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Turkey’s first decacorn: Trendyol raises $1.5B at a $16.5B valuation
Trendyol, an e-commerce platform based in Turkey, has raised $1.5 billion in a massive funding round that values the company at $16.5 billion. General Atlantic, SoftBank Vision Fund 2, Princeville Capital and sovereign wealth funds, ADQ (UAE) and Qatar Investment Authority co-led the round.
The deal marks SoftBank’s first in the country.
The new financing also makes Trendyol Turkey’s first decacorn, and among the highest-valued private tech companies in Europe. It comes just months after strategic — and majority — backer Alibaba invested $350 million in the company at a $9.4 billion valuation.
Founded in 2010, Trendyol ranks as Turkey’s largest e-commerce company, serving more than 30 million shoppers and delivering more than 1 million packages per day. It claims to have evolved from marketplace to “superapp” by combining its marketplace platform (which is powered by Trendyol Express, its own last-mile delivery solution) with instant grocery and food delivery through its own courier network (Trendyol Go), its digital wallet (Trendyol Pay), consumer-to-consumer channel (Dolap) and other services.
Image Credits: Founder Demet Mutlu / Trendyol
Trendyol founder Demet Suzan Mutlu said the new capital will go toward expansion within Turkey and globally. Specifically, the company plans to continue investing in nationwide infrastructure, technology and logistics and toward accelerating digitalization of Turkish SMEs. She said the company was founded to create positive impact and that it intends to continue on that mission.
Evren Ucok, Trendyol’s chairman, added that part of the company’s goal is to create new export channels for Turkish merchants and manufacturers.
Melis Kahya Akar, managing director and head of consumer for EMEA at General Atlantic, said that Trendyol’s marketplace model — ranging from grocery delivery to mobile wallets — “brings convenience and ease to consumers” in Turkey and internationally.
“Turkey is one of the fastest growing economies in the world and benefits from attractive demographics, with a young population that is very active online,” wrote General Atlantic’s Kahya Akar via e-mail. “We expect its already sizable e-commerce market –$17 billion in 2020 – to continue to grow meaningfully on the back of growing online penetration. We think Trendyol is ideally positioned to meet the needs of consumers in Turkey and around the world as the company expands.”
A 2020 report by JPMorgan found that e-commerce represented only 5.3% of the overall Turkish retail market at the time but that Turkish e-commerce had notched impressive leaps in revenues in recent years: 2018 alone saw the market jump by 42%, followed by 31% in 2019. As of 2020, 67% of the Turkish population were making purchases online.
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Extra Crunch roundup: Build a founding team, choose a VC and recruit your board
Assembling a startup team is harder than assembling 10 IKEA dressers, and the stakes are much, much higher.
Starting with the assumption that 90% of startups will fail and the most successful ones take an average of six years to IPO, founders must make careful decisions about whom they invite to join the core team.
Will that stellar engineer become a great CTO? Should your product person be opinionated or a team player? Are you even the best choice for CEO?
ThoughtSpot CEO Sudheesh Nair shared some of his thoughts about building a sturdy leadership team and drafted a thorough checklist for entrepreneurs who are putting a crew together. His initial advice?
“Investors love founder-CEOs, and founders are often fantastic candidates for this role. But not everyone can do it well, and more importantly, not everyone wants to.”
In a related article, Gregg Adkin, VP and managing director at Dell Technologies Capital, shared the framework he’s developed for helping founders set up their board.
Choosing the right mix of people can impact everything from fundraising to hiring: “Investors often ask founders about their board [because] it says a lot about their character, their judgment and their willingness to be challenged,” he writes.
Full Extra Crunch articles are only available to members.
Use discount code ECFriday to save 20% off a one- or two-year subscription.
Miranda Halpern spoke to Amsterdam-based coach Ward van Gasteren for our latest growth marketing interview, which is free to read.
In their discussion, van Gasteren addressed misconceptions about growth hacking, the mistakes most startups are likely to make, and the distinctions he draws between growth hacking and growth marketing:
“Growth hacking is great to kickstart growth, test new opportunities and see what tactics work,” he tells us.
“Marketers should be there to continue where the growth hackers left off: Build out those strategies, maintain customer engagement, and keep tactics fresh and relevant.”
Thanks very much for reading Extra Crunch this week; I hope you have a great weekend.
Walter Thompson
Senior Editor, TechCrunch
What Square’s acquisition of Afterpay means for startups
Image Credits: sureeporn / Getty Images
In his first column since returning to TechCrunch, reporter Ryan Lawler considered the potential ripples Square’s purchase of Afterpay may send across the pond of buy now, pay later startups.
