Rounds that matter: Fintech’s fortunes, DAO dreams, Asia’s reseller revival

Despite the slowdown in venture capital activity, there’s still a mountain of money flowing through startups today. TechCrunch+ is launching a series of posts looking at recent, notable venture rounds, exit activity and other news that relates to the financial side of building new technology companies.

While banks are dealing with the crisis kicked off by the failure of well-known, startup-friendly Silicon Valley Bank, upstart tech companies are still more than busy raising capital. They’re also looking for exits. More former than the latter, given the frozen IPO market. But while we wait for the reawakening of a key exit point for startups, we can still keep tabs on where and how the money is flowing into their world.

Remarkable rounds of the week

Etoro reloads at $3.5B valuation

  • After its SPAC deal failed to consummate, consumer trading service eToro was left without an expected new tranche of capital and a new valuation mark. However, it had previously secured a pledge for new funds if its SPAC deal fell through, capital that it has now raised.
  • The round matters for its size (nine figures), industry (fintech has taken a valuation pounding in recent quarters) and underlying financial results. Despite posting some growth since 2020 in 2022, the company shrank compared to the 2021 period last year. This means that we’re seeing a massive, consumer-fintech company set a new valuation under difficult conditions. Fintech founders should take note.

Seed Club Ventures sneaks out of stealth with $25M to make DAO dreams a reality

  • A lot of people assumed interest in DAOs, or decentralized autonomous organizations, had faded in the past year along with crypto bros’ fortunes. But it turns out there are still a number of people very invested in the concept of communities making their own decisions on how to spend millions of dollars.
  • Seed Club Ventures, a 63-member consortium of VCs, individual investors, family offices and various entities that still believe in web3, recently came out of stealth with a $25 million fund to help DAOs do just that.
  • This matters because that $25 million is going to go to really early-stage projects building much-needed tooling for DAOs. It has already backed projects like Guild, Stability AI, Lens and Metalabel. Such tooling will actually help take DAOs to a level where they can realize some, if not all, of the potential that fully decentralized systems bring.

IntegrityNext raises $109M to help companies ensure their supply chain is ESG-compliant

  • There’s a lot of politics around environmental, social and governance (ESG) investing policies for good reason: Compliance with ESG norms requires companies to examine the breadth and depth of their operations to ensure things are done responsibly. That can get expensive, tedious and take a really long time.
  • Munich-based IntegrityNext is doing something very special to help companies solve that problem: It helps companies audit their supply chains so they can quickly find out where and how they can optimize the supply chain and comply with ESG requirements.
  • This fundraise is really good news for European companies, because they will have an easier time of adopting previously “nice-to-have” ESG policies that are soon becoming “must-have” as regulations in the EU tighten up.

Kream rushes to a $742M valuation because fashion nerds like the circular economy

  • In a world of abundance, some things are rare, which is why reseller platforms for luxury goods exist. Spun out of Korean e-commerce giant Naver, Kream has only been around for two years, but the company has seen incredible success as fashion-savvy customers flooded its store, looking for high-end, rare sneakers, watches, bags, accessories and clothing.
  • Kream’s $168 million fundraise is interesting because the company is going to invest a lot in its peers to build a reseller network spanning a large swath of Asia — meaning someone in Japan can buy limited edition sneakers that were only launched in Japan.
  • It’s also great news for Asia’s growing reselling market, as it signals consumer interest in collectibles and other luxury items, which could drive further investment in this space.

Kredivo raises gigantic $270M Series D to make credit more accessible for underbanked Asians

  • It’s no secret that the massive underbanked population in Asia’s developing economies is a big market for fintech to disrupt, and Kredivo, which aims to increase access to credit in Indonesia and Vietnam, has certainly struck gold with a user base that’s about as big as Indonesia’s credit-card-holding population.
  • The company’s oversubscribed $270 million Series D is proof of the fact that there’s growth to be had in making people’s lives easier and helping them get access to banking services easily and seamlessly.

