Identity.vc writes checks that range from €250,000 to €1.5 million into companies from the pre-seed to Series A stages.
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Atlassian now gives startups a year of free access
Long before product-led growth became a buzzword, Atlassian offered free tiers for virtually all of its productivity and developer tools. Today, that mostly means free access for up to ten users and some other limitations. For startups, that’s a good way to get started with the company’s tools like Jira and Bitbucket, but they also […]
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Skej’s AI meeting scheduling assistant works like adding an EA to your email
AI may not be up to the task of replacing Google Search just yet, but it can be useful in more specific contexts — including handling the drudgery that comes with performing everyday tasks, like scheduling meetings. That’s the premise behind the new startup, Skej, which offers an AI assistant you can loop into your […]
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Deal Dive: Can blockchain make weather forecasts better? WeatherXM thinks so
Accurate weather forecasts are critical to industries like agriculture, and they’re also important to help prevent and mitigate harm from inclement weather events or natural disasters. But getting forecasts right is extremely difficult. That’s why the founders of WeatherXM have been looking to make weather forecasts more accurate for the past 12 years. In 2012, […]
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Food supply chain software maker Silo lays off ~30% of staff amid M&A discussions
Silo, a Bay Area food supply chain startup, has hit a rough patch. TechCrunch has learned that the company on Tuesday laid off roughly 30% of its staff, or north of two dozen employees. Silo has confirmed the headcount reductions, clarifying the cuts were across the board and not focused on individual departments. Silo shared […]
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Crypto startup Ledger teams up with Cathay Innovation to launch $110M sector fund
Cathay Innovation is hoping to secure the bag in a new investment partnership with a company that secures crypto assets.
The $1.5 billion venture capital firm is entering the crypto market with a new $110 million fund dedicated to the sector that it will operate jointly with Ledger, a French startup focused on digital asset security, Cathay co-founder Dennis Barrier told TechCrunch.
The fund is similar to a corporate venture firm in that it’s partially operated by a company, but Ledger is different from the typical corporate VC because it’s a Series C-stage startup, not a large conglomerate looking to make bets on nascent firms. Ledger Cathay Capital, as the new fund is called, will invest in seed to Series A companies across a broad variety of segments across the crypto landscape, including emerging DeFi, security and infrastructure, according to Barrier.
Denis Barrier, co-founder of Cathay Innovation Image Credits: Cathay Innovation
Ledger’s claim to fame is its USB-like device that confirms crypto transactions, allowing users to keep physical control of their private wallet keys rather than relying on their memories for access. The startup’s most recent fundraise brought in $427 million for the company, its CEO Pascal Gauthier told TechCrunch — a slight increase from the $380 million in commitments that TechCrunch reported at the time because of new commitments that came in thereafter. Cathay Innovation was the lead investor in that round, which valued Ledger at $1.5 billion, Gauthier said.
Cathay, a backer of Ledger for the past five years, asked Ledger to team up with them to raise new capital for a crypto fund rather than doing so alone because the venture firm wanted to “get the best of both worlds,” Barrier explained. He wanted the fund to be able to move quickly like a traditional VC while providing long-term support and expertise for portfolio companies akin to a corporate venture arm, Barrier explained. It’s taken about a year for the fund to come together as an official vehicle after the two companies began conversations about this strategy, he added.
While it’s somewhat unconventional for a startup to launch a venture arm, it’s a lot more common in crypto — Uniswap, FTX, and Binance are three prominent examples. Ledger itself, which Gauthier said has been profitable for years, has made some recent investments into other startups. One of them was RTFKT, the NFT company Nike acquired last December, Gauthier said, though he did not share the names of any of Ledger’s other bets in the space.
“We invested from the balance sheet because the pressure from our partners was too high, so we had to start somewhere. Now, we are putting some structure around what we were doing, very naturally and very quickly … but we’ve been in the market for some time,” Gauthier said.
Cathay, a global venture firm that’s best known for its bets on tech startups including Pinduoduo and Chime through generalist funds, has paired up with companies in this manner in the past to go deep into a sector. It runs a smart energy fund in conjunction with Total Energy and Hubei as well as a mobility fund alongside Valeo, both of which operate with models similar to Ledger Cathay Capital, according to the Barrier.
Although Ledger itself is best-known for its hardware, the fund has a broad mandate, according to Gauthier.