For commentary and perspective, he interviewed:
- Dan Rosen, founder and general partner, Commerce Ventures
- Jake Gibson, founding partner, Better Tomorrow Ventures
- TX Zhuo, partner, Fika Ventures
- Matthew Harris, partner, Bain Capital Ventures
The investors he spoke to agreed that deferring payments helps drive e-commerce, “but scale matters and long-term margins look slim for BNPL startups,” reports Ryan.
Enterprise AI 2.0: The acceleration of B2B AI innovation has begun
Image Credits: Ivan Bajic (opens in a new window) / Getty Images
Businesses have been deploying AI solutions for 20 years, but few have achieved the outstanding gains in efficiency and profitability promised when the technology first appeared.
But there’s a burgeoning new generation of enterprise AI, Eshwar Belani, an operating partner at Symphony AI, writes in a guest column.
“Companies on the leading edge of AI innovation have advanced to the next generation, which will define the coming decade of big data, analytics and automation — Enterprise AI 2.0.”
Embodied AI, superintelligence and the master algorithm
Image Credits: Joan Cros Garcia-Corbis (opens in a new window) / Getty Images
Over the next 18 months, one technologist says the increased adoption of embodied artificial intelligence will open a path to superintelligence — incredibly powerful software that dwarfs anything the human mind could produce.
“All the crazy Boston Dynamics videos of robots jumping, dancing, balancing and running are examples of embodied AI,” says Chris Nicholson, founder and CEO of Pathmind, which uses deep reinforcement learning to optimize industrial operations and supply chains.
“The field is moving fast and, in this revolution, you can dance.”
A lot of cash and little love: An insurtech story
Image Credits: Nigel Sussman (opens in a new window)
The Exchange looks at the valuations of public insurtech companies and considers what that means for startups — but from a slightly different perspective.
“We’d typically riff on the new values of public neoinsurance companies and use that data to work our way into a guess concerning what the price declines might mean for related startups,” Alex Wilhelm writes. “Taking public-market data and using it to better understand private markets is pretty much the national pastime of this column.
“Not today.”
5 factors founders must consider before choosing their VC
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The fact that the globe is awash in venture capital should not be news to readers of this newsletter.
For founders, it means more than just fat checks, Kunal Lunawat, the co-founder and managing partner of Agya Ventures, writes in a guest column.
“Founders would be well served to go back to the basics and focus on the principles of fundraising when determining who sits on their cap table.”
Neobanks’ moves toward profitability could be the path to public markets
Image Credits: Nigel Sussman (opens in a new window)
Alex Wilhelm checks in on results from Starling Bank and Monzo to see what the neobanks’ most recent financial figures say about the state of neobanks overall.
“Although some neobanks are managing to clean up their ledgers and work toward profits — or reach profitability — not all are in the black,” he notes.
But among those that are?
“At least a portion of the neobanking world is financially stable enough to consider public offerings.”
Founders must learn how to build and maintain circles of trust with investors
Image Credits: MicroStockHub (opens in a new window)/ Getty Images
The red-hot venture capital market may give founders lots of investors to choose from, but the most important thing (if you can be choosy) is being able to trust and rely on your investors, Ripple Ventures’ Matt Cohen and True’s Tony Conrad write in a guest column.
“This … new dynamic is forcing founders to be extremely selective about exactly who is sitting around their mentorship table,” they write.
“It’s simply not possible to have numerous deep and meaningful relationships to extract maximum value at the early stage from seasoned investors.”
What’s the board’s role in an early-stage startup?
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Assembling a board of directors is not merely about finding individuals who can aid your early-stage journey, Gregg Adkin, the vice president and managing director at Dell Technologies Capital, writes in a guest column.
The composition of the board can also impact your fundraising.
“Investors often ask founders about their board [because] it says a lot about their character, their judgment and their willingness to be challenged,” he writes.
Adkins offers a framework he calls “SPIFS” — for strategy, people, image, finance and systems for compliance — to aid founders in setting up a board.
Do bronze medals ever make sense for unicorns?
Image Credits: Nigel Sussman (opens in a new window)
In the wake of Deliveroo’s plans to abandon the Spanish market after the country passed legislation requiring companies dependent on gig workers to hire employees, Alex Wilhelm wondered about the battle for smaller markets and whether third place is sufficient.
“One company exiting a market is not a big deal, but we were curious about Deliveroo’s comments regarding the need for market leadership — or something close to it — to warrant continued investment,” he writes for The Exchange.
