in digital advertising.
And moving forward, he said, “We will never go into media business, never go into media services. We want to maintain our independence, we want to maintain our previous unbiased positions.”
Kaniel also argued that while he doesn’t see regulations like Europe GDPR and California’s CCPA hindering ad attribution directly, the regulatory environment has justified AppsFlyer’s investment in privacy and security.
“Even more than just being in compliance, [with AppsFlyer], marketers all of a sudden have full control of their data,” he said. “Let’s say on the web, probably your website is sending data and information to partners who don’t need to have access to this ifnormation. The reason is, there’s no logic, there’s a lot of pixels going everywhere, the publishers don’t have control. If you use our platform, you have full control, you can configure the exact data points that you’d like to share.”
Stasher, the luggage storage app for travelers, has raised $2.5 million in additional funding. Leading the round is Venture Friends, along with various angels, including Johan Svanstrom, former president of Expedia-owned Hotels.com.
Launched in 2015, and now calling itself a “sharing economy solution” to luggage storage, the Stasher marketplace and app connects travelers, event attendees and vacation rental guests with local shops and hotels that can store their luggage on a short to medium-term basis.
Insurance is included with each booking, and items stored at a StasherPoint are covered for damage, loss and theft up to the value of £1,000.
Meanwhile, the revenue share for hosts is roughly 50% of the storage fee. The idea is that brick and mortar shops can access an additional revenue stream, thanks to the so-called sharing economy.
More broadly, the problem Stasher wants to solve is that having to carry around luggage can often stop you enjoying part of your day when traveling, time that is otherwise wasted. “If you’ve ever been forced out of your Airbnb at 10am, you may be familiar with the issue,” co-founder Anthony Collias told me back in 2018.
To that end, the Stasher network has grown a lot since then, and now has a presence in 250 cities, up from 20. This has included bringing the luggage storage app to the U.S. and Australia.
This has seen the startup partner with the likes of Klook, Sonder, Marriott and Hotels.com, along with brands such as Premier Inn, Expedia, Holiday Express, OYO and Accor.
Home, the Berlin-based startup that set out offering an app to help landlords manage rentals but has since pivoted to solve the landlord-tenant problem more directly, has raised €11 million in Series A funding.
Backing the round is Capnamic, EQT Ventures, FJ Labs and Redalpine, whilst the new capital will be used for “product innovation”, particularly on the tenant side. In addition, Home plans to bring its offering to new cities.
“[We] started with an app for landlords, which tracked rent payments etc., but Home is now a managed marketplace for landlords and tenants,” Home co-founder and CEO Thilo Konzok tells me.
“Home now acts as both the tenant and the landlord. Landlords get an instant offer and sign a contract with Home. A digital lock is fitted at the apartment and the landlord then simply gets rent – no maintenance stresses, financial risks etc”.
The idea of essentially becoming a full-stack landlord (my words, not Konzok’s) is so that property owners don’t need to become experts in renting apartments, understanding legislation, maintenance and knowing what rent to charge.
“Tenants also have a far better, more transparent experience,” argues the Home CEO. This includes the ability to visit and book apartments themselves, thanks to Home’s use of smart locks. “If they need anything, they can reach Home 24/7 via the app,” he adds.
The proposition is currently available in Berlin, Munich and Hamburg, and appears to be proving popular. Konzok says that every month more than 1,100 landlords request an offer from Home. To be able to accept more of these requests, the company will expand into new cities throughout 2020. Specifically, this should see seven more German cities by April 2020 and one international city in October 2020.
Adds Jörg Binnenbrücker, Managing Partner at Capnamic: “When we first met Thilo and Moritz we were impressed by their vision of creating a new asset class and form of ownership. Capnamic is excited to have found the best team to bring this new housing experience to everyone and capture a massive market opportunity”.
French startup Qonto has raised a $115 million Series C funding round led by Tencent and DST Global. Today’s news comes a few days after another French fintech startup, Lydia, raised some money from Tencent.