“Anyone that can build on top of the [Ledger] platform — which is basically anyone in the market — has a shot of engaging with us [through the fund],” Gauthier said.
The fund hasn’t yet deployed any of the capital, he added, noting that it closed very recently. Bpifrance, the country’s public investment bank, is one of the new fund’s investors, according to Ledger Cathay Capital’s official announcement.
With the recent crypto market downturn, I asked Gauthier if he was concerned about the timing of launching this fund and whether it’s too late to capitalize on opportunities in crypto. He responded by noting that Ledger was founded in 2014 and has weathered downturns before, adding that he is still optimistic about the market’s potential, in part because of the developer activity he’s seen on the Ledger platform.
Gauthier thinks this will be a key differentiator for Ledger Cathay Capital, as Ledger has a global view of new dApps and blockchains coming to market from its own users — the company claims it secures 20% of the world’s cryptocurrencies. That’s part of why Gauthier said he isn’t concerned about crypto prices right now, in addition to the advantages he said stem from being a global investor headquartered outside of the United States.
“When markets are getting tough, that’s when we are at our best,” Gauthier said.
Antler East Africa closes $13.5M fund to invest in early-stage startups
Antler East Africa, the Nairobi office of VC firm and venture builder Antler, has closed a $13.5 million fund to invest in early-stage tech startups in the region.
The oversubscribed round — Antler intended to raise $10 million but ended up with an extra $3.5 million — has LPs that include Baillie Gifford, a well-known Tesla backer; family offices such as Canica; and institutional investors like the IFC.
Antler East Africa was launched in August 2019. It runs a full venture building model with two cohorts each year.
Five cohorts with 153 founders have passed through the accelerator programs so far, and the firm has made 14 investments. A few of them include AIfluence, Marketforce-subsidiary Digiduka, Honeycoin, Uncover Skincare, Try Cooked and Vybe.
However, its parent company, Antler, founded two years earlier by Magnus Grimeland, employs a mixed model where it acts as a venture builder and VC firm.
The firm, which invests from pre-seed to Series C, has cut checks in more than 250 companies from its $300 million fund.
Antler East Africa’s new fund allows it to embrace a similar approach: accepting founders who want to build their startups from scratch and investing in already formed teams that need capital to scale.
“We still do the venture building. That’s still the core of what we do. Just that now that the fund is closed, we have enough money to spend in existing businesses that are coming in,” Selam Kebede, the firm’s director, told TechCrunch over a call. “And we can invest in stuff that’s already been built with a pure kind of VCs type setup investment.”
Kebede is part of the all-female-led team that includes partners Melalite Ayenew and Marie Nielsen and program manager Joana Borges.
Antler said it would accept founders and teams on a rolling basis. Founders going for the venture building model to find a co-founder and launch an idea will stay within Antler’s community for up to six months.
For existing startups, two to six weeks is all that’s needed for Antler East Africa to work with the team before the firm cuts a check. Antler East Africa says it will invest up to $100,000 in these startups at a “mutually agreed valuation.” It plans to make 35 new investments from pre-seed to Series A over the next three years. There’s also an arrangement for the global Antler fund to follow up on some rounds all the way to Series C.
“What changed now is, in the past, we were going only from zero to like the first $100,000 ticket. But now we’re saying we can also take in existing teams and ideas that formed outside of Antler, but they can come to us and then we can invest just like any other VC would,” Kebede noted.
“So that changed a bit from what we typically used to do in the past three years. Now, we can start from literally day zero to support you and give you the first institutional ticket following up to Series C and D.”
Kebede told TechCrunch that Antler East Africa is sector agnostic. Nevertheless, the firm is keen on investing in startups solving problems in climate tech, agritech and fintech. She also said the team has already made a few investments with this new format but declined to disclose their names.
Being a female-led VC team, Antler East Africa is particular about investing more in startups founded and led by women in the region, Kebede said. It will try to improve the numbers from its venture building model, where 25% of the founders in its portfolio are women.
Meanwhile, female-run VC firms are impressively taking up their place in a male-dominated tech space as they try to address the funding gap that has plagued the industry for years. The Antler East Africa team, led by Ayenew and Nielsen, joins that list of such firms, including those specially dedicated to female-founded and led teams like Alitheia Capital and FirstCheck Africa.