“Is this the common reality for startups battling for market position, no matter if those markets are cities or countries?”
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Extra Crunch roundup: Livestream e-commerce, growth marketing interviews, CEO for a day
This year, livestream viewers in China are projected to spend more than $60 billion on digital shopping experiences that let them interact with influencers in real time.
Promoting everything from cosmetics to food, social media stars use Taobao, TikTok and other platforms to livestream products and take questions from the audience.
On Taobao’s Singles Day in 2020, livestreams racked up $6 billion in sales, twice as much revenue as the year prior.
Sensing a trend, Western startups are getting in on the action, with companies like Whatnot and PopShop.Live raising rounds to build out their infrastructure. Looking forward, Alanna Gregory, senior global director at Afterpay, says she foresees four major trends:
- Networks
- SaaS streaming tools
- Host discovery and outreach tools
- Host marketplaces and agencies
“For brands, SaaS streaming tools will be the most impactful way to take advantage of livestream commerce trends,” Gregory writes in an Extra Crunch guest post. “All of this will be incredibly transformative.”
To help entrepreneurs take on the most fundamental challenge facing early-stage startups, our team is speaking to growth marketers to learn more about the advice they’re offering clients these days.
This week, Miranda Halpern and Anna Heim interviewed experts on growth marketing:
- The MKT1 interview: Growth marketing in 2021, hiring versus outsourcing and more
- Unmuted founder Max van den Ingh on success beyond the metrics
- Draft.dev CEO Karl Hughes on the importance of using experts in developer marketing
Growth is an existential issue, so these stories are free to read and share. If you’ve worked with an individual or an agency who helped your startup find and keep new users, please let us know.
Thanks very much for reading Extra Crunch this week; have a great weekend.
Walter Thompson
Senior Editor, TechCrunch
Why Latin American venture capital is breaking records this year
Image Credits: Nigel Sussman (opens in a new window)
Alex Wilhelm and Anna Heim’s global exploration of Q2 venture capital data wrapped up this week with an in-depth look at Latin America.
One investor told them that today’s LatAm startup market “is a story about talent, not about capital.”
“The union of talent and money is what startup markets need to thrive,” they write. “But there are other reasons why Latin American startups are so frequently in the news today, including structural factors, such as strong digital penetration and quick e-commerce growth.”
Dear Sophie: Should we sponsor international hires for H-1B transfers and green cards?
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie,
My startup is desperately recruiting, and we see a lot of engineering candidates on H-1Bs.
They’re looking for H-1B transfers and green cards. What should we do?
— Baffled in the Bay Area
Why I make everyone in my company be the CEO for a day
Image Credits: Blake Little (opens in a new window) / Getty Images
In the reality TV series “Undercover Boss,” high-powered executives disguise themselves so they can work alongside everyday employees, ostensibly to learn from them.
Flipping that script, software company Vincit USA has a “CEO of the Day” program where staffers move into a metaphorical corner office for 24 hours and receive a very real unlimited budget. There’s just one requirement.
“The CEO must make one lasting decision that will help improve the working experience of Vincit employees,” said Ville Houttu, Vincit’s founder and CEO.
Since instituting the program, Vincit USA has received multiple awards for its workplace culture and sees reduced staff turnover.
“Though it may seem crazy, the initiative has paid off tenfold,” said Houttu.
What I’ve learned after 5 years of buying common stock in startups
Image Credits: Tim Robberts (opens in a new window) / Getty Images
Instead of giving founders standard term sheets, Boston-based seed-stage venture capital firm Pillar VC offers to buy common stock.
“There are many terms and conditions in a preferred term sheet that can misalign investors and founders,” says founding partner Jamie Goldstein.
“As with any experiment, we have learned a few things that have surprised us and faced challenges we’ve had to overcome.”
China’s regulatory crackdown is good news for startups aligned with CCP goals
Image Credits: Nigel Sussman (opens in a new window)
Alex Wilhelm takes stock of the wall of news out of China over the past week to see if there’s a silver lining for startups in the country as the Chinese Communist Party cracks down on everything from edtech companies to streaming platforms.
His take?
“The result may be concentrated effort and capital in sectors that Beijing favors and reduced capital and focus from entrepreneurs in sectors that have been deemed fit for strict control,” he writes. “Simply: Central planning is going to tilt business more toward centrally planned goals.”
