Noble emerges from stealth to help companies extend lines of credit to their customers

Credit lines are a lucrative product. U.S. consumers alone pay $120 billion in credit card interest and fees every year, according to the Consumer Financial Protection Bureau. Given the revenue opportunity, it’s no surprise that there’s enduring interest from both startups and established companies in delivering credit-based products. But challenges stand in the way, including — but not limited to — complying with local laws and regulations and modeling credit risk.

Enter Noble, a putative solution in the form of a platform that allows businesses to build credit-based products like credit cards and buy now, pay later services with no-code tools. Founded by WeWork veterans, Noble allows clients to connect data sources to create custom credit offerings, providing a rules-based engine to edit and launch credit models.

Noble today emerged from stealth and announced the close of a $15 million Series A round led by Insight Partners with participation from Cross River Digital Ventures, Plug & Play Ventures, Y Combinator, Flexport Fund, TLV Partners, Operator Partners, Verissimo Ventures, Interplay Ventures and the George Kaiser Family Foundation. The new cash brings the company’s total raised to $18 million, which CEO Tomer Biger tells TechCrunch will go toward opening a new office and expanding Noble’s portfolio to support additional use cases.

Noble

Connecting data sources in Noble’s admin dashboard. Image Credits: Noble

Biger and Noble’s CTO, Moran Mishan, worked together at WeWork on building underwriting infrastructure to help screen and assess the creditworthiness of tenants. Prior to WeWork, Biger was the product manager responsible for business-to-business (B2B) lender Behalf’s underwriting infrastructure, while Mishan was a software engineer at Woo.io, a job candidate sourcing platform.

“From these firsthand experiences, [we] saw how complicated it is for companies to build underwriting infrastructure and launch new credit-based products, Noble aims to change that,” Biger told TechCrunch in an email interview. “[We allow] companies to launch additional products that their end-customers want — access to credit.”

With Noble, companies can access credit bureaus, banks and income verification providers in deciding to which customers to extend credit lines (e.g. loans and cash advances). The platform’s interface lets businesses deploy workflows that automatically approve, decline or flag users for manual reviews, while on the backend customizing the experience to match a brand and auditing underwriting data from a single view.

“This increases lifetime value, boosts customer retention and ultimately can be an entirely new revenue source for companies,” Biger asserted. “Noble empowers … companies to do this quickly and efficiently without expending much internal engineering or product resources.”

Daniel Aronovitz, principal at Insight Partners, sees Noble’s primary customers as fintechs, software-as-a-service companies with financial offerings and B2B marketplaces and wholesalers. It’s early days, but he claims that the company already has “tens” of clients including major fintechs, with “millions of dollars” of loans originated through the Noble platform.

“With its strong product offerings and impressive founding team, Noble has already acquired B2B and business-to-consumer customers across use cases,” Aronovitz said in an emailed statement. “Noble has created a platform for credit underwriting infrastructure as a service, enabling any company to build proprietary credit products in-house.”

Noble

Conditional logic in Noble’s credit decisioning engine. Image Credits: Noble

But Noble isn’t unique in providing credit infrastructure. Fintech startup Alloy, which last year raised $100 million at a $1.35 billion valuation, recently expanded into automated credit underwriting. Stilt raised $114 million in March to expand its credit offerings. There are also firms like Finally, which focus on credit products for small- and medium-sized businesses.

For his part, Biger believes the market is robust enough that Noble isn’t at risk of getting crowded out. He’s not necessarily wrong — credit originated at the point of sale in the U.S. is projected to grow from about 7% of unsecured lending balances (i.e. without collateral) in 2019 to about 13% to 15% of balances by 2023, according to a McKinsey report. By 2023, the report projects that “pay in four” players — i.e. vendors like Klarna and Afterpay — will originate about $90 billion annually and generate around $4 billion to $6 billion in revenues.

Of course, credit products don’t guarantee profits — the buy now, pay later sector in particular has suffered steep losses and slashed valuations as of late. But Noble’s small-but-growing customer base proves that some companies, at least, are buying the sales pitch — and perhaps seeing some success.

“There are simply too many challenges that companies face when looking to build credit products including compliance, debt funding and underwriting,” Biger said. “Noble’s mission is to remove these barriers and enable the inevitable movement of lending experiences from offline to online in the same way that payment processing platforms built the new payment rails that enabled the explosive growth in online payments witnessed over the past decade.”

Noble emerges from stealth to help companies extend lines of credit to their customers by Kyle Wiggers originally published on TechCrunch

TechCrunch+ roundup: Due diligence roadmap, employment law basics, YC’s Michael Seibel

Last week, we ran an article by Gaetano Crupi, a partner at VC firm Prime Movers Lab, identifying three pillars required to support a Series B data room: a strategy memo, a pitch deck and a forecast model.