Existing investors Valar and Alven are also participating in today’s funding round. TransferWise co-founder Taavet Hinrikus and Adyen CFO Ingo Uytdehaage are also joining the round. Qonto says it represents the largest funding round for a French fintech company.
Qonto is a challenger bank, or a neobank, but for B2B use cases. Instead of attracting millions of customers like N26 or Monzo, Qonto is serving small and medium companies as well as freelancers in Europe.
According to the startup, business banking in Europe is broken. The company thinks it can provide a much better user experience with an online and mobile-first product.
The company has managed to attract 65,000 companies over the past two years and a half. The product is currently live in France, Italy, Spain and Germany. In 2019 alone, Qonto managed €10 billion in transaction volume.
With today’s funding round, the company plans to double down on its existing markets, develop new features that make the platform work better in each country based on local needs and hire more people. The team should grow from 200 to 300 employees within a year.
Qonto obtained a payment institution license in June 2018 and has developed its own core banking infrastructure. Around 50% of the company’s user base is currently using Qonto’s own core banking system. Others are still relying on a third-party partner.
Moving from one back end to another requires some input from customers, which explains why there are still some customers using the legacy infrastructure. Over the coming months, Qonto plans to launch new payment features that should convince more users to switch to Qonto’s back end.
Even more important, Qonto plans to obtain a credit institution license, which could open up a ton of possibilities when it comes to features and revenue streams. The company says that it should have its new license by the end of the year.
For instance, you could imagine being able to get a credit card, apply for an overdraft and get a small loan with Qonto.
Compared to traditional banks, Qonto lets you open a bank account more easily. After signing up, Qonto offers a modern interface with your activity. You can export your transactions in no time, manage your expenses and get real-time notifications. Qonto also integrates with popular accounting tools.
When it comes to payment methods, Qonto gives you a French IBAN as well as debit cards. You can order physical or virtual cards whenever you want, customize limits and freeze a card. Qonto also supports direct debit and checks. Like many software-as-a-service products, you can also manage multiple user accounts and customize permission levels.
Uber said on Tuesday it has sold its food delivery business, Uber Eats, in India to local rival Zomato as the American ride-hailing giant races to shed loss-making operations to become profitable by next year.
As part of the deal, Uber would own 9.99% of Zomato and its Eats users would become part of the Indian company, the two loss-making firms said. The deal valued Uber Eats’ India business between $160 million and $200 million*, two people familiar with the matter told TechCrunch.
TechCrunch reported last month that the two were in advanced stages of talks for a deal. Indian newspaper Times of India first signaled about the two companies’ talks in November.
Satish Meena, an analyst at Forrester, told TechCrunch that despite the Uber deal, Zomato still lags local rival Swiggy, which services more orders each day. Backed by Prosus Ventures, Swiggy raised $1 billion in late 2018.
“Our Uber Eats team in India has achieved an incredible amount over the last two years, and I couldn’t be prouder of their ingenuity and dedication,” said Dara Khosrowshahi, chief executive of Uber, in a statement.
Uber Eats, which entered India in 2017, initiated conversations to sell the local business in late 2018, said people familiar with the matter.
“India remains an exceptionally important market to Uber and we will continue to invest in growing our local Rides business, which is already the clear category leader. We have been very impressed by Zomato’s ability to grow rapidly in a capital-efficient manner and we wish them continued success,” he added.
According to industry estimates, Uber is not the “clear category leader” in India. That title belongs to Ola, which processes twice as many rides as Uber in India and has presence in 110 cities, compared to the American firm’s roughly three-dozen.
As for Uber Eats employees in India, some of them have been given the option to join Uber while rest will be let go, people familiar with the matter told TechCrunch.
The announcement comes amidst news of Zomato’s new financing round. The 11-year-old Indian firm last month raised $150 million from Ant Financial and says it is looking to secure another $400 million in the next few weeks.
Offloading Uber Eats India would help Uber, which left Southeast Asia last year, reduce its global losses. The company, which cut hundreds of jobs last year, reported a quarterly loss of more than $1 billion in November. In the prior quarter, it lost about $5.2 billion. Uber says that it aims to become profitable by 2021.