Duolingo’s IPO pricing is great news for edtech startups
Image Credits: Nigel Sussman (opens in a new window)
The Pittsburgh-based language-learning unicorn initially aimed for an $85 to $95 per share IPO price range, then bumped that up to $95 to $100 before it began to trade. It ultimately entered the public markets at $102 per share.
Alex Wilhelm notes that based on Duolingo’s expected Q2 revenues, the company has a run-rate multiple of nearly 16x. Compare that to the median multiple for public SaaS companies of 14x.
“Duolingo, a consumer edtech company, is now more valuable per revenue dollar than the median public enterprise SaaS business,” Alex writes.
Financial firms should leverage machine learning to make anomaly detection easier
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“Anomaly detection is one of the more difficult and underserved operational areas in the asset-servicing sector of financial institutions,” EZOPS CEO Bikram Singh writes in a guest column.
But it’s critical to detect these anomalies amid a sea of data. That’s where unsupervised learning can offer a solution.
”With all eyes on data, it’s crucial that financial institutions find solutions to detect anomalies upfront, thereby preventing bad data from infecting downstream processes,” Singh writes.
“Machine learning can be applied to detect the data anomalies as well as identify the reasons for them, effectively reducing the time spent researching and rectifying executions.”
African startups join global funding boom as fintech shines
Image Credits: Nigel Sussman (opens in a new window)
Alex Wilhelm and Anna Heim continued their global tour of Q2 2021 venture capital data, this week focusing on Africa.
“Early data indicates that Africa is set to trounce historical records in terms of venture capital raised in the year and that the first half of 2021 saw roughly twice the funds raised by African startups as was recorded in the first half of 2020,” they write.
“Startups across Africa have never had more access to capital than they do right now.”
True ‘shift left and extend right’ security requires empowered developers
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The intention of DevSecOps is to wedge security and compliance into DevOps. But that’s easier said than done, says Apiiro founder and CEO Idan Plotnik.
“Shifting left and extending right doesn’t mean that a scanning tool or security architect should detect a security risk earlier in the process — it means that a developer should have all the context to prevent the vulnerability before it even happens,” he writes.
4 key areas SaaS startups must address to scale infrastructure for the enterprise
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Asana’s head of engineering, Prashant Pandey, rounds up four tips for SaaS startups looking to build up their infrastructure to meet customers’ growing needs.
“Startups and SMBs are usually the first to adopt many SaaS products. But as these customers grow in size and complexity — and as you rope in larger organizations — scaling your infrastructure for the enterprise becomes critical for success,” he writes.
He offers four areas to focus on:
- Address your customers’ security and reliability needs
- Give IT admins control over product usage
- Build data isolation into your architecture
- Support customers by interconnecting their data across applications
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White-label SaaS shipping startup Outvio closes $3M round led by Change Ventures
Outvio, an Estonian startup that provides a white-label SaaS fulfillment solution for medium-sized and large online retailers in Spain and Estonia, has closed a $3 million early-stage financing round led by Change Ventures.
Also participating were TMT Investments (London), Fresco Capital (San Francisco) and Lemonade Stand (Tallinn). Several angels also joined the round, including James Berdigans (Printify) and Kristjan Vilosius (Katana MRP). This is the startup’s first institutional round of funding after bootstrapping since 2018.
Online retailers usually have to use a number of different tools or hire expensive developers to create in-house shipping solutions. Outvio offers online stores of any size a post-purchase shipping setup, which seeks to replicate an Amazon-style experience where customers can also return packages. Among others, it competes with ShippyPro, which runs out of Italy and has raised $5 million to date.
“We can give any online store all the tools needed to offer a superior post-sale customer experience,” Juan Borras, co-founder and CEO of Outvio, said. “We can integrate at different points in their fulfillment process, and for large merchants, save them hundreds of thousands in development costs alone.”
“What happens after the purchase is more important than most shops realize,” he added. “More than 88% of consumers say it is very important for them that retailers proactively communicate every fulfillment and delivery stage. Not doing so, especially if there are problems, often results in losing that client. Our mission is to help online stores streamline everything that happens after the sale, fueling repeat business and brand-loyal customers with the help of a fantastic post-purchase experience.”
“While online retailing has a long way to go, the expectations of consumers are increasing when it comes to delivery time and standards,” Rait Ojasaar, investment partner at lead investor Change Ventures, said. “The same can be said about the online shop operators who increasingly look for more advanced solutions with consumer-like user experience. The Outvio team has understood exactly what the gap in the market is and has done a tremendous job of finding product-market fit with their modern fulfillment SaaS platform.”
