Despite the slowdown in venture capital activity, there’s still a mountain of money flowing through startups today. TechCrunch+ is launching a series of posts looking at recent, notable venture rounds, exit activity and other news that relates to the financial side of building new technology companies.
While banks are dealing with the crisis kicked off by the failure of startup-friendly Silicon Valley Bank, upstart tech companies remain busy raising capital and looking for exits. More former than the latter, though, given the frozen IPO market. But while we wait for startups’ traditional exit avenues to reopen, we can still keep tabs on where and how money is flowing into their world.
Remarkable rounds of the week
Etoro reloads at $3.5B valuation
- It’s always useful to have a backup plan. After its SPAC deal failed to consummate, consumer trading service eToro was left without the new tranche of capital and valuation it had worked towards. But the company had secured a pledge for funds in case the SPAC deal fell through, and that promise is proving a lifeline now.
- The round matters given its size (nine figures), the industry (fintech has taken a valuation pounding in recent quarters) and underlying financial results. The company is still trailing its performance from the rosy days of 2021, but it still grew in 2022. This means that we’re seeing a massive, consumer-fintech company gain a new valuation under difficult conditions. Fintech founders should take note.
Seed Club Ventures sneaks out of stealth with $25M to make DAO dreams a reality
- A lot of people assumed interest in DAOs, or decentralized autonomous organizations, had faded in the past year along with crypto bros’ fortunes. But it turns out there are still a number of people very invested in the concept of communities making their own decisions on how to spend millions of dollars.
- Seed Club Ventures, a 63-member consortium of VCs, individual investors, family offices and various entities that still believe in web3, recently came out of stealth with a $25 million fund to help DAOs do just that.
- This matters because that $25 million is going to go to early-stage projects building much-needed tooling for DAOs. The consortium has already backed projects like Guild, Stability AI, Lens and Metalabel, and such tooling will help take DAOs to a level where they can realize some, if not all, of the potential that fully decentralized systems hold.
IntegrityNext raises $109M to help companies ensure their supply chain is ESG-compliant
- Environmental, social and governance (ESG) investing policies are riddled with politics. For good reason: Compliance with ESG norms requires companies to examine the breadth and depth of their operations to ensure things are done responsibly. That can get expensive, tedious and take a really long time.
- Munich-based IntegrityNext is doing something special to help companies solve that problem: The startup works with companies to audit their supply chains so they can quickly find out where and how they can optimize logistics and comply with ESG requirements.
- This fundraise is great news for European companies, because they will have an easier time of adopting previously “nice-to-have” ESG policies that are soon becoming “must-have” as regulations in the EU tighten.
Kream rushes to a $742M valuation because fashionistas like the planet
- Even in our world of abundance, some things are rare. That is why reseller platforms for luxury goods exist. Spun out of Korean e-commerce giant Naver, Kream has only been around for two years, but the company has seen incredible success as fashion-savvy customers flood its stores in their quest for rare and expensive sneakers, watches, bags, accessories and clothing.
- Kream’s $168 million fundraise is interesting because the company is going to invest a lot in its peers to build a reseller network spanning a large swath of Asia — meaning someone in Singapore can buy limited edition sneakers that were only launched in Japan.
- It’s also great news for Asia’s growing reselling market as it signals consumer interest in collectibles and other luxury items, which could drive further investment.
Kredivo raises gigantic $270M Series D to make credit more accessible to underbanked Asians
- Asia’s developing economies are home to massive underbanked populations — a huge market for fintech to disrupt. Kredivo, which aims to increase access to credit in Indonesia and Vietnam, has certainly struck gold with a user base that’s about as big as Indonesia’s credit-card-holding population.
- The company’s oversubscribed $270 million Series D is proof of the fact that there’s growth to be gained by helping people get access to banking services easily and seamlessly.
Other startup and venture capital news
The venture slowdown is hindering even the fastest startup categories
- Sometimes, even diamonds will go ignored. That’s what’s happening in startup land at the moment: Previously hot API startups are also suffering in the venture slowdown.
- Per data from GGV, which tracks funding into 63 API companies, startups in this category raised about $2.15 billion in 2022, less than half of what they raised a year earlier. And Q4 2022 saw such startups raising a paltry $134 million, a figure lower than the year’s previous three quarters. That’s got to be tough.
- We care about this because even though API startups are leading the charge with usage-based pricing models — which some argue is the future of software sales — they’re still subject to market pressures. Their struggle indicates that no matter how hot a sector you’re in, dollars are likely to be harder to come by.
Coinbase execs are angry at the SEC raining on their parade
- Crypto isn’t happy with how lawmakers are treating it. Coinbase’s CEO recently said the government should just make up its mind about regulations already after the SEC sent it a Wells notice, which means the government is going to come after Coinbase and companies like it for “violations of the federal securities laws.”
- Coinbase has a point: There’s no precedent to what crypto companies are developing, and fitting the SEC’s nearly century-old laws to this nascent economy looks like a square-peg-triangle-hole situation.
- It’s clear the SEC needs to cement its beliefs on how crypto should be traded so that the wider ecosystem can just follow the rules.
Roofstock cuts 27% of staff in second round of layoffs
- Proptech startups are having a moment, and their employees seem to be paying for it. Rising mortgage rates and the general housing slowdown haven’t been good for companies that depended on people realizing their American dream.
- But buying a house? In this economy?! A lot of people said, “yeah, right.” And that led to Roofstock, which lets people buy and sell rental homes in dozens of U.S. markets, deciding that it needs to lay off 27% of its staff for the second time in two quarters.
- The company’s trying to stay afloat in a sinking housing market, which makes sense. But what doesn’t is that it has money: it raised $240 million just a year ago. This isn’t good news for the wider proptech market.
4 Indian investors explain how their investment strategy has changed since 2021
- Indian startups were pretty optimistic early in 2022 since the global venture slowdown hadn’t reached the country yet. But arrive it did, leading to a 70% drop in funding in the second half of the year.
- While we’re sure investors in the country saw it coming, how did they recalibrate their sensors to the new climate? Jagmeet found out that for starters, they slowed down, choosing to make safer bets and generally ensuring their portfolio companies have enough runway to outlast this downturn.
- Indian investors are also telling their startups to take a step back, solidify their business models, and focus on the basics to get to their next milestone. And if needed, raise a down round, because life > death.
When the tech IPO market reopens, keep an eye on HR unicorns
- Do you hear that? That’s Alex giggling in anticipation of all the S-1s we’re likely to get if HR unicorns continue to grow as quickly as they have.
- The startup group’s ARR growth and regular EBITDA output — and therefore, valuations — seem to be nearly immune to the slowdown, as unicorns like Deel, Velocity Global, Gusto and Ripple continue to expand into new markets and categories.
- This means that come IPO season (whenever that happens), HR tech companies are going to likely be among the first out of the gate. We’re curious about one thing, though: How long can the startups in question grow without going to war with each other? Perhaps we’ll see a price war?