In a follow-up, he explains the next step: packaging this information for prospective investors to “create the blueprint and backbone for an in-depth Series B due diligence process.

If you’re preparing for a Series B, these articles explain exactly what investors are looking for and how each piece of content works individually and in tandem.


Full TechCrunch+ articles are only available to members.
Use discount code TCPLUSROUNDUP to save 20% off a one- or two-year subscription.


Crupi also discusses some of the less obvious aspects of Series B fundraising, such as the need for topic-specific breakout decks, a comprehensive due diligence questionnaire, and critically, how to put it all together.

If your startup still hasn’t achieved product-market fit, feel free to skip this article and get back to work. As Crupi notes:

The advice presented here will only help companies that have really good fundamentals. You have to have the goods — all the other stuff is window dressing that tips luck in your favor.

Thanks very much for reading,

Walter Thompson
Editorial Manager, TechCrunch+
@yourprotagonist

‘Just break even’ may be the worst possible advice for startups in turbulent times

Dollar sign made out of cheese on a mousetrap; break even bad advice startups

Image Credits: Andriy Onufriyenko (opens in a new window) / Getty Images

A friend shared a photo on Twitter of a feral cat in NYC walking on the electrified third rail of a subway track.

It was dangerous, but as long as the animal avoided making contact with the ground and the rail simultaneously, it could very well have been the safest route to its destination.

Refusing to cut costs during a downturn is similar to walking on the third rail: Companies that can maintain this tricky balance can maintain growth that propels them to the next level, according to Igor Ryabenkiy, CEO and managing partner of AltaIR Capital.

“Founders tend to like the idea of breaking even as quickly as possible,” he writes.

“Although their company might not become a unicorn, it can now earn them a stable salary and dividends. But for an investor, this is terrible.”

4 employment law mistakes startups can stop making today

A slice of burnt toast with a sad face; employment law mistakes

Image Credits: Martin Diebel (opens in a new window) / Getty Images

There’s no nice way to say this: when it comes to onboarding new employees, most early stage startups are either inept or uninterested.

At that point in a company’s development, Speed and Growth are considered more important than basic paperwork. And since most first-time founders have no management experience, problems will eventually arise.

In her third article for TC+, attorney Kristen Corpion explores the risks associated with non-compliance, and describes four common mistakes that create problems down the road.

“By being proactive with addressing employment law issues early on, a startup can set itself up to scale more seamlessly,” she writes.

YC’s Michael Seibel clarifies some misconceptions about the accelerator

YC Demo Day 2022 image

Image Credits: Bryce Durbin / TechCrunch

In a conversation adapted from the Equity podcast, Michael Seibel, partner at YC and managing director of YC Early Stage, spoke about starting up during a downturn, why his accelerator is offering larger checks, diversity and other issues relevant to seed-stage startups.

In the middle of last year, we started asking the question, “What’s the revenue multiple here?” And we started seeing companies raising at 100x to 350x their revenue.

So if I have $3 million in revenue, I have a billion-dollar company. Any of us who’ve been around for longer than two seconds [knows] that doesn’t feel sustainable.

So our partners, Dalton Caldwell, Jared [Friedman] and I sat down that fall and we were like, “Let’s say that this doesn’t continue,” because that seems to be for sure. “What can we do to help YC companies in a downturn?”

TechCrunch+ roundup: Due diligence roadmap, employment law basics, YC’s Michael Seibel by Walter Thompson originally published on TechCrunch

Tres raises $7.6M to help web3 teams manage their financials and crypto data

Tres, a financial “data lake” for web3 companies, has raised $7.6 million in a seed round led by boldstart ventures, its founder and CEO Tal Zackon, exclusively shared with TechCrunch.

Investors include F2, The Chainsmokers’ venture fund Mantis, New Form Capital, Kenetic Capital, Blockdaemon Ventures and Alchemy. As well as angel investors like Fireblocks CEO Michael Shaulov and Chainalysis CEO Michael Gronager, among others.

The Tel Aviv-based firm aggregates crypto data across different wallets, accounts and platforms, so crypto entities’ financial teams can better understand what’s happening internally at their business without needing the crypto-native knowledge and experience to gather the information, Zackon said.

Its platform can onboard any on-chain or centralized finance data sources and enable financial workflows like balance calculations or auditing and reporting so businesses can monitor and manage their web3 assets both on-ramp and off-ramp, Zackon added. “The thing about having all the data related to your business in a data lake in a format that you need with raw data and financial data, there’s no need to manually gather the data, move it around, edit it and do calculations.”

