Fundings & Exits – Page 505 – Product Management Confabulation

July 3, 2019

SoftBank Vision Fund partner David Thevenon is coming to Disrupt Berlin

SoftBank Vision Fund has single-handedly changed the game when it comes to tech startup investment. And that’s why I’m excited to announce that SoftBank Vision Fund partner David Thevenon is joining us at TechCrunch Disrupt Berlin.

Thevenon spent most of his career working for Google on international and strategic partnerships, especially in Latin America, Asia, Europe and Middle-East. He ended up heading the business development teams working on Android partnerships globally.

While his career as an investor is still relatively recent, he’s currently a board member for DiDi, Grab and Kabbage. As a reminder, SoftBank’s Vision Fund invested $5 billion in DiDi — it’s not every day that you get to cut such a big check.

So Thevenon has become a sort of expert in ride-hailing and mobile transportation platforms. It’s going to be interesting to hear what he thinks about the concept of ‘super apps’ that Grab pioneered for instance. Can you transform ride-hailing apps into apps that you open every day to make payments, get insurance products and loans?

More generally, given the size of SoftBank’s Vision Fund ($100 billion), it has had a huge impact on the growth trajectory of some companies. I’m personally curious to know SoftBank’s approach as board members, whether they get involved in the strategy of those companies or let the executive teams make decisions on their own.

Buy your ticket to Disrupt Berlin to listen to this discussion and many others. The conference will take place on December 11-12.

In addition to panels and fireside chats, like this one, new startups will participate in the Startup Battlefield to win the highly coveted Battlefield cup.

Before joining SoftBank in 2014, David had a 10-year tenure at Google, where he last led global partnerships for the Android platform and was in charge of product related partnerships and business development activities across Asia, Europe, Middle-East, Africa and Latin America.

Prior to Google, David was leading strategic partnerships at T-Mobile International, and worked as a finance executive at Dell, ICL-Fujitsu and Elf-Atochem. David received a Master in Management from ESCEM.

July 3, 2019

Klaus, the ‘conversation review’ tool for support teams, picks up $1.9M seed

“No bad conversations between companies and their customers is what we’re shooting for,” Kair Käsper tells me. He’s the CEO of a relatively new startup called Klaus, which he founded together with old high school friend Martin Kõiva.

Most recently the pair were employees at Pipedrive, holding the roles of Director of Product Marketing and Global Head of Customer Support, respectively. Many years prior to that they shared a flat together and worked on a number of projects. One of those was an applicant tracking startup called Jobkitten “that didn’t really go anywhere”.

The latest Käsper and Kõiva venture, however, appears to already be on firmer footing. Described as a “conversation review and QA tool for support teams,” Klaus is designed to help companies improve the quality of customer service. Two years in the making but only launched formally 6 months ago, customers already include Automattic, Wistia, and Soundcloud. And today the Estonian startup is disclosing $1.9 million in seed funding led by Creandum, the first Baltic investment by the Swedish VC firm and the first from its new fund.

“The problem is that maintaining an even, high level of customer service quality is hard,” explains Käsper. “It becomes even harder if you have over 20,000 monthly conversations with customers and your support team is 100 people in 3 offices.

“As the head of customer support, you want everyone on your team to provide answers that meet with internal standards, regardless of how long they’ve been with the company or how seriously they take their job. You get very anxious in this situation, because you have no idea about what’s going on in those thousands of conversations. For you, no visibility means no control”.

Screenshot 2

He says that his and Kõiva’s first hand experience at Pipedrive taught them that the key to quality assurance is going through past interactions and then giving systematic feedback to agents. “Kind of like code review in engineering or the editorial process in writing,” he says. “Teams all over the world are discovering this now, but they almost always start with a manual process, managed in spreadsheets. They get stuck fast”.

To make this type of feedback loop more scalable, Klaus has created a purpose-built UI for giving internal feedback. Smartly, it also integrates with modern SaaS help desk solutions, such as Zendesk and Intercom.

“[The software also has] countless specialized features that allow you to focus on the actual feedback instead of managing a spreadsheet,” adds the Klaus CEO. They include the ability to easily filter out conversations for review, rate them based on a customized score card and notify agents of received feedback through email or Slack.

