Cash is the predominant method of sending and receiving payments in the Middle East. If you owe someone a cup of coffee or a trip over a long period, repaying via cash is your best bet. This is one problem out of many financial issues that haven’t been addressed in the region.
The good news is that startups are springing up to provide solutions. Last month Telda, a now two-month-old startup in Egypt, raised an impressive sum as pre-seed to offer digital banking services. Today, Ziina, another startup based in Dubai, has closed $7.5 million in seed funding to scale its peer-to-peer (P2P) payment service across the Middle East and North Africa.
Ziina has managed to enlist top global investors and fintech founders in the round. Avenir Growth and Class 5 Global led this latest tranche of financing. Wamda Capital, FJ Labs, Graph Ventures, Goodwater Capital, Jabbar Internet Group, Oman Technology Fund’s Jasoor Ventures, and ANIM also participated.
The founders who took part include Checkout CEO Guillaume Pousaz via his investment fund Zinal Growth; Krishnan Menon, BukuKas CEO, as well as executives from Paypal and Venmo. This adds to a roster of executives and early employees from Revolut, Stripe, Brex, Notion, and Deel that joined Ziina’s round.
According to the company, it has raised over $8.6 million since launching last year. This includes the $850,000 pre-seed raised in May 2020 and $125,000 secured after going through Y Combinator’s Winter batch early this year.
Ziina was founded by Faisal Toukan, Sarah Toukan, and Andrew Gold. It’s the latest addition to the Middle East’s bubbling fintech ecosystem and is capitalising on the region’s rapid adoption of fintech friendly regulation.
The company allows users to send and receive payments with just a phone number —no IBAN or swift code required as is the de facto method in the UAE and some parts of the Middle East. It also claims to be the country’s first licensed social peer-to-peer application “on a mission to simplify finance for everyone.”
After meeting during a hackathon in the U.S., Faisal and Gold began exchanging ideas on how to build wallets, wanting to mirror the successes platforms like WePay, Paytm have had. At the time, VCs seemed to be interested in how the wallets ecosystem intersected with banking.
“The lines between wallets and banking have become really blurred. Every wallet has a banking partner, and people who use wallets use them for their day-to-day needs,” CEO Faisal Toukan said to TechCrunch.
On the other hand, Sarah, who is Faisal’s sister, was on her personal fintech journey in London. There, she attended several meetups headlined by the founders of Monzo and Revolut. With her knowledge and the experience of the other two, the founders decided that solving P2P payments issues was their own way of driving massive impact in the Middle East.
So how far have they gone? “We launched a beta for the market but it’s restricted for regulatory reasons and basically to keep ourselves in check with the ecosystem,” Toukan remarked. “Since then, we’ve gotten regulated. We’ve got a banking partner, one of the three largest banks in the UAE, and we’ve set a new wallet a month from now. That’s also what we were working throughout our period in YC. So it’s been quite an eventful year.”
The fintech sector in MENA is growing fast; in terms of numbers, at a CAGR of 30%. Also, in the UAE, it is estimated that over 450 fintech companies will raise about $2 billion in 2022 compared to the $80 million raised in 2017. Fintechs in the region are focused on solving payments, transfers, and remittances. Alongside its P2P offering, these are the areas Ziina wants to play in, including investment and cryptocurrency services.
According to Toukan, there’s no ease of making online investments, and remittances are done in exchange houses, a manual process where people need to visit an office physically. “So what we’re looking to do is to bring all these products to life in the UAE and expand beyond that. But the first pain point we’re solving for is for people to send and receive money with two clicks,” the CEO affirmed.
Starting with P2P has its own advantages. First, peer-to-peer services is a repeat behavioural mechanism that allows companies to establish trust with customers. Also, it’s a cheaper customer acquisition model. Toukan says that as Zinna expands geographically — Saudi Arabia and Jordan in 2022; and Egypt and Tunisia some years from now — as he wants the company’s wallet to become seamless cross border. “We want a situation where if you move into Saudi or Dubai, you’re able to use the same wallet versus using different banking applications,” he added.
To be on the right side of regulation is key to any fintech expansion, and Toukan says Ziina has been in continuous dialogue with regulators to operate efficiently. But some challenges have stemmed from finding the right banking partners. “You need to make a case to the banks that this is basically a mutually beneficial partnership. And the way we’ve done that is by basically highlighting different cases globally like CashApp that worked with Southern Bank,” he said.
Now that the company has moved past that challenge, it’s in full swing to launch. Presently, Ziina has thousands of users who transacted more than $120,000 on the platform this past month. According to the company, there are over 20,000 users on its waiting list, and they will be onboarded post-launch.
Ziina has already built a team with experience across tech companies like Apple, Uber, Stanford, Coinbase, Careem, Oracle, and Yandex. It plans to double down on hiring with this new investment and customer acquisition and establishing commercial partnerships.
A decade before investing outside of San Francisco and New York became trendy, entrepreneurs Jewel Burks, Justin Dawkins and Barry Givens were betting on Atlanta. Each experienced first-hand the biases that disproportionately hurts Black founders – while also being living proof of the wave of Black innovation and opportunity in their city.
Last year, the trio saw opportunity in that disconnect and launched Collab Capital, a firm designed to invest explicitly in Black founders. It debuted with $2 million in capital and a massive end target: $50 million. Today, the firm announced that it has met that goal, with backers such as Apple, Goldman Sachs, Google, The Andrew W. Mellon Foundation, Mailchimp, and PayPal, making it one of the largest funds closed from an entirely Black-led firm solely committed to Black founders.