“CFOs are really struggling to understand what is happening within their financial parameters because they didn’t grow up in this space, it’s different from traditional finance with new protocols and products coming up all the time,” Zackon said. “They don’t know how to handle it.”

The capital will be used to hire as well as build out its product, Zackon said. “I think today we’re really working on onboarding customers and developing the product for their needs and pains. The more we add, the deeper these use cases become and more use cases will open up.”

As it stands, there’s little technology or platforms out there to help web3 companies manage their finances, Zackon said. “They’re mainly using excel spreadsheets and block explorers like etherscan to manage thousands of their wallets, with hundreds to billions of dollars – manually — which is madness. That’s why we created this.”

“We’re able to go cross-chain, cross-protocol, cross wallet, on-chain and off-chain,” Zackon said. “Adding data whether it’s on Coinbase, Solana or somewhere else – all we need is your wallet address and we can pull all the transactions from all the wallets into one data lake. Something like that doesn’t exist today, you have to look at Ethereum data or Solana data one at a time. But on our platform you can look at it altogether and slice it how you want.”

To date, Tres has monitored and analyzed over $40 billion of crypto assets for customers like Hivemind Capital, non-custodial staking platform Stakely and blockchain infrastructure firm Blockdaemon across the US, Israel and Europe, its press release stated.

Although the current crypto market is wavering, the downturn and bearish sentiment is “actually a positive” for Tres, Zackon said.

“When everything is going up and everyone is making money, no one cares about finance,” Zackon said. “But when things start going sideways, you have to think about what you’re actually worth, how much runway you have, where the money is.”

At the end of the day, Tres hopes to become the “financial backbone” to crypto organizations, Zackon said.

Tres raises $7.6M to help web3 teams manage their financials and crypto data by Jacquelyn Melinek originally published on TechCrunch

OurCrowd announces its new $200M Global Health Equity Fund

OurCrowd, the global crowdfunding venture firm, today announced its newest fund. As the organization announced at today’s Clinton Global Initiative event in New York, it is partnering with the WHO Foundation to launch its Global Health Equity Fund (GHEF), a $200 million fund that will focus on healthcare solutions that can have a global impact.

Even before the pandemic, OurCrowd had long invested in medical startups, but that only accelerated during the pandemic, and best I can tell, it has also become somewhat of a personal mission for the firm’s founder and CEO, Jon Medved. ”COVID-19 was a wake-up call for me as an investor,” said Medved. “The pandemic opened my eyes to health inequity around the world and reinforced the potential of innovative technology to save lives […] This new fund builds on that success with the explicit orientation of having impact. The collaboration with the WHO Foundation will allow us to identify even more exciting investments and facilitate the commitment of investors and entrepreneurs to equitable access to the technologies we support.”

While the fund’s focus is on healthcare, the management team is taking a wider view here that goes beyond startups in the medical field, including other areas that can also have a more indirect impact on health, such as energy and agriculture, for example.

OurCrowd is aligning its fund with the WHO Foundation’s Access Pledge. The idea here is to ensure that portfolio companies will make their solutions accessible to populations experiencing inequity. Specifically, this means any GHEF portfolio company will develop an Access Plan for their solutions and the WHO Foundation and OurCrowd will launch an advisory board to provide them with the assistance needed to do so. That’s not, after all, something that most startups are used to doing — and not necessarily something that most investment funds would want their companies to focus on. But especially in the healthcare space, this seems like the right thing to do.

“Despite clear models for successfully balancing economic return with equitable access, such as the provision of medicines for HIV and AIDS, the world failed to deliver solutions for COVID-19 to everyone, everywhere,” said WHO Foundation CEO Anil Soni. “It is imperative that we deploy solutions in response to that failure, including directing investment to innovation and aligning both to equity as a goal from the start.”

OurCrowd CEO Medved will lead the fund’s team together with OurCrowd Managing Partner Morris Laster and the firm’s team of clinical experts, with WHO Foundation’s Impact Investment Officer Geetha Tharmaratnam also providing support.

At this point, OurCrowd has invested in about 350 companies across its 39 funds for its more than 215,000 members, making it one of Israel’s most active investors. Some if its other healthcare-centric investments include Alpha Tau Medical, which focuses on treating solid malignant tumors, and BrainQ, a non-invasive technology to treat stroke and other neurological pathologies.