Meanwhile, the young company makes money by charging a monthly or yearly subscription fee based on how many users are connected to its app. In other words, just like Pipedrive before it, another classic enterprise SaaS play out of Estonia.

July 3, 2019

Podimo raises €6M to become Europe’s ‘Netflix for podcasts’

Podimo, a Copenhagen-based startup building what it hopes will become Europe’s “Netflix for podcasts,” has raised €6 million in seed funding prior to launch. The round is co-led by Germany’s E.ventures and Denmark’s Heartcore, reflecting the young company’s two planned country launches later this year.

Founded by Morten Strunge, who has a track record in subscription media products via audio books service Mofibo (which he sold to Storytel), Podimo is hoping to capitalise on the rise in consumption in podcasts. Ambitiously, this will include both a free and paid version of its product, with the aim of creating a reliable revenue stream for podcast producers. The startup’s other founders are Nikolaj Koppel, Andreas Sachse and Sverre Dueholm .

“Podcasts have finally come of age and we are seeing a lot of demand for audio content globally across many different demographics,” Strunge tells me. “Consumers are increasingly looking for premium, ad-free services and we see a huge potential in the podcasting space”.

The Podimo app has been designed to provide a “superior experience” in discovery and recommendation compared to existing podcast streaming and download services. The idea, says Strunge, is to make it as seamless and easy as possible to find your next podcast.

“We believe that with the fast increasing amount of podcasts available, curation and discovery becomes more and more important to both unfold content in a relevant context and to the right individual user, which will benefit both podcast creators and consumers,” he says.

By launching a freemium model, where a paid version provides unlimited listening and features, Strunge believes there is an opportunity to work closely with podcast creators to strengthen the podcast ecosystem and make it less reliant on advertising revenue. “We want to become the preferred partner for creators, by both working closely with their content, curate and match it with each individual user, but also by offering a superior monetisation model,” he explains.

The hope then is that a more robust revenue stream will enable new podcasters to enter the market and existing ones to earn more. In turn that could give podcasters the financial headroom to invest even more time and effort into “creating great content”.

“Our dream is that with around 20% of people in Europe listening to podcasts on a weekly basis, many creators should be able to make a living out of creating podcasts, it shouldn’t just be for the few,” says Strunge, perhaps ignoring the fact that media often scales to become a hits-driven business. “We will offer revenue share to all existing podcasters out there, but also co-produce and produce original content,” he adds.

More broadly, Strunge says he remains a strong believer in audio as a format. He says not only is it easier to listen than it is to read but that podcasts are built for subscriptions. “It’s a short format, actuality driven, series driven and niche and broad at the same time,” says the Podimo CEO.

In addition, production cost are low so it is possible to keep to a price point below music and VOD services and Strunge is convinced we’ll continue to see a significant increase in the number of podcasts produced. This will include the broader market but also podcasts from more professional media players yet to invest strategically in the audio format.

July 3, 2019

Kyash, a would-be challenger bank in Japan, raises $14M

The new era of tech-enabled banks is coming, even in regulation-heavy Japan. Kyash, a fintech company with visions on becoming Japan’s first challenger bank, said today it has raised $14 million to continue its expansion.

To be clear, Kyash isn’t a bank. Yet. But it is currently applying for a host of licenses in Japan that could allow it to offer banking-style features including checking accounts, ATM withdrawals and money remittance. Right now, it is a payment app that offers a connected Visa card in the style of Monzo, N26, Revolut (which has a Japan license) and others of that ilk.

The startup was founded in 2015 in Shinichi Takatori, a former banker and management consultant who saw the potential to merge tech and finance.

“I really noticed that information and communication has become ubiquitous but money itself hasn’t changed for a long time,” Takatori told TechCrunch in an interview.

The company took some time — two years — before it released a consumer product, but it quickly tied up with Visa to offer a prepaid debit card that connects to the Kyash app. That provides benefits like instant payment notifications, clear balance and lower fees for overseas spending, while costs are born by merchants rather than users. They might seem elementary today, but they are still not standard among Japan’s traditional banks, Takatori explained.