“We really wanted to build a fund that was appropriate for the opportunity that we see [in Black founders],” Burks said. “And honestly I would say, it’s a small fund out there relative to the number of Black-led companies out there that are looking and seeking funding.”
With the new fund, Collab Capital plans to invest in 50 companies over a three-to-five-year period with check sizes between $500,000 and $750,000. The firm has also reserved up to $2 million per investment for follow-on bets. It is targeting ownership between 10% to 15% in each deal. To date, Collab Capital has backed six companies in the healthcare, edtech, and future of work spaces, including Music Tech Works and Hairbrella.
Internally, the team plans to stay based in Atlanta. Burks, who founded Atlanta-based PartPic, a TC Battlefield company that sold to Amazon, said that reinvesting in the community has always been a part of Collab Capital’s intention. Case in point? The firm’s first three deals were in Atlanta. As Zoom investing became more popular in the wake of the coronavirus, the team invested in startups from Kansas City, Washington, D.C., and Miami, as well.
“We’re excited to be able to support founders anywhere in the United States, but we’re really focused on cities that have a high concentration of Black innovators and a lower concentration of capital,” she said.
While part of Collab’s focus is avoiding coastal cities, network matters. The firm’s ability to secure heavyweight investors such as Apple and PayPal gives it a key signal that validates its bet on Black founders.
Burks thinks part of the reason that investors might be more intentional about backing firms such as hers is the result of the racial injustice that was highlighted in the wake of the murder of George Floyd, Breonna Taylor, and countless other Black people at the hands of police.
After Floyd and Taylor were murdered, there was a global movement spearheaded by Black Lives Matter in response to police brutality and racism in the United States. Burks says that Collab Capital had only raised a few million at that time, but then witnessed “a shift in the hearts and minds of capital allocators.”
Burks noted that when Collab Capital was first raising its fund, potential investors told them to have a “wider perspective” on what kinds of entrepreneurs to back. Some thought they should create a fund around underrepresented founders or multicultural founders. With general VC volatility in the early months of the pandemic, Collab Capital saw some of its LPs pull back or delay commitments.
“We were very adamant that the most important thing we wanted to solve was the funding gap for Black founders, so we were not willing to broaden the spectrum there because we saw that there were so many firms out there for diverse founders, and even in some of those, Black founders were still marginalized.”
While the majority of venture dollars are still managed by white men, Black-led venture capital firms are having quite the year. Collab Capital’s news is preceded by Harlem Capital, which closed a $134 million seed fund earlier this year, Cleo Capital, which set a $20 million target for Fund II, and MaC VC landing $103 million for its inaugural fund.
Beyond a broader understanding of the importance of diversity in tech, Burks pointed to Zoom as a value unlock.
“If you’d asked me a year ago [if] I think we’d be successful in raising $50 million over Zoom meetings, I would have said absolutely not,” she said. “But you can build meaningful relationships with people and not even have to be in person. That’s a big surprise — and, oh, the realization that you don’t have to travel so much.”
The relationships between banks and fintechs are multi-faceted.
In some cases, they partner. In many cases, they compete. In other cases, one acquires or invests in the other.
Well, today, an announcement by global payments giant Visa is aimed at helping facilitate banks and fintechs’ ability to work together.
Specifically, Visa said today it has expanded its Visa Fintech Partner Connect, a program designed to help financial institutions quickly connect with a “vetted and curated” set of technology providers.
I talked with Terry Angelos, senior vice president and global head of fintech at Visa, to understand just exactly what that means.
“Global fintech investment last year was $105 billion,” Angelos said. “There were about 2,861 deals in venture, PE and M&A. So literally over $100 billion is going into fintech, which is more than the combined tech budgets of every bank in the U.S. As a result, a lot of innovation that is occurring in fintech is funded by venture dollars. We’re trying to bring that innovation to our clients, whether they are banks, processors or other fintechs.”
The program initially launched in Europe in November of 2020, and now is available in the U.S., Asia Pacific, Latin American and CEMEA (Central Europe, Middle East and Africa). Visa has worked to identify fintechs that can help banks and financial institutions (that are clients of Visa’s) as well as other fintechs “create digital-first experiences, without the cost and complexity of building the back-end technology in-house.”
Local teams will run programs in the respective regions, and vet and manage partners in the following categories: account opening, data aggregation, analytics and security, customer engagement and new cardholder services and operations and compliance.
So far, Visa has identified about 60 partners that offer a range of technologies — from back-office functions to new front-end services, according to Angelos. Those partners include Alloy, Jumio, Argyle, Fidel, FirstSource, TravelBank, Canopy, Hummingbird and Unit21, among others. Twenty-four are located in the U.S.
“So much of fintech focus and coverage is about disrupting existing banks. Everyone is trying to disrupt everyone, including fintechs like PayPal,” Angelos told TechCrunch. “Venture numbers are certainly very large. What we’re realizing is there is a significant opportunity to pair up a lot of venture-backed companies with our existing clients. It runs a little bit against us versus them approach you typically hear about.”
Visa clients can get in touch with program partners via the Visa Partner website and get benefits such as reduced implementation fees and pricing discounts.