OurCrowd announces its new $200M Global Health Equity Fund by Frederic Lardinois originally published on TechCrunch

Fintech app Portabl raises $2.5M to help consumers securely store financial data

Fintech Portabl announced the closing of a $2.5 million seed round today led by Harlem Capital Partners. Portabl, founded by Nate Soffio and Alex Yenkalov, also launches today.

It is a digital wallet and password manager for financial services and banking apps, but Soffio calls it a financial digital passport, which helps with user identification, making the task less cumbersome for both consumers and financial services. He said the company’s goal is to wean people from passwords, helping consumers obtain more ownership over their economic data by granting control over who can access it.

The app works like this: Portabl stores the information used to access existing financial apps. Every time an app is opened, a Portabl log-in will appear and, within two clicks, simply enable users to log in.

“We recognize the fact that if you’re a consumer, having a say over who has access to your identity and financial life has been historically confusing and cumbersome — at worst, adversarial and exclusionary,” Soffio told TechCrunch. “We believe that by enabling consumers to own their data, securely hold it, and share it for access or updates, that’s the right way to make good on a lot of the promises you hear about in open banking.”

Yenkalov noted the emergence of decentralized identifiers, verifiable credentials and zero-knowledge proofs, saying that the industry is closer than ever to enabling financial organizations to benefit from consumers owning and sharing their own data.

“In a way, by putting users in charge of their authentic data, Portabl is turning them into secure APIs of themselves,” he told TechCrunch. “This has enormous potential to transform consumer-provider interactions in the financial world. ”

Calling the fundraising journey “this sort of weird hopscotch situation,” Soffio said he started building the app early last year while attending the Wharton School of Business. In his spare time, he pitched competitions and accelerators. Eventually, he met Yenkalov, who helped him continue shaping the hypothesis of the app. Thanks to a series of warm introductions, the duo managed to start scraping together money and met with investors.

Soffio said Portabl chose Harlem Capital to lead the round after a call he’ll never forget: Yenkalov, a Ukrainian citizen, was trapped in the country as the war with Russia broke out in the middle of a fundraising call with the firm. Soffio remembers air raid sirens going off and said for the first few minutes of the call, the conversation was not about business but instead about finding a way to support Yenkalov’s escape from the country.

“It’s a VC firm, and their mission is to make great investments,” Soffio said. “They put all that aside and said, ‘Hey, this is a global crisis going on — what else can we do for you?’ For me, that was something to remember forever, frankly.”

Harlem Capital Partner Brandon Bryant said what initially drew the fund to Portabl was the idea that the verification of identity in fintech is still unsolved. “Their platform lets you as a consumer create your own identity credentials one time and bring them with you to every fintech application,” Bryant told TechCrunch. “We think this will be a big unlock for the industry.”

Carl Vogel, a partner at Sixth Man Ventures who also invested in Portabl’s seed round, expressed similar sentiments. He said the app “realized that creating user-owned financial identities can create enormous value for not only users but can also create a meaningful product and operational improvements for financial institutions.”

“What also excited us was that Portabl’s solution spans both traditional financial institutions and web3-native companies looking to securely onboard and maintain users,” Vogel continued. “We could not be more excited to partner with Portabl on their journey.”

Soffio said the company plans to use the money to help expand the team and accelerate its growth. It’s also working on its SOC2 and ISO/IEC 27001 security certifications (the former is a voluntary standard for managing consumer data while the latter is an international rubric for managing information) and is leaning into blockchain to grant consumers “bulletproof records of their data.”

As a child, Soffio learned the importance of verifiable identity information. He was born in Colombia and adopted by a Polish mother and a Puerto Rican father, who raised him in Stanford, Connecticut. He describes his neighborhood as primarily immigrant and said there was always an underlying fear and anxiousness about having proper documentation.

“I grew up witnessing various types of financial exclusion due to poverty, immigration, cash reliance, and a lot of anxiety around documentation and forming relationships with brick-and-mortar banks,” Soffio said. “Those are the things that keep otherwise good people locked out of using basic services.”

He studied anthropology during his undergraduate years at Yale and always planned to attend law school. His first job out of university was as a paralegal, where he was tasked with building databases, fostering his love for information-gathering. He then spent a decade working for various software and fintech startups, holding roles focused on product management fraud and anti-money laundering.

He soon realized the link between data management, identity issues and access to essential financial services. From there, he dropped everything, scrapped plans for law school, and went on the journey of learning about identity, naturally leading him to Wharton.

“Historically, lots of people have been left out of the system not because they’re bad, but because they’re hard to make sense of,” he said. “We want to make that a thing of the past by standardizing how both traditional and alternative data can be owned, shared and trusted.”