The company declined to share its user numbers, but Takatori said that this new round of funding — Kyash’s Series B — is a validation of the progress it has made.

The $14 million investment is co-led by Goodwater Capital, a U.S. investor that has backed fintech startups like Monzo, Stash and Toss in Korea, and Mitsubishi UFJ Capital, the investment arm of Japan’s largest bank.

Mitsubishi’s involvement means that Kyash counts Japan’s three largest banks as investors, with SMBC, Mizuho having previous put money into the company. Others that took part in this Series B include Toppan Printing, JAFCO and Shinsei Corporate Investment Limited.

So many banks on the cap table might seem like a strange thing for a disruptor — let alone the banks, which tend to behave territorially — but Takatori believes that there’s the potential for cooperation, not to mention that it will help the startup with its licensing efforts. Already, he revealed, Mitsubishi plans to integrate its card with the Kyash app to provide its customers with the best of both worlds.

“We’re not here to win over existing banks, but instead inform [them of] how money should work in next decade,” explained Takatori. “So why not collaborate in some way.”

Kyash has a tie-up with Visa that allows it to offer its customers a connected debit card and also provide issuing services to other fintech startups

There’s also the fact that, even with a license, Kyash and others are unlikely to be able to offer full banking services. That means they will have to serve as complementary offerings to the industry, which would likely mean that cooperation is good — essential — for both sides.

But, beyond the consumer play, a notable piece of Kyash’s business that has investors excited is its B2B payment business.

The company developed its own payment processing system to reduce costs, which is one reason why it took time to launch. Thanks to a tie-up with Visa, it offers both issuing and processing of prepaid Visa cards to fintech companies in Japan that want to go down the payment route.

That’s increasingly popular given the government push to make the country a “cashless society” ahead of the 2020 Olympic Games next year. It could also appeal to crypto companies in Japan, which offers the world’s most robust licensing, who want to follow the example of the Coinbase card in Europe or startups like Crypto.com and TenX which offer similar prepaid cards.

Takatori said Kyash is “in discussions” with crypto companies, but that it has not made a decision on how to proceed yet. The company is also eying potential overseas expansions, although that is some way down the line.

“We have open eyes for globalization, it’s just a matter of when,” he told TechCrunch. “We still have a far way to go [in Japan, but] maybe after the Olympics.”

More pressingly, he sees the company looking to raise a “pretty quick” Series C round to give it acceleration into next year. That’s likely to go to more expansion and user acquisition since the licenses the startup has applied for are unlikely to be granted this year.

July 2, 2019

KKR has acquired Corel (including its recent acquisition Parallels), reportedly for $1B+

Only six months after snapping up virtualization specialist Parallels, Canadian software company Corel is itself getting acquired. TechCrunch has learned and confirmed with multiple sources that private equity giant KKR has closed a deal to buy the company from Vector Capital, which has owned some or all of Corel since 2003.

KKR’s interest in Corel was first rumored in May, when PE Hub reported the two were in talks for a sale valued at over $1 billion. At the time, representatives of Corel declined to comment, although our sources inside the company indicated that the reports were not inaccurate.

Fast forward to today, and both KKR and and a spokesperson for Parallels/Corel declined to comment. But, we now have a copy of the memo provided by an internal source that has been sent out to staff announcing that the deal has indeed closed, and that Corel is now officially part of the KKR family of companies.

According to the memo, KKR is very optimistic about Corel’s prospects. It plans to give Corel an “infusion of capital” to accelerate its growth, which will go into two areas. First will be expanding operations for the existing business: Corel is the company behind a number of longstanding software brands including WordPerfect, Corel Draw, WinZip, PaintShop Pro. Second will be making acquisitions (and the sheer proliferation of promising startups in the last decade dedicated to all variety of apps and other software that may have found it a challenge to scale means Corel could have rich pickings).

There are no layoffs planned as part of the deal, and the official announcement had been planned to go out next week, but now looks like it may be moved up to tomorrow (Wednesday).

Vector and Corel itself have never publicly disclosed much on user numbers or financials, but Vector has described the company as “highly profitable”, with dividends of over $300 million to date. The memo we’ve seen notes that Corel (including Parallels) has millions of customers across its various software platforms and apps.