Other startup and venture capital news

The venture slowdown is slowing down even the fastest startup categories

  • It’s a sad reality of the world that even diamonds at times have no takers, and that seems to be panning out right now in startup land: Even previously hot API startups are suffering in the venture slowdown.
  • Per data from GGV, which tracks funding into 63 API companies, startups in this category raised about $2.15 billion in 2022, less than half of what they raised a year earlier. Deal counts have also been down. Q4 2022 saw such startups raising a paltry $134 million, which is lower than in the year’s previous three quarters. That’s got to be tough.
  • We care about this because even though API startups are leading the charge with usage-based pricing models, which is arguably the future of software sales, they’re still subject to wider market pressures. Their struggle indicates that no matter how hot a sector you’re in, dollars are likely to be increasingly harder to come by.

Coinbase execs are angry at the SEC raining on their parade

  • The crypto world isn’t happy with how lawmakers are treating it. Coinbase’s CEO recently pretty much said the government should just make up its mind about regulations already after the SEC sent it a Wells notice, which basically means the government is going to come after Coinbase and companies like it for “violations of the federal securities laws.”
  • We sorta agree with Coinbase here: There really isn’t much precedent for what the crypto world is going through, and fitting the SEC’s nearly century-old laws to the crypto economy feels very much like a square-peg-triangle-hole situation.
  • It’s clear the SEC needs to really cement its beliefs on how crypto should be traded so that the wider ecosystem can just follow the rules.

Roofstock cuts 27% of staff in second round of layoffs

  • Proptech startups are having a moment, and their employees seem to be paying for it. Rising mortgage rates and the general housing slowdown haven’t been good for companies that depended on people realizing their American dream.
  • But buying a house in this economy? A lot of people basically said, “yeah, right,” which basically led to Roofstock, which lets people buy and sell rental homes in dozens of U.S. markets, deciding that it needs to lay off 27% of its staff for the second time in less than two quarters.
  • The company’s trying to stay afloat in a sinking housing market, which makes sense, but what doesn’t is that it was valued at $1.9 billion just a year ago. This isn’t good news for the wider proptech market right now.

4 Indian investors explain how their investment strategy has changed since 2021

  • Indian startups started 2022 with a pretty good outlook since the global venture slowdown hadn’t gotten to the country yet. But arrive it did, leading to a 70% drop in funding in the second half of the year.
  • While we’re sure investors in the country saw it coming, how did they recalibrate their sensors to the new climate? After polling a few investors, Jagmeet found out that for starters, they slowed way down, choosing to make safer bets and generally making sure their portfolio companies have enough runway to last for however long this downturn is going to take.
  • Indian investors are also telling their startups to take a step back, solidify their business models and focus on the basics to get to the next milestone. And if needed, raise a down round, because life > death.

When the tech IPO market reopens, keep an eye on HR unicorns

  • Do you hear that? That’s Alex giggling in excited expectation of all the S-1s we’re likely to get if HR unicorns continue to grow as quickly as they have.
  • The startup group’s ARR growth and regular EBITDA output — and therefore, valuations — seem to be nearly immune to the slowdown as unicorns like Deel, Velocity Global, Gusto and Ripple continue to grow into new markets and categories.
  • This means that come IPO season, HR tech companies are going to likely be among the first out of the gate. We’re curious about one thing though: How long can the startups in question grow without going to war with each other, perhaps in the form of price cuts?

    Rounds that matter: Fintech’s fortunes, DAO dreams, Asia’s reseller revival by Ram Iyer originally published on TechCrunch

Proptech in Review: Investors predict slower growth in 2023

Building and owning a home has been part of human life for as long as civilization itself. But in the past few decades, the lens through which we view real estate and property development has slowly blurred.

It’s not a huge stretch to say that today, as tech increasingly permeates property development and housing, few except those operating in the sector can truly pinpoint what’s happening in the fast-developing world of proptech.

So in order to pull back that veil, towards the end of 2022, we decided to take an in-depth look into the trends and tech in property development and construction. We spoke to a diverse array of investors about finance-focused proptech and the move towards greener proptech.

But since we can’t get a full picture of the proptech space without delving into the tech driving so much of the change, we interviewed Momei Qu, managing director at PSP Growth, and AJ Malhotra, managing director at Insight Partners. They spoke extensively about the latest tech in property and housing development, where the next disruption is likely to happen, and other trends.

(Editor’s note: This interview has been edited lightly for length and clarity.)

TC: There’s a lot of overlap between construction tech and proptech. What would you say is the difference between the two? And where do they overlap?