The ride-hailing giant projected a loss of $107.5 million for its Uber Eats business in India for the period between August and December of last year. Zomato, too, has been reducing its burn rate. The company, which as of 2018 was losing more than $40 million each month, has cut its monthly loss to $20 million, Info Edge, one of the investors in Zomato, told analysts in an earnings call in November.
*Update: The story was updated to change the valuation of Uber Eats’ India business. An earlier version of the story pegged the deal to be worth $300 million to $350 million.
Personio, the Germany-founded HR platform for SMEs, has raised $75 million in Series C funding in a round led by Accel. I understand the investment values the company at around $500 million.
Also joining is Lightspeed Venture Partners, alongside Lars Dalgaard (the founder and former CEO of SuccessFactors). Existing investors Index Ventures, Northzone, Rocket Internet’s Global Founders Capital, and Picus Capital followed on.
The Series C brings Personio’s total funding to $130 million since launching in 2015. The additional capital will help support the company’s expansion into the U.K. and Ireland, which is also being announced today. This will see Personio establish a new office in London to better serve clients in the U.K. and Ireland.
Combining human resources, recruiting and payroll into a single platform, Personio bills itself as an “HR operating system” for small and medium-sized companies (SMEs) ranging from 10 to 2,000 employees.
The cloud-based software is designed to power all of a company’s people processes via the product’s own growing functionality or through its ability to integrate with third-party software.
To that end, Personio says its customer base has tripled in the past 12 months, and says it now serves almost 2,000 customers in more than 40 countries. In the same period, the number of employees at Personio has more than doubled to more than 350. That figure is set to reach 700 employees by the end of 2020.
Along with traditional SMEs, Personio has naturally found a home amongst startups. “The strong growth of the last four years in German-speaking countries has shown that there is a great demand for HR software in SMEs,” Personio co-founder and CEO Hanno Renner tells me.
“Forty-two percent of their time is currently spent on administrative tasks, according to a recent, as yet unpublished, study from Germany. Personio automates repetitive tasks and thus gives HR staff time for value-adding tasks. This is an invaluable advantage that has already convinced several U.K. customers such as Raisin and millimetric.”
Co-leading this new round is Dawn Capital, HMI Capital and Insight Partners. The round also includes the incumbent postal operator and Italy’s largest financial services network Poste Italiane as a new investor, along with existing investors Heartcore Capital, ABN AMRO Ventures and BNP Paribas’ venture arm, Opera Tech Ventures.
The injection of capital will enable Tink to accelerate its European expansion plans and further develop its product accordingly.
“During 2020, we are committed to building out our platform with more bank connections and, on top of that, expand our product offering,” Tink co-founder and CEO Daniel Kjellén tells me. “Our aim is to become the preferred pan-European provider of digital banking services and increase our local presence across the region”.
Originally launched in Sweden in 2013 as a consumer-facing finance app with bank account aggregation at its heart, Tink has long since repositioned its offering to become a fully-fledged open banking platform, requisite with developer APIs, to enable banks and other financial service providers to ride the open banking/PSD2 train.
Through its various APIs, Tink provides four pillars of technology: “Account Aggregation,” “Payment Initiation,” “Personal Finance Management” and “Data Enrichment.” These can be used by third parties to roll their own standalone apps or integrated into existing banking applications.
“We have grown significantly, both in terms of our platform’s connectivity and as an organisation,” says Kjellén, when asked what has changed in the last 11 months. “We have during the year launched our platform in Belgium, Austria, the U.K., Germany, Spain, the Netherlands, Portugal and Italy. In total, our open banking platform is right now live in twelve European markets and connects to more than 2,500 banks that reach more than 250 million bank customers across Europe”.
The company’s headcount has also grown a lot, too. In the beginning of 2019 it sat at around 120, but is now at 300 employees. Most but not all are based in its headquarters in Stockholm, alongside local offices including recently opened sites in Paris, Helsinki, Oslo, Madrid, Warsaw, Milan and Copenhagen.