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Twitter launches US e-commerce pilot that lets users shop from profiles
Twitter this morning will launch a pilot in the U.S. aimed at testing the potential for e-commerce on its platform. The company is introducing a new “Shop Module” that offers brands, businesses and other retailers the ability to showcase their products to Twitter users directly on the business’ profile. Users will then be able to scroll through a carousel of product images in the module and tap through on a product they’re interested in purchasing. This opens up the business’s website inside the Twitter app itself, where the customer can learn more about the product in question and opt to make a purchase.
The Shop Module will appear in a new, dedicated space at the top of a supported Twitter profile, which can be seen by U.S. users in English on iOS devices.
The company told TechCrunch that only businesses with a Professional Profile will be able to use the feature at this time.
Professional Profiles, which began testing in April, give businesses, nonprofits, publishers and creators the ability to display specific information about their business directly on their profile, including things like their address, phone number, operating hours and more. Essentially, it’s the Twitter equivalent to something like a Facebook Page for a business.
At launch, the new Shop Module will be made available to only a small group of pilot testers. In addition to gaming retailer @GameStop and travel brand @ArdenCove, Twitter says there will only be approximately 10 other brands across the lifestyle, traditional retail, gaming, media and entertainment, tech and telco industries who will gain access to the new feature.
At present, Twitter isn’t offering a way for interested businesses to sign up for the pilot because the company is only in the initial phases of testing this feature, it said.
Image Credits: Twitter
While Twitter users often discuss products on the app and even reach out to companies directly for help with purchases, it’s unclear whether users will come to view Twitter as a shopping platform.
With the pilot, Twitter aims to better understand what could help it make that shift by tracking which types of products drive traffic to online retailers. For example, it wants to determine whether people are inspired by online conversations in the heat of the moment — like sports fans buying team apparel — or whether Twitter users could be encouraged to make purchases of a more lasting impact, like products for a new skincare routine. Having a diverse lineup of early pilot testers will help the company to compare data across verticals to learn what works best.
Twitter says it will also work directly with businesses to better understand their needs through the creation of a new Merchant Advisory Board, which will consist of “best-in-class examples” of merchants on Twitter.
The company earlier this year mentioned its plans to expand into e-commerce. At Twitter’s Analyst Day presentation in February, where it first announced its Super Follow platform for creators, the company also briefly spoke about its e-commerce investments.
“We’re … starting to explore ways to better support commerce on Twitter,” Twitter revenue lead Bruce Falck said during the event. “We know people come to Twitter to interact with brands and discuss their favorite products. In fact, you may have even noticed some businesses already developing creative ways to enable sales on our platform.
“This demand gives us confidence in the power of combining real-time conversation with an engaged and intentional audience. Imagine easily discovering, and quickly purchasing, a new skincare product or trendy sneaker from a brand you follow with only a few clicks,” Falck added.
Since then, Twitter has tested a new e-commerce feature for tweets, which allowed businesses to link out to online product pages — like those on a Shopify store, for instance.
Twitter CFO Ned Segal also touted the potential to shop on Twitter when speaking to investors at the J.P. Morgan Technology, Media and Communications conference in May, noting that people “do a lot of research on Twitter before they buy something.”
Twitter’s entry into online shopping comes at a time when major tech companies and social platforms are ramping up their investments in e-commerce. Facebook has made significant moves into e-commerce with shopping features across Facebook, Instagram and WhatsApp, including with initiatives like online storefronts, integrated checkout, product drops, video shopping and more.
Shopify has also partnered with a number of tech platforms, including Facebook, TikTok and Google, to make it easier for consumers to connect with products sold by its merchants.
It’s worth noting that Twitter previously attempted to run a commerce operation and failed. In 2017, the company began to wind down its “Buy” button product, which had allowed Twitter users to click to make purchases, and the retailer partnerships associated with that effort due to lack of traction. Clearly, the company believes the time is now right to try again.
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Sila banks $13M to offer single API for developing financial products, services
Sila announced Monday it raised $13 million in Series A funding for its banking and payment platform that gives software teams tools to build the next generation of financial products and services.
Revolution Ventures led the round and was joined by existing investors Madrona Venture Group, Oregon Venture Fund and Mucker Capital, as well as Wise co-founder Taavet Hinrikus. The funding brings the total investment to date for Portland, Oregon-based Sila to $20 million.