Fintech app Portabl raises $2.5M to help consumers securely store financial data by Dominic-Madori Davis originally published on TechCrunch

CFPB signals that regulation is coming for BNPL

In a shot across the bow to the buy now, pay later (BNPL) industry, the U.S. Consumer Financial Protection Bureau (CFPB) today issued a report suggesting that companies like Klarna and Afterpay, which allow customers to pay for products and services in installments, must be subjected to stricter oversight.

The CFPB — in a step toward regulation — plans to issue guidance to oversee BNPL vendors and have them complete “supervisory” exams in line with credit card company reporting requirements, according to agency officials speaking at a presser this week.

The CFPB first announced that it would investigate the burgeoning (but rocky) BNPL industry in December 2021. While the agency has jurisdiction over banks, credit unions, securities firms, and other financial services firms based in the U.S., it didn’t previously regulate BNPL providers, who argued that they were exempted from many of the existing rules governing consumer lending.

BNPL services like Affirm and Apple’s forthcoming Apple Pay Later usually split up purchases into four or six equal installments over a fixed short-term period (e.g., a few months). Many don’t charge any interest or late fees, and don’t require a credit check for customers to qualify.

In the course of its investigation, the CFPB said that it found BNPL vendors are approving more customers for loans — 73% in 2021 compared with 69% in 2020 — and that delinquencies on these services are rising sharply. Meanwhile, the BNPL industry’s charge-off rate, or the rate of uncollectible loans, was 2.39% in 2021 — up from 1.83% in 2020.

Late fees are also climbing. The CFPB found that 10.5% of customers were charged at least one BNPL late fee in 2021 versus 7.8% in 2020.

CFPB director Rohit Chopra outlined the other dangers of BNPL offerings during the call, including data harvesting and taking on multiple large loans at once. (Because BNPL firms typically don’t report to credit bureaus, it’s easier for consumers to take out loans from multiple vendors at once.) These will likely become more acute as people begin to use BNPL for routine expenses, the agency said; the CFPB found that BNPL customers are increasingly paying for purchases like groceries and gas, spurred by macroeconomic pressures, including inflation.

“[BNPL] firms are harvesting and leveraging data in ways we don’t see with other companies,” Chopra said, per CNBC’s reporting. “Through their proprietary interfaces, they can see which products we buy through product placement … “We want to ensure [BNPL] firms are subjected to the appropriate examination just like regular credit card firms.”

The Financial Technology Association, an industry trade group, pushed back against the allegations that BNPL could harm consumers if left unregulated — arguing that BNPL as it exists today provides a valuable alternative to other lines of credit.

“With zero to low-interest, flexible payment terms, and transparent terms and conditions, BNPL helps consumers manage their cash flow responsibly and live healthier financial lives,” Financial Technology Association CEO Penny Lee told the Associated Press in a statement.

Some data would suggest otherwise. A DebtHammer poll showed that 32% of customers skip out on paying rent, utilities or child support to make their BNPL payments, and BNPL services can also lead to bigger purchases. In May, SFGate reported that the average Affirm customer spends $365 on a single purchase as opposed to the $100 average cart size recorded in 2020.

The BNPL industry has flirted with regulations for some time, with the U.K. last year announcing new regulatory policies for BNPL companies. California sued Afterpay after it initially refused to obtain a lender’s license from the state. Elsewhere, Massachusetts regulators entered into a consent agreement with Affirm after allegations that it engaged in loan servicing activity without a license.

CFPB signals that regulation is coming for BNPL by Kyle Wiggers originally published on TechCrunch

Allocations just got valued at $150M to help private equity funds lure smaller investors

Interest in alternative investments such as private equity, real estate and crypto continues to surge, and Miami-based fintech startup Allocations is riding the wave. Less than three years after its founding, the company, which provides APIs to help private fund managers streamline processes, has crossed $1 billion in assets under administration on its platform, its CEO and founder Kingsley Advani told TechCrunch in an interview.

It has also raised $5 million in funding from investors including Flex Capital, Genesis Accel, Digital Horizon, Whatif Ventures, Garage Syndicate, W5 Group, Edoardo Ermotti, Peter Ko and others, all of whom are Allocations customers, at a valuation of $150 million. The latest round brings its total funding raised to $12 million, according to the company.

As for performance metrics, Advani noted that the company had reached a $6.25 million revenue run rate in July this year, which is up from $4.6 million last June according to a prior TechCrunch article.