Perhaps better positioned than most, I asked Kjellén what types of use cases are really resonating with open banking, given that many industry commentators don’t think it has quite yet lived up to the hype.
“Many of our customers are seeing the advantage of being able to build smart multi-banking products with the data that they are now able to fetch and use to add value for their end users,” he says. “The use cases that really show the potential of open banking that we see our customers thriving with are those that leverage the full value of the financial data to deliver truly personalised experiences at scale, or remove friction in the user journey to a minimum, such as proactive price comparison, enhanced credit scoring and onboarding. Use cases such as these show that the consumer’s data can really work for them and bring improvements to their everyday interactions”.
One example Kjellén gives me is Klarna, the checkout credit provider, which he says is using open banking to provide a “wonderful” in-app experience. “I love that I as a consumer can now choose to change my mind and slice up the payments for a purchase I have already paid in full with my bank card,” he explains. “This shows how the potential of open banking goes way beyond just accessing a transaction history and allows the most innovative players, such as Klarna, to create a new standard in consumer experience”.
Kjellén says another standout use-case is using PSD2 APIs to verify identity to complete any type of customer registration completely automatically. “[That is] something that I find very innovative. It automates the previously time-consuming administration on the business side and delivers a completely seamless digital service on the end user side,” he says.
Meanwhile, Tink says its customer numbers have “quadrupled” in the past year, and includes PayPal, Klarna, NatWest, ABN AMRO, BNP Paribas Fortis, Nordea and SEB. “More than 4,000 developers are currently using Tink to build and power new innovative financial services and products,” adds Kjellén.
Continuing our irregular surveys of the public markets, two things happened this week that are worth our time. First, a third domestic technology company — Alphabet — passed the $1 trillion market capitalization threshold. And, second, software as a service (SaaS) stocks reached record highs on the public markets after retreating over last summer.
The two milestones, only modestly related events, indicate how temperate the public waters are for technology companies today, a fact that should extend warmth into the private market where startups, and their venture capital backers, work.
The happenings are good news for technology startups for a number of reasons, including that major tech players have never had as much wealth in hand with which to buy smaller companies, and strong SaaS valuations help both smaller startups fundraise, and their larger brethren possibly exit.
Indeed, the stridently good valuations that major tech companies and their smaller siblings enjoy today should be just the sort of market conditions under which unicorns want to debut. We’ll continue to make this point so long as the public markets continue to rise, pricing tech companies that have already floated higher like the cliche’s own tide.
But while Alphabet, Microsoft and Apple are worth $3.68 trillion as a trio, and SaaS stocks are now worth 12.3x times their revenue (using enterprise value instead of market cap, for those keeping score at home), not every private, venture-backed company will necessarily benefit from public investor largesse.
How much the current public-market tech valuation expansion will help companies that are increasingly sorted into the tech-enabled bucket isn’t clear; some companies that went public in 2019 were quickly spit up by investors unwilling to support valuations that matched or rose above their final private valuations. SmileDirectClub was one such offering.
The dividing line between what counts as tech — often fuzzy — appears to be slicing along gross margin lines, and the repeatability of business. The higher margin, and more recurring a company is, the more it’s worth. This market reality is why SaaS stocks’ recent return to form is not a surprise.
For Casper and One Medical, the first two venture-backed IPO hopefuls of the year, the more tech-ish they can appear between now and pricing the better. Because technology companies today are valued so highly, perhaps even a faint dusting of tech will save their valuations as they cross the chasm between private and adult.
Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
Yesterday, TechCrunch reported that Eaze, a well-known cannabis-focused startup, is struggling to stay in business amidst a cash crunch, leadership turmoil, banking issues and a business model pivot. It’s a compelling, critical read.
The news, however, asks a question: How are other cannabis-focused startups faring? We’ll explore the question through the lens of fundraising and the public market results of public cannabis companies in Canada.