The acquisition of Corel by KKR marks another chapter in the company’s long corporate history.

Founded in the 1980s — when personal computers were just starting to enter the mainstream but well before we had anything like the internet (not to mention the world of cloud-based apps) that we know today — Corel once positioned itself as a potential competitor to Microsoft in the software wars.

When Corel purchased WordPerfect from Novel in 1996, Corel founder Michael Cowpland viewed the software package as an integral part of that rivalry, describing it as the Pepsi to Microsoft’s Coke — that is, Word.

Microsoft proved the mightier of the two, and it even eventually signed a partnership with Corel that saw it investing in the company: a sell out, as one disappointed Canadian journalist described it at the time. The two have also sparred over patents.

Corel, which went public early in its life, got battered in the first dot-com bust (which was not helped by an insider trading scandal that led to Cowpland’s departure). Vector stepped in and took it private in 2003.

After restructuring the company, Vector listed Corel again in 2006. But, amid another recession that again hit Corel hard, it once more took it private in 2010. In the intervening years, Corel has been focused on modernising its offerings, bringing in e-commerce, direct downloads, subscriptions, and acquisitions to bring the company’s products and wider business closer to how consumers and workers use computers today.

Parallels was a part of that strategy: its products help people work seamlessly across multiple platforms, letting employees (and IT managers) run a unified workflow regardless of the device or operating system, with Parallels providing support for Windows, Mac, iOS, Android, Chromebook, Linux, Raspberry Pi and cloud — a timely offering in the current, fragmented IT market.

If the $1 billion+ figure is accurate, that strategy seems to have worked: across the two times that Vector took Corel private, it never paid more than $124 million for the company (the second time, as its stock was tanking, it paid just $30 million).

July 2, 2019

Data says there are only two seasons for fundraising and one secret window

Russ Heddleston Contributor

Russ is the cofounder and CEO of DocSend. He was previously a product manager at Facebook, where he arrived via the acquisition of his startup Pursuit.com, and has held roles at Dropbox, Greystripe, and Trulia. Follow him here: @rheddleston and @docsend

There are really only two main fundraising seasons

I’ve often heard these anecdotes: “Don’t raise in August because VCs are on vacation,” and “VCs come back in January looking to do a deal.” But this is the first time there’s ever been data to support or disprove these statements. (See the analysis here).

My first big takeaway is that there are two big spikes during the year when VCs review a ton of pitch decks: October and November, then March. The summer definitely flattens out a bit, but August is not as bad as people think and December is actually way worse than most anticipate.

Sure, you might be the exception to this data and you might have pulled off a fundraise over the summer or in December. But if you have control over your timing, why take that risk?

How to think about runway and when to raise

Businesswoman Pogostick Jumping on Banknotes | New Business Concept

Image via Getty Images / runeer

A startup’s “runway” is how much time they have until they run out of money. The assumption here is that a startup isn’t profitable yet, and is using VC investment to grow their business more quickly at the expense of short-term profitability.

Often a founder will raise a Series Seed and plan to “burn through” all that money in 18 months either investing in product or growing the team. To raise a round successfully at a good valuation you need to be growing at a crazy high rate (which is what you’re burning money on).

YC says you should be growing 7% a week, although that applies to very early stage pre-funding. Once you’ve gotten a bit of traction, the conventional wisdom is that you need to be on the “triple triple double double” path (see the detailed overview here).

So if you raise a Series Seed or A at $2m in ARR, you need to get to $6m in ARR in twelve months (that’s a 9.6% compounding monthly growth rate). If you’re only on track to double in a year, you are likely not VC-fundable and need to go the bridge round route and steer the business towards profitability.

In other research from DocSend we’ve found that the median time spent to fundraise is about three months. If as a CEO you can’t raise capital at the right price, the responsible thing to do is to leave a bit of buffer so you can either reduce your burn rate to extend your runway or find a buyer for your business. Again, the CEO’s main goal is to not run out of money.

This means that ideally you begin to fundraise no less than six months before you anticipate running out of cash. So if you raise capital for 18 months of runway, you need to be back out in the market a short 12 months after popping the champagne to celebrate your last round.