“The Fintech Connect program is about both helping to identify and curate interesting fintech companies and then create a favorable commercial partnership for our clients so they can engage with these Fintech Connect partners,” Angelos said.
So, what does Visa gain from all this?
“Our goal is that all of our clients are in a position to build better digital experiences for their consumers,” he told TechCrunch. “We would love it if every bank had the latest tools in order to onboard clients and build digital experiences.”
One of its partners, for example, is virtual card startup Extend.
“There are fintechs that provide this today such as TripActions, Ramp and Divvy,” Angelos points out. “But what Visa is doing is looking at ‘How can we enable our banking clients to do something similar?’ So we’re bringing innovation into our ecosystem so that anyone can take advantage.”
It can also help companies such as TripActions, Ramp or Divvy with other complementary technologies for security posture, for example.
“The net beneficiary is to hopefully move more spending onto those rails,” Angelos said. “For example, if you look at B2B spend, there’s about $120 trillion of it annually. We believe about $20 trillion of that is card eligible. Today, Visa captures about $1 trillion of that. So, another $19 trillion is available for Visa to capture through our partners if our banks and fintechs can build these kinds of solutions to enable B2B payments.”
To be clear, Visa also invests in startups from time to time. But this initiative is distinct from those efforts, although a couple of its partners have been recipients of funding from Visa.
Ride-hailing giant Gojek and marketplace Tokopedia said on Monday they have combined their businesses to form GoTo Group, the largest technology group in Indonesia, the fourth most populous nation that is currently navigating to contain the economic fallout from the coronavirus pandemic.
Gojek’s Andre Soelistyo will lead the combined business as GoTo Group CEO, with Tokopedia’s Patrick Cao serving as GoTo Group President. Kevin Aluwi will continue as CEO of Gojek and William Tanuwijaya will remain CEO of Tokopedia, the two firms said in a joint announcement.
The combined entity is “a globally unique and highly complementary ecosystem,” the two firms said, claiming that GoTo features:
The deal, which has been in the works for several months, comes after Gojek spent several quarters exploring a merger with its chief Southeast Asian rival Grab. Tokopedia meanwhile was in talks late last year to pursue a public listing this year. Gojek and Tokopedia last month moved to seek approval from their respective investors. During their talks, the proposed valuation of GoTo was $18 billion.
The companies, which have together raised about $8.2 billion (according to research firm Tracxn) didn’t comment on the final valuation today nor did they disclose any other financial terms of the deal.
The friendship of founders of Gojek and Tokopedia — two of the largest startups in Indonesia — may have helped secure this deal. The two companies first began working together in 2015 to accelerate e-commerce deliveries using Gojek’s local network of drivers.
“The companies will continue to thrive and coexist as stand-alone brands within the strengthened ecosystem,” they said on Monday.
In the meantime, Grab has since announced plans to go public in the U.S. via SPAC, and is seeking a valuation of $39.6 billion, which if materializes at the current terms, would be the biggest-ever deal of its kind. GoTo plans to go public as soon as this year via listings in New York and Jakarta, according to media reports.
“Today is a truly historic day as we mark the beginning of GoTo and the next phase of growth for Gojek, Tokopedia and GoTo Financial. Gojek drivers will deliver even more Tokopedia packages, merchant partners of all sizes will benefit from strengthened business solutions and we will use our combined scale to increase financial inclusion in an emerging region with untapped growth potential. For the consumer, GoTo Group will continue to reduce frictions and provide best in class delivery of goods and services. This is the next step of an exciting journey and I am humbled and proud to lead the GoTo movement,” said Andre Soelistyo, CEO of GoTo Group, in a statement.
We got insanely lucky to partner w both for 6+ yrs
Priceless war stories & scars @Sequoia_India
Inspired, filled w gratitude, excited about future #GoTo
— Shailendra J Singh (@singh_sequoia) May 17, 2021
Existing investors — including Alibaba Group, Astra International, BlackRock, Capital Group, DST, Facebook, Google, JD.com, KKR, Northstar, Pacific Century Group, PayPal, Provident, Sequoia Capital India, SoftBank Vision Fund 1, Telkomsel, Temasek, Tencent, Visa and Warburg Pincus — backed the merger, the two firms said.
Tokopedia’s Co-founder and CEO William Tanuwijaya said, “The establishment of GoTo Group proves that you can believe in an ‘Indonesian dream’ and make it a reality. Our goal has always been to build a company that creates social impact at scale, levelling the playing field for small businesses and giving consumers equal access to goods and services across the country. In addition to accelerating the growth of Indonesia’s digital economy, GoTo Group will make it easier for people from all walks of life to access quality products and services, anytime and anywhere. We still have a long way to go to achieve our goals, but today is about starting that journey together.”
PayPal announced today it’s acquiring Happy Returns, a returns solution provider that offers online shoppers access to easier ways to send back unwanted merchandise to retailers without having to box it up and ship it themselves. The company today offers a network of more than 2,600 drop-off returns locations in the U.S., including those in over 1,200 metros and in every U.S. state.
It also has relationships with hundreds of brands that have been using its returns software and reverse logistics services. The company says it will continue to offer its returns experience to online retailers and shoppers as a part of PayPal.
Founded in 2015, Santa Monica-based Happy Returns’ value proposition was to take some of the overhead and cost out of the returns process for online retailers. Because online shoppers can’t inspect items they buy directly, online retail tends to see higher return rates, especially in apparel. Happy Returns found that online items are three to four times as likely to be returned than those purchased in store, for example.