Fintech Allocations' founder Kingsley Advani headshot

Allocations founder and CEO Kingsley Advani. Image Credits: Allocations

Advani started Allocations in 2019 as a response to challenges he faced in trying to set up his own investment funds and realizing that none of the tools available to him at the time could help him spin up funds quickly enough to stay competitive in the increasingly fast-paced private markets. Allocations’ core products help fund managers create special purpose vehicles (SPVs), which allow them to raise capital from a single investment from pooled sources. At a time when it is especially in vogue for venture investors to leave their firms to start their own solo funds, Allocations’ value prop looks increasingly appealing.

Its customers are asset managers looking to offer these alternative investment opportunities to their private wealth clients, who tend to be high-net-worth individuals that meet regulatory accreditation requirements applied to many alternative assets, Advani explained. The company is betting that retail investors will continue to show strong demand for alternative asset classes that have typically been dominated by institutions.

Allocations serves a broad range of managers, ranging from family offices to angel investment groups to venture capital funds, representing 10,000+ private wealth clients today. Its website lists funds such as Backstage Capital and Vitalize Venture Group as customers. The startup is also “in talks with some of the larger platforms” to provide high-volume, API-driven fund administration support, he added.

In addition to increasing deal speed, Advani said another benefit of using Allocations is that managers can offer their clients lower investment minimums.

“Traditionally, retail investors, if they go to their bank, their minimum to invest [in alternative assets] is really high, like $5,000 to a million dollars, but on Allocations, you can have any minimum,” Advani said. He shared the example of an SPV into an African startup on the platform that represented $10,000 in total investment, which he believes to be the world’s smallest SPV.

Private equity API provider Allocations' interface

Allocations’ interface. Image Credits: Allocations

Lowering check sizes is crucial to the mission of broadening access to the asset class. Private equity firm KKR made headlines earlier this week when it decided to tokenize part of one of its funds, which it says was to streamline administrative processes, allowing it to take smaller checks from investors. Without finding ways to make fund administration more efficient, it’s not always worth a manager’s while to take in a small check because the smaller fee amounts associated with it may not adequately justify the costs the manager has to incur to go through the necessary administrative processes.

With the latest funding, Advani plans to double down on the firm’s API offerings, which he said are a huge step up in terms of the level of automation they offer compared to popular legacy software systems like Assure.

“The most interest we’ve been getting recently is from these midsize asset managers that are running up to thousands of SPVs a year and need more automation,” Advani said. He added that he also hopes to allow for more customization of funds as the products evolve.

Taking a page from KKR’s book, Advani said Allocations is in the early stages of exploring a blockchain offering as he thinks the technology can help meaningfully streamline fund administration.

“We have about $13 trillion in alternative assets under management in the world, and this is expected to go to $23 trillion by 2026,” Advani said. “So if you imagine all of the liquidity requirements, all of the administration, a lot of it is siloed. If you can put it on-chain, you open up a huge amount of capital markets, in terms of matching, in terms of liquidity, in terms of setup, that is not available in siloed places.”

Allocations just got valued at $150M to help private equity funds lure smaller investors by Anita Ramaswamy originally published on TechCrunch

The alternative asset class needs new infrastructure — who will build it?

It took more than 30 years for alternative asset classes like venture capital, private equity and hedge funds to become must-have portfolio allocations, but they have finally arrived in force. Private investments in alternative assets grew to $13.3 trillion from $4.6 trillion over the 10 years ended 2021, and advisers now routinely recommend allocating 10%-25% of portfolios in these asset classes.

Liquid alternative asset classes are enjoying record inflows, and B2C-friendly distribution platforms like Moonfare, Fundrise and SeedInvest are building on-ramps for a new generation of investors.

Just as these traditional alternatives are becoming a consistent part of the modern investment portfolio, a new era of alternative assets is emerging, fueling an even broader and more fragmented landscape for investing. Dozens of platforms have launched to fractionalize, package and distribute everything from farmland, litigation finance and P2P lending to art, wine and collectibles.

Crypto added fuel to this trend and quickly became a mass-market asset category. Together with more established alternative classes like venture capital and private equity, these new alternatives give retail investors unprecedented access to asset classes that either never existed (like crypto) or were previously limited to high-net-worth investors.

However, there is a problem in alternative assets: the lack of digital infrastructure. Traditional alternative assets like venture capital and private equity at least have an ecosystem built to serve them, but that infrastructure is aging and built for a narrower base of institutional investors, like endowments, pension funds and large family offices.

As these asset classes scale and diversify their investor bases, they need a serious upgrade to modernize the fund manager/GP and investor/LP experience. The situation for emerging alternative assets is far worse. Today, investment platforms cobble together their operations — sourcing, brokerage, reporting and custody — while investors endure fragmentation throughout their journey of discovery, account creation, execution and reporting.

