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

March 26, 2023 ndowd

Keeping up with the latest technology money moves

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

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

Remarkable rounds of the week

Etoro reloads at $3.5B valuation

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

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

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

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

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

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

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

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

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

Other startup and venture capital news

The venture slowdown is slowing down even the fastest startup categories

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

Coinbase execs are angry at the SEC raining on their parade

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

Roofstock cuts 27% of staff in second round of layoffs

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

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

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

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

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

source