Meanwhile, today’s retailers have to compete with giants like Amazon and Walmart, both which enable returns more easily for their customers by way of their large brick-and-mortar footprints — Amazon with Whole Foods’ other locations, and Walmart with its own stores. In fact, the foot traffic that offering an Amazon returns desk or locker system in-store has led retailers like Kohl’s and Stein Mart to embrace the enemy by catering to shoppers with Amazon returns in their own stores.
Today, the Happy Returns solution offers a combination of software, services and logistics that allows retailers to manage their returns through their own retail stores, by carrier, as well as through Happy Returns’ “Return Bar” locations. These are found in physical retail stores like Paper Source, Sur La Table, Cost Plus World Market and others. The service has been used by several digitally native brands, including Everlane, Rothy’s and Parachute Home, among others.
Happy Returns has also been closely working with PayPal throughout its history, it notes. And notably, PayPal made a strategic investment in the business in 2019, as part of an $11 million financing round.
Following the deal’s close, Happy Returns will continue to work with retailers and shoppers both on and off PayPal’s platform, it says. The company’s co-founders, David Sobie and Mark Geller, and its full 120+ team, will join PayPal, and will report to Frank Keller, SVP Consumer In-Store and Digital Commerce at PayPal.
PayPal is not disclosing the deal terms. To date, Happy Returns had raised $25 million in funding.
“This is an incredibly exciting milestone for our company, and it would not have been possible without the hard work and dedication of our entire team,” an announcement on Happy Returns’ website reads. “We are so proud of what our team has accomplished and are grateful for the tenacity, creativity and empathy Happy Returns employees bring to work each day. We are confident that the best is yet to come, and are looking forward to our next chapter as part of the PayPal organization.”
Flywire is a global payments company that attracted more than $300 million as a startup, according to Crunchbase, most recently raising a $60 million Series F last month. We don’t have its most recent valuation, but PitchBook data indicates that the company’s February 2020, $120 million round valued Flywire at $1 billion on a post-money basis.
So what we’re looking at here is a fintech unicorn IPO. A great way to kick off the week, to be honest, though I’d thought that Robinhood would be the next such debut.
Fintech venture capital activity has been hot lately, which makes the Flywire IPO interesting. Its success or failure could dictate the pace of fintech exits and fintech startup valuations in general, so we have to care about it.
Regardless, we’re doing our regular work this morning. First, what does Flywire do and with whom does it compete? Then, a closer look at its financial results as we hope to get our hands around its revenue quality, aggregate economics and growth prospects.
After that, we’ll discuss valuations and which venture capital groups are set to do well in its flotation. The company had a number of backers, but Spark Capital, Temasek, F-Prime Capital, and Bain Capital Ventures made the major shareholder list, along with Goldman Sachs. So, a number of firms and funds are hoping for a big Flywire exit. Let’s dig in.
Flywire is a global payments company. Or, as it states in its S-1 filing, it’s “a leading global payments enablement and software company.” And it thinks that its market, and by extension itself, has lots of room to grow. While “substantial strides [have been] made in payments technology in the retail and e-commerce industries,” the company wrote, “massive sectors of our global economy—including education, healthcare, travel, and business-to-business, or B2B, payments—are still in the early stages of digital transformation.”
That’s the same logic behind Stripe’s epic valuation and the rising value of payments-focused companies like Finix.
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.
This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here.
This morning was a notable one in the life of TechCrunch the publication, as our parent company’s parent company decided to sell our parent company to a different parent company. And now we’re to have to get new corporate IDs, again, as it appears that our new parent company’s parent company wants to rebrand our parent company. As Yahoo.
Anyway, a bunch of other stuff happened as well:
We’re back Wednesday with something special. Chat then!
If there has ever been a golden age for fintech, it surely must be now. As of Q1 2021, the number of fintech startups in the U.S. crossed 10,000 for the first time ever — well more than double that if you include EMEA and APAC. There are now three fintech companies worth more than $100 billion (Paypal, Square and Shopify) with another three in the $50 billion-$100 billion club (Stripe, Adyen and Coinbase).
Yet, as fintech companies have begun to go public, there has been a fair amount of uncertainty as to how these companies will be valued on the public markets. This is a result of fintechs being relatively new to the IPO scene compared to their consumer internet or enterprise software counterparts. In addition, fintechs employ a wide variety of business models: Some are transactional, others are recurring or have hybrid business models.
In addition, fintechs now have a multitude of options in terms of how they choose to go public. They can take the traditional IPO route, pursue a direct listing or merge with a SPAC. Given the multitude of variables at play, valuing these companies and then predicting public market performance is anything but straightforward.
It is important to note that fintech is a complex category with many different types of players, and not all fintech is created equal.
For much of the past two decades, fintech as a category has been very quiet on the public markets. But that began to change considerably by the mid-2010s. Fintech had clearly arrived by 2015, with both Square and Shopify going public that year. Last year was a record one with eight fintech IPOs, and there has been no slowdown in 2021 — the first four months have already produced seven IPOs. By our estimates, there are more than 15 additional fintech companies that could IPO this year. The current record will almost certainly be shattered well before the end of the year.
Image Credits: Oak HC/FT
Weav, which is building a universal API for commerce platforms, is emerging from stealth today with $4.3 million in funding from a bevy of investors, and a partnership with Brex.