Momei Qu: We did not coin this term, but we like to use “built world” or “built environment” to capture both categories. Traditionally, we’ve referred to construction tech as solutions that touch things as they are being built (i.e., jobsite, field-level technology targeting AEC as an end customer), and proptech as solutions that touch things after they are already built (i.e., tenant engagement for office buildings, property management for rental properties).

They overlap when there is something of value that applies to the entire lifecycle — construction data around plumbing that can be used for facility management, or outfitting a unit as a “smart home” during the construction phase.

AJ Malhotra: I think of construction tech as a subset or segment of proptech. In my definition, proptech is any technology that touches the full lifecycle of a physical structure, including land acquisition, construction planning, construction execution, financing, leasing, property management, insurance and repair.

Construction tech would fall into the buckets of planning and execution in the examples I just gave, and could also touch financing (for things like construction loans) and repair.

What is your investment thesis for proptech in 2023? What sort of growth are you expecting in the sector?

Qu: The sector has been hurt in 2022, in some ways disproportionally more than others, by the broader tech market reset. Several proptech companies were valued at over $1 billion in private financings or via SPAC, and virtually none of them have maintained a valuation above $1 billion today.

I think part of what made it worse is the double whammy of general inflated multiples in tech/software, coupled with the fact that many proptech companies have a physical component that shouldn’t have allowed them to be valued like a software company to begin with.

I think investors and companies in 2023 will exercise much more discipline, and likely won’t raise too much capital until they have really found a product and sales motion that works. As a growth-stage investor, we typically don’t get involved until we see significant traction anyway, and if they can show momentum and traction in this environment, we are more than happy to lean in in a big way.

Malhotra: I think proptech in 2023 will certainly be challenged, mainly for two reasons.

Proptech in Review: Investors predict slower growth in 2023 by Karan Bhasin originally published on TechCrunch

Proptech still has fundamental problems for entrepreneurs to solve

Over the last decade, one tech sector that affects everyone’s quality of life — from where we live to what we put in our homes — has come a long way. Proptech has made our lives easier with innovations like smart homes, AirBnB, and the ability to shop for and secure a mortgage from our phones.

But major gaps, and opportunities, remain.

For example, the single-family residential market is enormous. Approximately $2 trillion worth of homes were sold in 2021, per CoreLogic. But buying a home is still an excruciatingly difficult process. A team from Keller Williams identified 180 things a seller’s agent does, and even this list, as exhaustive as it is, does not fully account for the many other players in a typical transaction.

Today, buying a house is a lot like running the steeplechase: you have to sprint between obstacles and pray you have the stamina to survive it all. It should not be this hard. So let’s fix it. This is a call to current and would-be proptech entrepreneurs to solve the problems that are close to home.

There has arguably never been a better moment to get started. Capital is searching for good ideas and quality execution. In 2021, venture capital poured a record $11.7 billion into proptech. While the market has started to slow down this year, driven in part by factors such as public market performance, inflation, and higher interest rates, there is still strong investor appetite for great and novel ideas with excellent execution.

If no one can find your house online, is it really even for sale?

Starting a business is hard, but we now have a path for proptech, lined with funders and advisors, that can propel entrepreneurs over early obstacles through to maturity and deep market penetration.

Proptech can solve many fundamental homebuying issues

Proptech still has fundamental problems to attack, including one of the most common: purchasing a home.

Below are eight high-leverage homebuying pain points that have not been sufficiently addressed. Because of the enormity of the housing industry, even marginal improvements in some of these areas will be greeted enthusiastically, and big leaps forward will be handsomely rewarded.

Housing affordability

The challenge: Many Americans cannot own a single-family residence, regardless of how long and how wisely they save. High construction costs, strong demand pushing up prices on relatively low supply, and low incomes can make homeownership difficult or impossible.

This is not a problem solely for lower-income households. The National Association of Realtors’ Housing Affordability Index, which measures the degree to which a family with the median income can afford monthly mortgage payments on a median-priced home, fell 30% between April 2021 and April 2022. Housing is taking up a greater percentage of Americans’ income.

Lessons we learned from the last week of fintech earnings

Startup investors around the world are pouring capital into fintech startups. With good reason, it appears, if third-quarter earnings from public companies in the sector are any indication.

Earnings reports released this week show a host of fintech players with strong operating results, both delighting investors and boosting share prices. For private companies, seeing their public champions do well is more than simply encouraging; strong results from their comps could help upstarts continue to attract venture capital.