“There are few or no female-run VC 100% that I know of, at least in Kenya. But our partners [Ayenew and Nielsen] and I, we’re all women,” expressed Kebede.
“And so it’s been super exciting to be able to do this, especially as first-time fund managers. It hasn’t been easy though because, you know, there’s the added kind of scrutiny and concern from other people when they see only women running it, but it has been exciting too.”
Intel’s plan to free Mobileye brings welcome IPO heat check
After promising the move back in December, Intel announced yesterday that its Mobileye division has confidentially filed to go public. Intel bought the computer vision company focused on the self-driving sector back in 2017, before which it had been a public concern.
The move by Intel to free Mobileye has been long-telegraphed, which means it would be an easy item to set aside in the present news cycle. However, with today’s IPO market frozen like a glacier, any and all exit data is welcome. If Mobileye manages a smooth IPO at an attractive price, the company could help shake loose the exit market for tech companies. No single IPO will fix a bear market, but it would help.
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In contrast, if Mobileye struggles when it debuts, or its IPO is pushed back due to market conditions, we’ll know that the public markets remain pretty darn closed for unicorns and other late-stage startups.
The number of companies looking to exit is not small: Databricks (big data analytics, worth $38 billion) is one such company. Chime (consumer fintech, worth $25 billion) is another. Instacart (on-demand grocery services, worth $39 billion) is in there as well. Ditto GoPuff (on-demand CPGs, worth $15 billion). Also Egnyte (corporate file management and security with north of $150 million ARR, though its most recent private-market price is unclear). Among just that group, there’s more than $10 billion in invested capital waiting for an exit.
So the Mobileye IPO really does matter for the startup market’s largest players, and a host of smaller, less well-known tech startups that would also like to exit, thank you very much.
Let’s remind ourselves of the Mobileye story and how it wound up poised for a spinout from U.S. chip giant Intel. Then we’ll discuss what the company may be worth based on prior reporting and Intel earnings data. Finally, we’ll ask what a winning price might be in today’s markets, and what that range may mean for more mature startups. Sounds good? Let’s have some fun!
Full circle
Intel buying Mobileye was “the biggest-ever acquisition of an Israeli tech company,” our colleague Ingrid Lunden reported at the time. Announced in March 2017 and fully cleared by antitrust in August of that year, the deal then represented “a fully-diluted equity value of approximately $15.3 billion and an enterprise value of $14.7 billion.”
In a way, a public Mobileye would return to where it was a few years ago: The company had been listed on the New York Stock Exchange since 2014 at the time of its sale to the larger company. Mobileye’s market cap was about $10.5 billion when it was acquired. Intel paid $63.54 per share, a premium compared to market rate, but slightly below the stock’s all-time high closing price of $64.14 in August 2015, CNBC noted.
In Intel’s words, Mobileye had managed to become “the leading supplier for computer vision systems in the automotive industry” less than a decade after its creation in 1999. Given that the self-driving market was heating up at the time, and Intel was hunting for growth and diversification, the deal made some sense.
With the acquisition, Intel’s goal was to position itself “as a leading technology provider in the fast-growing market for highly and fully autonomous vehicles.” The latter was still a few years away at the time and, depending on whom you ask, it may still be. What has that meant for Mobileye?
Historical and recent results
If we think about $15.3 billion back in 2017, we’re discussing a very different technology market from what we saw last year. In 2021, we might have expected Mobileye to be worth a multiple of that original sale price, given how elevated the prices for tech companies were at the time. However, the value of tech revenue has come back to Earth in the interim, so we need to do some work.
Mercury restricted a number of accounts linked to African startups and didn’t exactly say why
Yesterday, Mercury, which describes itself as a bank for startups, restricted several accounts linked to African tech startups, TechCrunch has learned.
The number of companies involved with this restriction is unknown. But some sources told TechCrunch that they range from a dozen to 30 — including well established YC-backed startups and newer upstarts.
According to our sources, Mercury did not give any prior notice that it would take this action, nor did it explain why the action was taken in its first email to the affected startups.
“Hi, Your access to the Mercury account for [company’s name] has been temporarily restricted. Let us know if you have any question or concerns,” read the first email Mercury sent out.
Upon further questioning, Mercury, who holds over 4 billion in customer deposits for its 40,000+ businesses in over 200 countries, told some of these startups that their accounts had been flagged and placed under review by its compliance team after it noticed some “unusual activity” and couldn’t provide further details until its review was complete.