Founded last year by engineers Ambika Acharya, Avikam Agur and Nadav Lidor after participating in the W20 YC batch, Weav joins the wave of fintech infrastructure companies that aim to give fintechs and financial institutions a boost. Specifically, Weav’s embedded technology is designed to give these organizations access to “real time, user-permissioned” commerce data that they can use to create new financial products for small businesses.
Its products allow its customers to connect to multiple platforms with a single API that was developed specifically for the commerce platforms that businesses use to sell products and accept payments. Weav operates under the premise that allowing companies to build and embed new financial products creates new opportunities for e-commerce merchants, creators and other entrepreneurs.
Left to right: Co-founders Ambika Acharya, Nadav Lidor and Avikam Agur; Image courtesy of Weav
In a short amount of time, Weav has seen impressive traction. Recently, Brex launched Instant Payouts for Shopify sellers using the Weav API. It supports platform integrations such as Stripe, Square, Shopify and PayPal. (More on that later.) Since its API went live in January, “thousands” of businesses have used new products and services built on Weav’s infrastructure, according to Lidor. Its API call volume is growing 300% month over month, he said.
And, the startup has attracted the attention of a number of big-name investors, including institutions and the founders of prominent fintech companies. Foundation Capital led its $4.3 million seed round, which also included participation from Y Combinator, Abstract Ventures, Box Group, LocalGlobe, Operator Partners, Commerce Ventures and SV Angel.
A slew of founders and executives also put money in the round, including Brex founders Henrique Dubugras and Pedro Franceschi; Ramp founder Karim Atiyeh; Digits founders Jeff Seibert and Wayne Chang; Hatch founder Thomson Nguyen; GoCardless founder Matt Robinson and COO Carlos Gonzalez-Cadenas; Vouch founder Sam Hodges; Plaid’s Charley Ma as well as executives from fintechs such as Square, Modern Treasury and Pagaya.
Foundation Capital’s Angus Davis said his firm has been investing in fintech infrastructure for over a decade. And personally, before he became a VC, Davis was the founder and CEO of Upserve, a commerce software company. There, he says, he witnessed firsthand “the value of transactional data to enable new types of lending products.”
Foundation has a thesis around the type of embedded fintech that Weav has developed, according to Davis. And it sees a large market opportunity for a new class of financial applications to come to market built atop Weav’s platform.
“We were excited by Weav’s vision of a universal API for commerce platforms,” Davis wrote via email. “Much like Plaid and Envestnet brought universal APIs to banking for consumers, Weav enables a new class of B2B fintech applications for businesses.”
Weav says that by using its API, companies can prompt their business customers to “securely” connect their accounts with selling platforms, online marketplaces, subscription management systems and payment gateways. Once authenticated, Weav aggregates and standardizes sales, inventory and other account data across platforms and develops insights to power new products across a range of use cases, including lending and underwriting; financial planning and analysis; real-time financial services and business management tools.
For the last few years, there’s been a rise of API companies, as well as openness in the financial system that’s largely been focused on consumers, Lidor points out.
“For example, Plaid brings up very rich data about consumers, but when you think about businesses, oftentimes that data is still locked up in all kinds of systems,” he told TechCrunch. “We’re here to provide some of the building blocks and the access to data from everything that has to do with sales and revenue. And, we’re really excited about powering products that are meant to make the lives of small businesses and e-commerce, sellers and creators much easier and be able to get them access to financial products.”
In the case of Brex, Weav’s API allows the startup to essentially offer instant access to funds that otherwise would take a few days or a few weeks for businesses to access.
“Small businesses need access as quickly as possible to their revenue so that they can fund their operations,” Lidor said.
Brex co-CEO Henrique Dubugras said that Weav’s API gives the company the ability to offer real-time funding to more customers selling on more platforms, which saved the company “thousands of engineering hours” and accelerated its rollout timeline by months.
Clearly, the company liked what it saw, considering that its founders personally invested in Weav. Is Weav building the “Plaid for commerce”? Guess only time will tell.
A biotech company, that has spent 11 years researching supplements to increase human longevity, plans to launch its supplements later this year. Longevica says it has attracted a total of $13 million from investors including, Alexander Chikunov, a longevity investor, who is also president of the company.
Longevica says it created a biotechnology platform for longevity after researching the life-span of laboratory mice. It now aims to produce medicines, dietary supplements, and food products.
The longevity space is a growing sector for tech startups. Google backed the launch of Calico in the space. Late last year Humanity Inc. raised $2.5 million in a round led by Boston fund One Way Ventures for its longevity company that will leverage AI to maximize people’s healthspan.
Longevica’s CEO Aynar Abdrakhmanov, backing up his company’s aim to tap the desire for people to live longer, said: “According to the WHO, by 2050, 2 billion people will be 60+ years old. By 2026, the sales of services and products for this audience will be around $27 trillion… By comparison, it was only $17 trillion in 2019.”
According to CB Insights, life-extension startups raised a record total of $800 million in 2018 alone. And there are some high-profile investors in the space.
PayPal co-founder Peter Thiel invested in Unity Biotechnology, which is developing drugs to treat diseases that accompany aging, has also raised significant funding. And Ethereum founder Vitalik Buterin invested $2.4 million worth of Ether into the nonprofit SENS Research foundation, where famed longevity research Aubrey de Grey is chief science officer, to develop rejuvenation biotechnologies.