For these asset classes to scale, they will need institutional capital, actively managed funds and financial advisers — and all of these depend on better data.

Let’s start with traditional alternatives

Yes, it’s oxymoronic to call alternatives “traditional,” but after more than 70 years, over $13 trillion in AUM and 10%-25% portfolio allocations, it’s hard to say that venture capital, private equity, private credit and real estate are novel forms of investment.

Investment performance for “traditional alts” is even highly correlated with public equities. The most enduring distinction is the accredited investor requirement (just 10% of the U.S. population), but Reg CF, Reg A+ and a myriad of platforms like SeedInvest and WeFunder are prying open that door as well.

Investment in traditional alternatives

Image Credits: F-Prime Capital

As these asset classes scale, fund managers are systematically diversifying their investor bases beyond institutional investors like pension funds and endowments. The old and labor-intensive processes built around 30-year tech stacks from FIS Investran, State Street and Citco will not scale to 100,000+ financial advisers and millions of accredited investors. What’s more, the user experience is so bad, you would not want to scale it: PDFs, manual bank wires and clunky investor portals are the current “state of the art” here.

Investment allocation across asset classes by investor

Image Credits: F-Prime Capital

Modernizing the infrastructure for traditional alts

Fortunately, entrepreneurs are tackling the problem posed by antiquated infrastructure for traditional alternative investments.

The alternative asset class needs new infrastructure — who will build it? by Ram Iyer originally published on TechCrunch

Kaszek, YC back DolarApp’s mission to ‘dollarize’ Latin America’s finances with crypto

When DolarApp founders Zach Garman, Álvaro Correa and Fernando Terrés were living in the United States and Europe, they would spend time in Latin America, where they saw problems that friends were having when it came to finances and access to banking in dollars.

DolarApp USDc Latin America

DolarApp’s platform showing USDc account Image Credits: DolarApp

So the three ex-Revolut employees started thinking of a way to provide that access to dollars and even cryptocurrency. The company, founded in 2021, is starting in Mexico, where Terrés said around 20 million citizens travel to the United States each year.

“They don’t go with a card, but with $5,000 in cash and go to the exchange house in the airport, which means they lose money in the spread,” he added. “Remittances between the U.S. and Mexico accounted for something like $50 billion last year, and the fees are outrageous, averaging 5% of the total amount sent.”

With DolarApp, users can open a bank account going from peso to dollar dominated stablecoin USD Coin (USDc) and back in seconds. They can also save in USDc, earning 3% annually, and pay with an international Mastercard with up to 4% cash back. In addition, users can send and receive payments in the United States for a flat fee of $3 versus the $3 fee plus 2% charge that other money transfer companies charge, Terrés said. The company makes money from the flat transfer fee and from revenue on the balances.

The company is now flush with $5 million in funding led by Y Combinator and Kaszek Ventures. The round also included a group of over 50 angel investors.

“DolarApp allows Latin Americans to manage their finances in USDc, protecting their savings in a stable currency and without the expensive banking fees associated to international bank transfers and card payments — all on one single account,” Hernán Kazah, founder and managing partner at Kaszek Ventures, said in a written statement. “At Kaszek we are convinced it will be a massive financial tool to help Latin America advance towards greater financial inclusion.”

The DolarApp founders were part of the YC Summer 21 batch, but didn’t do Demo Day and remained mostly heads down since then, working on the product, Terrés said.

The company started a beta program over the summer and will funnel the new funds into adding to its team, which is currently composed of 11 people, as well as marketing efforts and gearing up for a full launch.

Though Terrés declined to give hard growth figures, he did say that in the last two months, DolarApp had acquired “a few thousand beta adopters.”

Up next, the company will be focusing on Mexico market use cases and will launch virtual payments — for example, with Apple Pay and Google Pay.

Kaszek, YC back DolarApp’s mission to ‘dollarize’ Latin America’s finances with crypto by Christine Hall originally published on TechCrunch

TechCrunch+ roundup: Dotcom crash history lessons, post-M&A strategies, climate tech heats up

What can today’s founders learn from the 2000 dotcom bubble burst?

381632 01: The Pets.com sock puppet. The San Francisco-based pet products company, known for its commercials with the sock-puppet dog and the slogan "Because pets can''t drive," said November 7, 2000 that it is closing down after failing to find a financial backer or buyer. (Photo by Chris Hondros/Newsmakers)

Image Credits: Chris Hondros (opens in a new window) / Getty Images

The late 1990s were a fascinating time to work in startups and live in San Francisco.