It’s shaping up to be fintech’s year, both in the public and private markets. After raising a record total of $52.9 billion in 2018, global fintech companies saw their private investment plateau in both 2019 ($46.5 billon) and 2020 ($48.4 billion), according to data collected by CB Insights. But this year, global fintech startups raised $94.7 billion through Q3.

That wave of capital has borne a host of new unicorns, as investors wager that there’s ample growth ahead for fintech companies generally. Meanwhile, third-quarter results from companies like Affirm, SoFi and Marqeta support the view that the sector still has a way to go in filling white space, coloring over incumbents and aging systems.

Let’s examine a series of winning fintech results from BNPL, consumer finance, proptech and corporate finance players. After parsing those results and relating what they may mean for startups in those subsectors, we’ll discuss fintech earnings misses from Q3.

Hint: Trading incomes that were once the toast of the fintech market caused more than a few companies to stumble when they released their recent operating results.

Consumer lending is strong

Public buy now, pay later (BNPL) company Affirm beat investor expectations in the most recent quarter, which is the first quarter of its fiscal 2022. And the recently listed fintech raised its guidance for its current fiscal year.

Affirm saw active consumers of its BNPL offering grow 124% to 8.7 million during the quarter, and the number of transactions per active consumer increased 8% to 2.3. But where it saw real growth was in the number of active merchants on its platform, which increased from 6,500 to 102,000 thanks to the adoption of Shop Pay Installments by merchants on Shopify.

Zillow may be pulling up the welcome mat, but rival Opendoor is expanding into new markets

When Zillow announced that it was hitting pause on its iBuying operations earlier this week, the news sent shockwaves through the real estate industry.

Zillow blamed the pause on labor and supply constraints that were hampering its ability to quickly renovate and efficiently turn over its housing inventory. The announcement sent Zillow’s stock plummeting 10% in the day after the report, while driving competitor Opendoor higher.

The key to Opendoor’s recent market expansion can be tied to a fundamental retooling of its playbook for launching in a new city or region.

Given the overlap between operations — Opendoor is in 23 of the 25 markets where Zillow was purchasing homes — there was some question about whether Opendoor was affected by the same shortages. But while Zillow is pulling back, Opendoor says it is plowing ahead.

Over the past nine months, Opendoor has aggressively expanded operations and has been growing its inventory. The company purchased 8,500 homes in the second quarter — more than double Zillow’s tally — and said it had contracts to purchase another 8,200 homes in the third quarter.

Shortly after Zillow confirmed the pause in its iBuying operation, Opendoor issued a statement which said, “We know how important certainty and convenience are to homeowners seeking to move and we’ve worked hard over the past seven years to ensure we can continue to deliver our experience at scale. Opendoor is open for business and continues to scale and grow.”

Basically, Opendoor has no plans to slow down anytime soon. The company can cite a combination of proprietary data, centralized operations and an increasingly digital process for evaluating homes and making offers as just some of the reasons why it has been able to more than double the number of markets it operates in over the past nine months.

Data, data, everywhere

The key to any successful iBuying business is the use of data to make a competitive offer to sellers while also having a strong understanding of the price you can expect to garner when you put the home back up for sale.

That data, and how you model it, becomes even more crucial in a dynamic real estate market like the one that has emerged over the past 18 months, where historically low interest rates and unprecedented demand constrained inventory and led to home price appreciation in a very short period of time.

“Our job as a company is to provide a really compelling and competitive offer to sellers,” said Opendoor CTO Ian Wong. “If we can’t offer a competitive offer on the single largest asset most people have, they simply won’t take [it].”

3 views on the future of meetings

More than a year into the coronavirus pandemic, early-stage startups across the world are re-inventing how we work. But founders aren’t flocking to build just another SaaS tool or Airtable copycat — they’re trying to disrupt the only thing possibly more annoying than e-mail: the work meeting.

On an episode of this week’s podcast, Equity hosts Alex Wilhelm, Danny Crichton and Natasha Mascarenhas discussed a flurry of funding rounds related to the future of work.

Rewatch, which makes meetings asynchronous, raised $20 million from Andreessen Horowitz, AnyClip got $47 million in a round led by JVP for video search and analytics technology, Interactio, a remote interpretation platform, landed $30 million from Eight Roads Ventures and Silicon Valley-based Storm Ventures, and Spot Meetings got Kleiner Perkins on board in a $5 million seed.