Longevica is basing its platform on the work of scientist Alexey Ryazanov, who holds 10 US patents in the space, and a long-time researcher into the regulation of protein biosynthesis cells.
Chikunov said: “I gathered scientists known in this field to discuss their approaches to the problem. Then Alexey Ryazanov proposed the innovative idea of large-scale screening of all known pharmacological substances on long-lived mice in order to find those that prolong life.”
Under the leadership of Ryazanov, Longevica says it used 20,000 long-lived female mice and 1,033 drugs representing compounds from 62 pharmacological classes, to find five substances that statistically significantly increased longevity by 16-22%: Inulin, Pentetic Acid, Clofibrate, Proscillaridin A, D-Valine.
From this work, they formed a view about the elimination of certain heavy metals from the body and improve the body’s ability to remove toxins.
Nearly exactly one month ago, digital real estate platform Loft announced it had closed on $425 million in Series D funding led by New York-based D1 Capital Partners. The round included participation from a mix of new and existing investors such as DST, Tiger Global, Andreessen Horowitz, Fifth Wall and QED, among many others.
At the time, Loft was valued at $2.2 billion, a huge jump from its being just near unicorn territory in January 2020. The round marked one of the largest ever for a Brazilian startup.
Now, today, São Paulo-based Loft has announced an extension to that round with the closing of $100 million in additional funding that values the company at $2.9 billion. This means that the 3-year-old startup has increased its valuation by $700 million in a matter of weeks.
Baillie Gifford led the Series D-2 round, which also included participation from Tarsadia, Flight Deck, Caffeinated and others. Individuals also put money in the extension, including the founders of Better (Vishal Garg), GoPuff, Instacart, Kavak and Sweetgreen.
Loft has seen great success in its efforts to serve as a “one-stop shop” for Brazilians to help them manage the home buying and selling process.
Image courtesy of Loft
In 2020, Loft saw the number of listings on its site increase “10 to 15 times,” according to co-founder and co-CEO Mate Pencz. Today, the company actively maintains more than 13,000 property listings in approximately 130 regions across São Paulo and Rio de Janeiro, partnering with more than 30,000 brokers. Not only are more people open to transacting digitally, more people are looking to buy versus rent in the country.
“We did more than 6x YoY growth with many thousands of transactions over the course of 2020,” Pencz told TechCrunch at the time of the company’s last raise. “We’re now growing into the many tens of thousands, and soon hundreds of thousands, of active listings.”
The decision to raise more capital so soon was due to a variety of factors. For one, Loft has received “overwhelming investor interest” even after “a very, very oversubscribed main round,” Pencz said.
“We have seen a continued acceleration in our market share growth, especially in São Paulo and Rio de Janeiro, the two markets we currently operate in,” he added. “We saw an opportunity to grow even faster with additional capital.”
Pencz also pointed out that Baillie Gifford has relatively large minimum check size requirements, which led to the extension being conducted at a higher price and increased the total round size “by quite a bit to be able to accommodate them.”
While the company was less forthcoming about its financials as of late, it told me last year that it had notched “over $150 million in annualized revenues in its first full year of operation” via more than 1,000 transactions.
The company’s revenues and GMV (gross merchandise value) “increased significantly” in 2020, according to Pencz, who declined to provide more specifics. He did say those figures are “multiples higher from where they were,” and that Loft has “a very clear horizon to profitability.”
Pencz and Florian Hagenbuch founded Loft in early 2018 and today serve as its co-CEOs. The aim of the platform, in the company’s words, is “bringing Latin American real estate into the e-commerce age by developing online alternatives to analogue legacy processes and leveraging data to create transparency in highly opaque markets.” The U.S. real estate tech company with the closest model to Loft’s is probably Zillow, according to Pencz.
In the United States, prospective buyers and sellers have the benefit of MLSs, which in the words of the National Association of Realtors, are private databases that are created, maintained and paid for by real estate professionals to help their clients buy and sell property. Loft itself spent years and many dollars in creating its own such databases for the Brazilian market. Besides helping people buy and sell homes, it offers services around insurance, renovations and rentals.
In 2020, Loft also entered the mortgage business by acquiring one of the largest mortgage brokerage businesses in Brazil. The startup now ranks among the top-three mortgage originators in the country, according to Pencz. When it comes to helping people apply for mortgages, he likened Loft to U.S.-based Better.com.
This latest financing brings Loft’s total funding raised to an impressive $800 million. Other backers include Brazil’s Canary and a group of high-profile angel investors such as Max Levchin of Affirm and PayPal, Palantir co-founder Joe Lonsdale, Instagram co-founder Mike Krieger and David Vélez, CEO and founder of Brazilian fintech Nubank. In addition, Loft has also raised more than $100 million in debt financing through a series of publicly listed real estate funds.
Loft plans to use its new capital in part to expand across Brazil and eventually in Latin America and beyond. The company is also planning to explore more M&A opportunities.
Today’s children and teens want more power and control over their spending.
And while there are a number of financial services and apps out there aimed at helping this demographic save and invest money (Greenlight being among the most popular and well-known), one startup is coming at the space from another angle: helping younger people also better manage their spend.
Till Financial describes itself as a collaborative family financial tool that aims to empower kids to become smarter spenders. The New York-based company’s banking platform is designed to encourage “open and honest” discussions between parents and their kids. And it has just raised $5 million to help it advance on that goal.