The Q4 fundraising trap you need to avoid

The fundraising data at the end of each year tells a fascinating tale of hope and then a rising fervor of activity before falling off a cliff in December. The lesson in this is that if you can’t get your round closed by the end of November, you run the risk of losing momentum during the holidays and having to reset your process or deal with worse terms by having fewer potential investors at the table. As a VC, you also run the risk of missing out on a hot deal if you can’t get it closed before the holiday.

The story the data shows is that VC visits start low in August at the end of the summer low season and steadily build to their annual peak in November before falling off sharply in December. Entrepreneurs sending decks starts low and steadily builds to a peak in October, which makes sense because you need to send your decks in advance of VCs being able to view them.

So if you are scrambling to get your deck out to VCs in October, realize that you are behind the ball and are at risk of missing the window which means you might be better off waiting until the new year (if you have that luxury).

The secret window

Another surprising discovery in the data was when pitch decks get the most attention. It’s a time of year when relatively few pitch decks are sent, but the viewing of those pitch decks by VCs is incredibly high. This means if you do go out to fundraise in this window, you’ll get significantly more attention than you would at other times of the year. To see the data deep dive on this as well as the overall monthly sending and viewing stats, check out the deep dive in Extra Crunch.

Smart windows to raise capital

This research highlights the need for CEOs to pay closer attention to timing their fundraising activities. Let’s say you raise your Series Seed round in March. You might assume that you should go out to the market again in 12 months.

However, knowing what we do, it could be more advantageous to start raising money a couple months earlier, in January. You’ll get a whole lot more attention and will beat the entrepreneur rush in March. Plus, you don’t want to be caught fundraising in summer.

If there are four things you should take away from this research, they are:

Peak fundraising times are in October/November and in March.
Don’t spend too much time celebrating after raising; you’ll like need to go out for your next round in just 12 months.
Budget a minimum of 6 months to go out and fundraise and try to time to your advantage.
If you’re raising at the end of the year, you should get started in September at the latest unless you think you’re in a very strong position to raise your round quickly.

Good luck and happy fundraising!

July 2, 2019

When is the right time to pitch VCs for funding?

Russ Heddleston Contributor

What are the best times of year to share your pitch deck with VCs?

July 2, 2019

Sources: Currencycloud, the API for cross-border payments, has raised ~£32M in first part of a Series E round

Currencloud, the provider of an API and service for cross-boarder payments that is used by a host of fintechs and larger companies, including most recently Visa, has closed the first part of closing in on Series E funding.

According to sources, the 7 year old London headquartered company announced internally that it was closing in on new funding round a few weeks ago, while a recent regulatory filing reveals that the Series E totals just shy of £32 million in Series E shares so far. However, I understand that this is just tranche one, and that additional Series E funding will follow within the next 2-3 months when the round will be officially announced. Tranche one also consists of two slightly different share prices as it sees earlier debt financing converted into equity.

filing currencycloud With regards to who is backing Currencycloud’s Series E, one source tells me Goldman Sachs is in the running and is possibly leading the round. Existing investor GV (previously Google Ventures) is said to me following on. I’m also hearing that another new investor could be Spanish bank Santander, via its venture arm Santander Ventures, in what would signal a significant strategic investment and/or partnership. Currencycloud declined to comment.

Launched in 2012 — and long considered a mainstay of the London fintech ecosystem (the company was even used heavily by TransferWise in its early days)– Currencycloud has built out B2B cross-border payments infrastructure. It provides an API for businesses that need to offer their customers international transfers.

Now operating across Europe, along with the U.S. and Canada, the company has to date processed more than $50bn in transfers, sending money to over 180 countries. The banks and fintechs that Currencycloud works with globally include Starling Bank, Standard Bank South Africa, Visa, Travelex and Klarna. The company’s team now sits at over 200 employees (see photo above) across multiple international offices, including London, Amsterdam and New York.

July 2, 2019

Equinix and Singapore’s GIC will launch a $1 billion joint venture to build hyperscale data centers in Europe

Equinix, one of the world’s largest data center companies, announced that it will form a $1 billion joint venture with GIC, Singapore’s sovereign wealth fund. The partnership will focus on building xScale data centers in Europe. Instead of targeting the wholesale market, Equinix is developing xScale data centers to handle the demands of of the biggest cloud service providers in the world. Equinix’s clients have already included Alibaba Cloud, Amazon Web Services, Microsoft Azure, Oracle Cloud Infrastructure, Google Cloud and other hyperscale cloud providers.