We connected the dots between these funding rounds to sketch out three perspectives on the future of workplace meetings. Part of our reasoning was the uptick of investment as mentioned above, and the other is that our calendars are full of them. We all agree that the traditional meeting is broken, so below you’ll find each of our arguments on where they go next and what we’d like to see.

  • Alex Wilhelm: Faster information throughput, please
  • Natasha Mascarenhas: Meetings should be ongoing, not in calendar invites
  • Danny Crichton: Redesign meetings for flow

Alex Wilhelm: Faster information throughput, please

I’ve worked for companies that were in love with meetings, and for companies where meetings were more infrequent. I prefer the latter by a wide margin. I’ve also worked in offices full-time, half-time and fully remote. I immensely prefer the final option.

Why? Work meetings are often a waste of time. Mostly you don’t need to align, most folks taking part are superfluous and as accidental team-building exercises they are incredibly expensive in terms of human-hours.

I am not into wasting time. The more remote I’ve been and the less time I’ve spent in less-formal meetings — the usual chit-chat that pollutes productive work time, making the days longer and less useful — the more I’ve managed to get done.

But I’ve been the lucky one, frankly. Most folks were still trapped in offices up until the pandemic shook up the world of work, finally giving more companies a shot at a whole-cloth rebuild of how they toil.

The good news is that CEOs are taking note. Chatting with Sprout Social CEO Justyn Howard this week, he explained how we have a unique, new chance to not live near where we work in 2021, but to instead bring work to where we live. He’s also an introvert, which meant that as a pair we’ve found a number of positives in some of the changes to how tech and media companies operate. Perhaps we’re a little biased.

A number of startups are rushing to fill the gap between the new expectations that Howard noted and our old digital and IRL realities. might be one such company. The former Y Combinator launch-day darling has spent its post-halo period building. Its CEO sent me a manifesto of sorts the other day, discussing how his company approaches the future of work meetings. Tandem is building for a world where communication needs to be both real-time and internal; it leaves asynchronous internal communication to Slack, real-time external communications to Zoom and asynchronous external chats to email. I agree, I think.

Brian Chesky describes a faster, nimbler post-pandemic Airbnb

As we transition from the pandemic to whatever comes next, Airbnb is evolving. The company announced a major redesign of its website and introduced a bevy of features focused on both hosts and guests today. All told, the release includes more than 100 new features or upgrades, with the goal of increasing and diversifying the supply side of the business to not only fuel overall growth but also meet the changing demands of guests.

The changes come in response to the way travel has evolved during the pandemic; Airbnb as a company has changed, too.

TechCrunch sat down with Brian Chesky, Airbnb co-founder and CEO, to discuss the future of travel, how his company worked to support a changing market and what it was like leading the world’s biggest travel startup during a global pandemic.

If you want to read more about today’s update, you can check out our article on it here.

The TL;DR version is as follows:

  • New search flexibility around dates, destinations and matching criteria
  • Easier onboarding and efficiency for hosts
  • Increased and enhanced customer support

From a very high level, the first change is designed to help drive demand, the second to boost supply and the third to keep both sides of the marketplace healthy.

TechCrunch’s interview with Chesky follows. It has been lightly edited for length and clarity.

TechCrunch: A lot of the announcement today comes from the fact that we’ve been through more than a year of a pandemic and travel has evolved, and you are responding to that. As a CEO, you’ve been through so many big moments, from the IPO to the early launch days to a long regulatory journey. Where does leading a company during a pandemic fit into the CEO journey for you?

Brian Chesky: Yeah, Jordan, I would probably say that I never thought we would do anything as crazy as starting Airbnb. I kind of assumed, until last year, that that would probably be the craziest story I’ll ever have. Little did I know that a travel company in a pandemic might even be crazier than starting a company based on strangers living together. I kind of feel like I’m now 39 going on 49. It was definitely the craziest year ever.

Our business initially dropped 80% in eight weeks. I say it’s like driving a car. You can’t go 80 miles an hour, slam on the brakes, and expect nothing really bad to happen. Now imagine you’re going 80 miles an hour, slam on the brakes, then rebuild the car kind of while still moving, and then try to accelerate into an IPO, all on Zoom.