“We don’t have a definite date for when this will be completed, but we will provide an update as soon as we have one. We’re prioritizing the review of your account with our bank partner. We do apologize for any inconvenience this may cause,” it said in another email.
Some founders and tech stakeholders have taken to Twitter to express their disappointment at Mercury’s decision to block these accounts without any concrete reason. For a number of these startups, Mercury’s restriction came at an inconvenient time — the end of the month — when major obligations such as salaries and taxes ought to be attended to; now, those will have to wait, the founders say.
A couple of founders, who chose not to be named, said Mercury’s move might be linked to the ongoing conflict between Russia and Ukraine, which has seen the company’s partner bank review its exposure to “high risk” regions such as Africa. However, in an email sent to one of the founders whose startup was affected, Mercury tried to point out that its intention wasn’t for the founder and his business to “feel singled out or held to a different standard.”
It’s hard to think that isn’t the case, considering how startups from other regions don’t seem to have experienced a similar problem, judging by activity linked to the situation on Twitter.
A spokesperson responding to TechCrunch’s request for comment said Mercury is aware that one of its backend banks has suspended the accounts of a number of Mercury customers in Africa. And while the bank was acting in compliance with its internal procedures, the suspension has adversely affected some of its customers.
“It’s top priority for us to work with the bank to resolve this matter as quickly as possible. We’re reaching out to the customers impacted directly and apologize for the disruption this event has caused,” it said in the remainder of the email to TechCrunch.
Meanwhile, CEO Immad Akhund reached out via email to those affected:
Hi everyone,
I am the CEO of Mercury. Since many of you have emailed/messaged me directly I thought it would be best if I just reached out directly.
We found out yesterday that our partner bank noticed unusual activity and asked us to lock and investigate a large set of accounts with linked activity. We are working through our due diligence on all those accounts and will be in touch with you individually with questions if we have any on your account or activity.
Since it’s a reasonably large set of accounts it’s taking us some time to work through all of them but it’s the highest priority for us internally and we have more than 10 people working on this.
We apologize for this sudden inconvenience and hope to put better practices in place to avoid this in the future. We will be in touch directly as we make progress and feel free to email me on this email if you have follow up questions.
Regards,
Immad
Wayflyer raises $150M on a $1.6B valuation for a new spin on providing loans to e-commerce merchants
E-commerce has continued to boom in the wake of the Covid-19 pandemic, but running an e-commerce business has also become significantly more chaotic, with unpredictable supply chains, logistics hiccups, and overall higher costs upending even the best-laid plans. To underscore the demand for solutions to address this, today a startup called Wayflyer — which has built a new kind of financing platform, using big data analytics and repayments based on a merchant’s revenue activity — is announcing a big round of funding, $150 million. It plans to use the funds to double down on its business after a strong year of growth, with average monthly capital deployments (that is, loans) on the platform reaching $100 million, up nearly 1,000% on the year before.
The Series B funding values the Dublin-based startup at $1.6 billion.
DST Global and QED Investors co-led the all-equity round, with Prosus, Madrone Capital Partners and J.P. Morgan — all new backers — also participating, alongside previous investors Left Lane Capital and Guillaume Pousaz (the founder of Checkout.com). J.P. Morgan is something of a strategic investor here: it’s not a direct partner (yet?) of Wayflyer, but in addition to being a major financier of tech startups, it’s also the world’s biggest bank and has been buying up fintechs to grow that part of its business.
Some 65% of Wayflyer’s customers today are in the U.S. and North America, with the remainder in Western Europe (mainly UK) and Australia. The plan is to continue investing both in the technology that Wayflyer uses to evaluate and make loans; and to continue growing its business overall, in particular with more partnerships to serve merchants. (Those partners today include Adobe, Sezzle and eBay UK.)
Wayflyer is not yet profitable, said CEO Aidan Corbett in an interview. But he noted that the startup has hardly touched the $76 million in funding that it raised in May 2021, and could potentially be profitable this year if it chooses. Along with the $76 million equity round in May, the startup also secured $100 million in debt to provide financing; we’ve asked whether there is another debt component in this latest round and will update the story as and when we learn more.