A slew of investors put money in the round, including Elysian Park Ventures, Melinda Gates’ venture fund Pivotal Ventures with Magnify Ventures, Afore Capital, Luge Capital, Alpine Meridian Ventures, The Gramercy Fund, SM Ventures (the family office of the founders/CEOs of Stadium Goods) and Lightspeed Venture Partners’ Scout Fund. Also participating were angel investors such as the founders of fintech Petal, the founders of alcohol marketplace Drizly, the president of Transactis, and the president of 1800Flowers.
Part of Till’s goal is to help kids “learn by doing” and gain confidence in spending decisions. It arms them with a bank account, digital and physical debit card and goal-based savings. For example, say a teen wants to buy an iPad, they can set up an account that they can save toward that iPad and give family members (such as grandparents, for example) the opportunity to pitch in the same amount, or more. They can also set up recurring payments for things like Netflix or Spotify subscriptions so they can get a taste of what it’s like to pay regular bills.
“Parents and the current banking options miss the point when they just focus on savings. We need to first prepare kids to be Smarter Spenders, supported by savings and investing,” said Taylor Burton, who founded the company with Tom Pincince. “On Till, kids learn to spend with intention and purpose, while parents gain confidence and trust based on transparency and accountability.”
To Pincince, the market is clearly underserved.
“The legacy banks really don’t care about this young person and the early digital players are really missing the mark,” he said.
And despite the plethora of apps targeting the demographic, Pincince believes there’s plenty of room for the right players.
“The reality is you’re talking about a swath of kids under the age of 18 and over the age of eight that is the single largest unbanked population,” he said. “We’re not fighting to be the top of your son’s wallet. We’re fighting to be the first product into that wallet.”
Indeed, it’s a big market — the average middle-class family in the U.S. spends $284,570 per child by the time they turn 18.
The platform is free to all families and, early on, attracted the attention of Peggy Mangot, operating partner/COO of PayPal Ventures. She invested personally in Till in its pre-seed rounds. Prior to PayPal, Mangot ran development of Greenhouse, Well Fargo’s fee-free mobile banking app that aimed to help younger users build responsible spending habits.
Mangot has three kids and recalls that when they were shopping online, she’d give them her credit card. Or, if they were going to the corner store or meeting with friends, she’d give them cash.
“But that way, the money is meaningless to them. They didn’t really know how to understand what things cost and there was no sense of ownership,” she said. “It was just me handing over cash or a card.”
What attracted her the most about Till, Mangot said, was the team’s approach to treat younger people “with respect and agency.”
She also believes that by helping children and teens understand important financial lessons at a younger age, the world will ultimately be full of more responsible adults.
“By putting these tools in the hands of these young people early, they’ll have years and years of experience before they’re more independent and have to manage their paycheck and bills,” Mangot told TechCrunch. “Once you have mass adoption, it’s going to create a much more financially literate, confident and in control set of young adults than we’ve ever had.”
Besides making money on interchange fees, Till aims to earn revenue by partnering with merchants to offer rewards to users. It also plans to earn referral fees by referring the teens to other financial institutions when they get older and have different needs.
“It’s not our intention to be your son or daughter’s forever bank. It’s our intention to be the first bank,” Pincince said. “So, they hit the age of maturity, we’re actually giving them a high-five off of our platform and introducing them to maybe their first college loan or their first credit card.”
PayPal this morning announced the launch of Checkout with Crypto, a new feature that will allow consumers to check out at millions of online businesses using cryptocurrency. The feature expands on PayPal’s current investments in the cryptocurrency market, which include its partnership with Paxos to power its service that allows customers to buy, sell and hold a range of cryptocurrencies, and more recently, its acquisition of cryptocurrency security startup Curv.
According to PayPal, customers with cryptocurrency holdings in the U.S. will be able to check out using their cryptocurrency at PayPal’s 29 million global online businesses in the coming months. The feature will also work without any additional integrations or fees required by the businesses themselves.
Essentially, Checkout with Crypto allows the customers to sell their cryptocurrency through PayPal at the time of checkout, then settle the actual transaction in U.S. dollars. For the businesses, that means nothing really changes on their end — they’re still being paid in USD, not cryptocurrency. But PayPal’s feature makes it possible for this transaction to take place within the same checkout flow, making it easier on shoppers to quickly make their purchases using cryptocurrency.
At launch, the service will support Bitcoin, Litecoin, Ethereum and Bitcoin Cash — but only one type of cryptocurrency can be used for each purchase.
If the customer has enough cryptocurrency to pay for their online purchase, then the Checkout with Crypto feature will appear, alongside other traditional payment methods, like the customer’s bank account, PayPal balance, or credit or debit card. Like other payment methods, Checkout with Crypto will also include PayPal’s safety and security benefits, including fraud protection, return shipping and purchase protection on eligible items, PayPal notes.
After the transaction completes, the customer will receive both a record of the cryptocurrency sale, as well as their purchase receipt.
The company had announced its plans to launch support for checkout with cryptocurrency last year, when it first entered the cryptocurrency market. It said that after providing support for buying and selling cryptocurrencies, it would launch a checkout feature in 2021.
Today, PayPal makes makes money by charging transaction fees when customers buy or sell their cryptocurrencies, which is why it’s not placing any fees on their merchants themselves.