Under the agreement, expected to be finalized in the third quarter, GIC will own an 80 percent stake in the joint venture, with Equinix owning the remaining 20 percent. Equinix will also sell its London LD10 and Paris PA8 International Business Exchange (IBX) data centers to the joint venture for new xScale centers. xScale centers will also be built in Amsterdam, Frankfurt and London, bringing the total to six centers that will provide a combined capacity of 155 megawatts once completed.

Equinix says global deployments from hyperscale cloud providers currently exceed about $500 million in annual revenue. The new xScale data centers will be located on or near Equinix’s IBX campuses, to enable providers to handle more customer access points and rapidly-scaling workloads. Equinix currently has more than 200 IBX campuses, covering more than 50 metro areas around the world. xScale data centers will also offer interconnection and edge services to increase connection speeds for cloud service customers and be engineered specifically to meet the needs of hyperscale companies.

In a press statement, Charles Meyers, president and CEO of Equinix, said, “The JV structure will enable us to extend our cloud leadership while providing significant value to a critical set of hyperscale customers. We look forward to launching similar JVs in other operating regions and believe that these efforts will continue to further differentiate Equinix as the trusted center of a cloud-first world.”

July 1, 2019

Calm raises $27M to McConaughey you to sleep

Meditation app unicorn Calm wants you to doze off to the dulcet tones of actor Matthew McConaughey’s southern drawl or writer Stephen Fry’s english accent. Calm’s Sleep Stories feature that launched last year is a hit, with over 150 million listens from its 2 million paid subscribers and 50 million downloads. While lots of people want to meditate, they need to sleep. The 7-year-old app has finally found its must-have feature that makes it a habit rather than an aspiration.

Keen to capitalize on solving the insomnia problems plaguing people around the world, Lightspeed tells TechCrunch it has just invested $27 million into a Series B extension round in Calm alongside some celebrity angels at a $1 billion valuation. The cash will help the $70 per year subscription app further expand from guided meditations into more self-help masterclasses, stretching routines, relaxing music, breathing exercises, stories for children, and celebrity readings that lull you to sleep.

Calm App

The funding adds to Calm’s $88 million Series B led by TPG that was announced in Februay that was also at a $1 billion valuation, bringing the full B round to $115 million and it’s total funding to about $141 million. Lightspeed partner Nicole Quinn confirms the fund started talks with Calm around the same time as TPG, but took longer to finish due diligence, which is why the valuation didn’t grow despite Calm’s progress since February.

“Nicole and Lightspeed are valueable partners as we continue to double down on entertainment through our content” Calm’s head of communications Alexia Marchetti tells me. The startup plans to announce more celebrity content tie-ins later this summer.

Broadening its appeal is critical for Calm amidst a crowded meditation app market including Headspace, Simple Habit, and Insight Timer plus newer entrants like Peleton’s mindfulness sessions and Journey’s live group classes. It’s become easy to find guided meditations online for free, so Calm needs to become a holistic mental wellness hub.

While it risks diluting its message by doing so much, Calm plethora of services could make it a gateway to more of your personal health spend, including therapy, meditation retreats, and health merchandise from airy clothing to yoga mats. But subscription fees alone are powering a big business. Calm quadrupled revenue in 2018 to reach $150 million in annual revenue and profitability.

That revenue is poised to keep up it’s rapid growth. After the launch of Sleep Stories, “it was incredible to see the engagement spike up and also the retention” says Quinn. Users can choose from having McConaughey describe the wonders of the cosmosm, John McEnroe walk you through the rules of tennis, fairy tales like The Little Mermaid, and more.

Quinn tells me “Sleep Stories is now a huge percentage of the business, and also the length of time people spend on the app has gone up dramatically.” She tells me that so many startups are “trying to invent a problem where there isn’t one.” But difficulty snoozing is so widespread and detrimental that users are eager to pay for an app instead of a sleeping pill.