The valuation is a big one for an Irish startup, but it is all the more notable because Wayflyer, founded in September 2019, has only been around for just over two years. Yet in that time it has grown substantially. Corbett (who co-founded the company with president Jack Pierse) said that currently the company has “thousands” of customers — exact number undisclosed — who typically take out loans of between $300,000-$400,000 to cover things like inventory purchases, shipping costs and other big-ticket items necessary for running an e-commerce business.
The crux of the problem that Wayflyer is addressing is a persistent one in the world of e-commerce, but it has definitely become more exacerbated in the last couple of years. E-commerce businesses regularly face shortages with working capital, with funds coming into their accounts often not matching up with expenditures because outgoings need to be made on a regular basis, but incoming funds face reconciliation and other delays.
Corbett said that the Covid-19 pandemic made this an even more acute situation, with e-commerce merchants facing “three hits” that got especially rough in 2021. (Ironically, he noted that 2020 was a lot less difficult because it was just pure boost in demand with the knock on effect in supply chains taking longer to play out. 2022 is looking “better,” he added.)
“Raw material prices went up, there were supply chain delays so getting things took longer, and the cost of freight has gone up,” he said of last year. “It was a triple blow and they needed our funding more because the time in which they were paid or recognized revenue was elongated.” Specific costs simply went haywire: for example, the price of a container — an important item especially for smaller merchants that don’t charter their own shipping frigates — jumped to $14,000 from $4,000 last year. And supply chain delays jumped to 12 weeks from four.
“We have thousands of customer stories” detailing the problems, he said.
The company’s technology is a classic big-data play: it uses a number of sources of data, from Shopify and Woo Commerce through to TrustPilot reviews and Google Analytics and even wider information about how shipping services are performing, to determine how a merchant is doing as a business. It considers data not as a static but dynamic resource, which in turn becomes the basis on which repayments are made.
Revenue finance, as this is called, is not completely a new concept, but with the rise if big data analytics, it has become increasingly more ubiquitous and stands in contrast to how a traditional bank might have made a loan in the past.
“This gives founders downsize protection,” Corbett notes. “So say a shipment is late, you pay less money back that month. I am taking a performance risk on you.”
But this is also variable and can work in Wayflyer’s favor, too. “If they do well and outperform, we get paid back faster. It’s a lovely alignment on both sides,” he said. It’s not unlike the financing model adopted by other kinds of startups like Lambda School.
Its big data approach has some other benefits, too. Wayflyer can forecast when a merchant might be seeing more issues down the line, and so it nudges customers to put in orders earlier in those cases. It also has an interesting view on what is driving sales for businesses. Right now, for example, among social channels, TikTok is outpacing Snapchat and Pinterest for referrals and giving Facebook and Instagram a big run for their money.
In terms of competitors, the size of the loans it typically makes, and the frequency — depending on the nature and size of the customer, loans could be made as frequently as monthly — has partly meant that Wayflyer doesn’t compete, but complements, some of the other companies that have emerged as financiers to e-commerce businesses. Those include the likes of Stripe and Square, or those issuing credit cards to merchants, all of whom also base their loans on data from their platforms detailing what kind of incomings and outgoings a company is seeing. These tend to be much smaller amounts of money, however, and not aimed at helping a merchant run their supply chains. The bigger players in those categories might potentially become partners, or even try to acquire companies like Wayflyer as they grow and seek to diversify their own revenue streams.
More directly, Wayflyer competitors include the likes of Clearco and Uncapped.
“Aidan, Jack and the Wayflyer team remain focused on helping eCommerce companies grow and maximise their potential,” said Tom Stafford, co-founder and managing partner at DST Global, in a statement. “We are impressed by their commitment to building the best products for their customers and proactively helping their customers grow via analytics, practical insights and attractively priced funding. We are pleased to continue supporting the team, as Wayflyer expands globally to provide innovative financing and growth solutions for eCommerce businesses around the world.”
“The pandemic has accelerated eCommerce adoption globally and Wayflyer is transforming financial services for eCommerce businesses wanting to scale quickly, helping them to gain access to capital, inventory and insights at attractive terms,” said Sandeep Bakshi, head of investments for Europe at Prosus Ventures, in a statement. “Aidan, Jack and their team have a deep understanding of what will drive value for their customers, and the financial and business innovation that Wayflyer provides will help to fuel eCommerce ecosystems globally.”