I didn’t need to be an economist to realize that many of the companies I worked for and patronized were lacking solid fundamentals: The same unprofitable startups that offered in-house massages, catered meals and laundry service were also purchasing Super Bowl ads and freeway billboards.

I still have storage crates in my kitchen from Webvan, a grocery delivery contender that flamed out so famously, MBA candidates now study it in business school. Similarly, messenger bags for Kozmo.com, which promised to bring “videos, games, DVDs, music, mags, books, food, basics & more” to customers in 60 minutes or less, sell today for $350 and up on Etsy.


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By 2000, many of these high-fliers had left smoking craters behind. Anna Barber was VP of Product at Petstore.com when her company was sold off in a fire sale to Pets.com, a competitor.

“We laid off our staff except one person, who stayed around with the CEO to help wind down the company and settle up with all our creditors,” says Barber, now a partner at M13. “That person was me.”

Today at noon PDT/3 p.m. EDT, she’ll join me to talk about how today’s startup operators can avoid many of the missteps founders made in past downturns.

We’ll discuss the economic, social and emotional impact created when so many companies close their doors at once, and Barber will talk about how founders can align with their investors and employees while managing through uncertainty.

This Twitter Space is open to everyone, so I hope you’ll join the chat.

Thanks for reading,
Walter Thompson
Editorial Manager, TechCrunch+
@yourprotagonist

You’ve sold your company. Now what?

Scaling a company from conception to acquisition is a real accomplishment, but it’s not the finish line, according to investor and frequent TC+ contributor, Marjorie Radlo-Zandi.

“You may wonder if the acquirer truly understands your products, values, culture or the customer needs that drive the business,” she writes. “Staff will wonder if there’ll be a place for them as a part of another company.”

In her latest column, she shares “six guiding principles that will set a transaction up for success” and help you achieve your full earnout.

Enterprise e-commerce in 2022: As TAM expands, the platform wars are heating up

Image Credits: Getty Images

E-commerce platforms have onboarded new merchants at a fast clip since the pandemic began, and there’s no sign of a slowdown, according to market intelligence platform PipeCandy.

“The top enterprise e-commerce platforms have added more than 10,000 merchants,” according to co-founder Ashwin Ramasamy, who compared the relative performance of Shopify Plus, Salesforce Commerce Cloud, Drupal Commerce and four other players.

“That’s immense, especially as the year is still far from over, and these platforms already have just 1,000 merchants shy of last year.”

Use DORA metrics to support the next generation of remote-work models

Liwa, UAE - Laptop glows outside a tent pitched on the dunes of the Empty Quarter desert

Image Credits: Edwin Remsberg (opens in a new window) / Getty Images

Non-technical CEOs often rely on someone else’s assessment to find out how good their developers are. But without data, that’s a pretty subjective process.

Startups that don’t use DORA (DevOps research and assessment) metrics have a harder time measuring a software delivery team’s performance. For example, a group that has a high failure rate may cover their deficiencies (for a time) by deploying quickly.

Remote work is the new normal, especially for engineers, says Alex Circei, CEO and co-founder of development analytics tool Waydev. But using DORA metrics, CTOs, CEOs and HR managers can “get back on the same page to support their tech teams and business outcomes.”

Climate tech is a hot investment in 2022 — next five years could be even hotter

Engineer climbs a wind turbine

Image Credits: Monty Rakusen (opens in a new window) / Getty Images

Is the recently passed Inflation Reduction Act creating tailwinds for climate tech startups?

Reporter Tim De Chant found that deal count for climate tech startups increased by 15.4% in Q2 2022, “and the average value per deal has held steady at $23.6 million, more than triple what it was five years ago.”

Tax credits and other incentives in the IRA could spark interest in funding for property tech, recycling, ecosystem monitoring and companies that pull carbon dioxide directly from the atmosphere.

“In other words, investment opportunities in climate tech are just warming up,” he writes.

For LatAm payment orchestration startups, market fragmentation is a blessing in disguise

In Latin America, e-commerce is plagued by high fraud rates. Scarcely 20% of adults have a credit card, and many who do aren’t able to use them internationally.

It’s also true that e-commerce is growing faster there than in any other region since the pandemic began. According to one study, online sales in LatAm will generate $379 billion in 2022, a 32% year-over-year increase.

“The payments landscape in Latin America seems hopelessly fragmented and riddled with fraud,” says Rocio Wu, a principal at F-Prime Capital.

“However, we believe that fragmentation actually offers a huge opportunity for vertically integrated payments orchestration startups to capture a lot of value.”

TechCrunch+ roundup: Dotcom crash history lessons, post-M&A strategies, climate tech heats up by Walter Thompson originally published on TechCrunch