PayPal’s launch will help to dramatically expand the number of places where cryptocurrency can be used for real-world purchases, which could help accelerate mainstream adoption of digital currencies. The move comes shortly after last week’s announcement from Tesla, which said U.S. customers could now buy a car using bitcoin, and Japanese e-commerce giant Rakuten’s news earlier this month where it said users could check out with online merchants in Japan using cryptocurrencies.
“As the use of digital payments and digital currencies accelerates, the introduction of Checkout with Crypto continues our focus on driving mainstream adoption of cryptocurrencies, while continuing to offer PayPal customers choice and flexibility in the ways they can pay using the PayPal wallet,” said PayPal President and CEO Dan Schulman, in a statement about the launch. “Enabling cryptocurrencies to make purchases at businesses around the world is the next chapter in driving the ubiquity and mass acceptance of digital currencies,” he added.
It is nearly impossible for businesses in some African countries to receive money from PayPal. While the payments giant has not given reasons why this is so, speculation hints at factors like insufficient regulation and poor banking security in said countries.
That might be a thing of the past for some businesses as African payments company Flutterwave today is announcing a collaboration with PayPal to allow PayPal customers globally to pay African merchants through its platform.
Via this partnership, businesses can connect with the more than 377 million PayPal accounts globally and overcome the challenges presented by the highly fragmented and complex payment and banking infrastructure on the continent.
According to CEO Olugbenga ‘GB’ Agboola, this will happen via a Flutterwave integration with PayPal so merchants can add PayPal as a payment option when receiving money outside the continent. The service, which is already available for merchants with registered business accounts on Flutterwave, will be operational across 50 African countries and worldwide, the company claims. Flutterwave hopes to roll out this service to individual merchants on the platform as well.
“In a nutshell, we’re bringing more than 300 million PayPal users to African businesses so they can accept payments across the continent,” he said to TechCrunch. “Our mission at the company has always been to simplify payments for endless possibilities, and from when we started, it has always been about global payments. So despite having the largest payment infrastructure in Africa, we want to have arguably all the important payments systems in the world on our platform.”
A PayPal spokesperson confirmed the Flutterwave collaboration with TechCrunch.
Since the company’s expansion to Africa, it has maintained a one-sided relationship with most countries on the continent, allowing them only to send money. And according to its website, only 12 African countries can send and receive money on the platform, but to varying degrees. They include Algeria, Botswana, Egypt, Kenya, Lesotho, Malawi, Mauritius, Morocco, Mozambique, Senegal, Seychelles and South Africa.
Users in countries who are not afforded the luxury to do so have to rely on using the PayPal account of a friend or family, based in countries where payments can be received. Next, they request the funds via bank transfer, leading to more incurred costs or use other cross-border money platforms like WorldRemit.
This is a pain point for these businesses, particularly in Nigeria. PayPal finally arrived Africa’s most populous country in 2014 and a year later, it became the company’s second-biggest market on the continent.
But despite its fast adoption rate and large fintech appetite, merchants cannot still receive payments from other countries on the platform with various sources alluding PayPal’s decision to the country’s history with internet fraud.
Fraud or not, Nigeria’s e-commerce and that of the continent at large continues to grow at a breathtaking pace. In 2017, Africa generated $16.5 billion in revenue, and by 2022, it is expected to reach $29 billion. With numbers like this, it isn’t hard to see why PayPal wants to get in on the action, albeit not completely. Hence, the partnership with Flutterwave.
The company, via its APIs, offer payment services to individuals and businesses across the continent. Since launching in 2019, the African payments company has partnered with Visa to launch Barter; Alipay to offer digital payments between Africa and China; and Worldpay FIS for payments in Africa.
But this one with PayPal is arguably its biggest partnership yet. Now, African businesses have more access to sell to global customers using PayPal to receive and send payments online.
In a way, Flutterwave absorbs most of the risk PayPal thinks it will incur if it makes its platform more open to merchants in these countries. But at the same time, it solidifies Flutterwave’s position in the eyes of multinationals looking to enter the African market.
Like when its partnership with Worldpay FIS coincided with its Series B funding, this announcement is also coming on the back of a raise. Last week, the payments company closed a $170 million Series C led by Avenir Growth Capital and Tiger Global, becoming a billion-dollar company in the process.
In hindsight, the mammoth raise suggests that there are a couple of projects in the company’s pipeline. Going by this partnership, we can expect the majority of them to be global plays.
Yet, these questions remain top of mind — What happens when PayPal automatically allows businesses from these neglected African countries to start receiving payments? Will both services continue to coexist if that happens? We’ve reached out to PayPal for comment.
However that plays out, this is a step forward in the right direction for Flutterwave, which has shown time and time again the length it is willing to go for its 290,000 merchants and the ongoing quest to become a global payments company.
“By working with PayPal, we can further strengthen our commitment to our customers and service users as we will be enabling them to transact and expand their business operations to reach new markets. PayPal’s global reach is unrivalled, and collaborating with them allows our customers to explore new markets where PayPal is embedded,” the CEO said.
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.
Natasha and Danny and Alex and Grace were all here to chat through the week’s biggest tech happenings. Like every week, we had to leave a lot of great stuff on the cutting-room floor. But, we did get to touch on a bunch of news that we feel really matters.
Also we do wind up talking about a few Extra Crunch pieces, which is where our deeper analysis on news items lives. If the paywall is a bother, you can get access while saving 50% with the code “EQUITY.”
Here’s what we got into:
The show is back Monday morning. Stay cool!