The company was founded in 2018 by Shamir Karkal, Angela Angelovska, Isaac Hines and Alex Lipton to simplify digital payments and storage in a regulatory compliant way and build on blockchain technology. CEO Karkal has a long history in the fintech space, co-founding Simple, an app unifying various accounts into one accessible bank card, in 2009. It was acquired by BBVA in 2014 for $117 million and shuttered earlier this year.
Karkal told TechCrunch that the idea for Sila was born out of frustration while starting another bank. He saw a need for financial application development, but was hindered by a banking system “still stuck in the 20th century.” He thought consumers expected a different level of service, which is why many flock to fintechs.
However, whenever a business tried to connect existing banking systems, fintechs and cryptocurrency innovators, as it built and scale, would always run into technology and compliance issues, Karkal said.
“The problem with working with banks, is that you have to figure out how to integrate with their mainframe,” he added. “In the process, you end up having to also be compliance experts just to be able to do it.”
Whereas it took Karkal three years to get bank processes set up for other companies, it took Sila 18 months. Its banking APIs enable developers to create their own digital wallets, replacing the need to integrate with legacy financial institutions. Sila also has partnerships with fintech platforms, including Plaid, Alloy, Lithic and Arcus to move money, and is backed by Evolve Bank and Trust.
Sila can now get customers up-and-running in six to eight weeks. And unlike competitors that focus almost exclusively on e-commerce, most of Sila’s customers are doing regulated payments within the fintech, insurtech, commercial real estate and cryptocurrency spaces that tend to be more complex from a compliance basis, Karkal said.
Since the company launched its platform, business was building steadily, and took off in the second half of 2020. The company raised a $7.7 million seed round earlier in the year. In the last 12 months, Sila grew its revenue 10 times and customers’ end users grew over 500% in the last seven months.
Sila will use the new funding to increase headcount, target additional partners and expand product features, including its Ethereum MainNet stablecoin issuance and interoperability between FedWire and the Nacha Automated Clearing House network.
“There is a massive wave of fintechs emerging in the U.S., and we have barely scratched the surface,” Karkal said. “Places like India, Africa and Latin America could accelerate at the same time because they are mainly starting from zero. We are here to ‘arm the rebels’ and help those innovators build applications to give all end users a much better financial experience.”
As part of the investment, Clara Sieg, partner at Revolution Ventures, is joining the company’s board. She told TechCrunch she met the company’s co-founders through the Portland ecosystem.
Revolution tends to look at fintech startups from a consumer angle. Recognizing that the problem with building infrastructure meant dealing with banks, the firm set out how to find a company building the pipes to solve it, she said.
In the landscape of fintech, she considers Dwolla to be a competitor to Sila. Last week, the company raised $21 million to continue developing its API that allows companies to build and facilitate fast payments, specifically with a focus on ACH. However, it comes down to actually signing up customers, and that competitive landscape is pretty thin, Sieg added.
“Sila is building an easy way for people to program money and taking a regulatory eye to things,” Sieg said. “When Shamir was building Simple, he could see how challenging it was for incumbents to provide the tools developers need to embed financial services, and this is why we have confidence in his ability to win.”
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Sproutl is an online marketplace for gardeners founded by former Farfetch executives
Meet Sproutl, a marketplace for gardeners living in the U.K. The startup founded by former Farfetch executives has raised a $9 million seed round. It wants to make gardening more accessible by providing a curated list of items, relevant advice as well as inspiration.
Index Ventures is leading the round in the startup with Ada Ventures and several business angels also participating. The funding round originally closed in April of this year.
“A few years ago, we bought a flat in London with a tiny little garden. We were both working full time in quite intense jobs with young kids. I went online assuming that I would be able to sort out this garden space. And I didn’t know a lot about gardening. And I just didn’t find anything that spoke to me as a new gardener. It felt like what was available was more for more knowledgeable people,” co-founder and CEO Anni Noel-Johnson told me.
If you’ve ever tried to search for gardening videos on YouTube, you may have ended up on long-winded videos with instructions that don’t make any sense to you. Similarly, there are not a lot of e-commerce websites focused on gardening specifically.
And yet, the market opportunity is quite big. There are millions of gardeners in the U.K. There are also quite a few independent garden centers, nurseries and shops with a turnover of several millions of pounds per year. More importantly, they generate the vast majority of their sales in store. Some of them have never sold anything online.
Sproutl is teaming up with those businesses so that they can find new customers across the U.K. Those third-party sellers list their items on Sproutl while the startup takes care of logistics, packaging sourcing and delivery.
On the marketplace, customers can buy indoor and outdoor plants, pots, gardening essentials and outdoor living products. Partners currently include Rosebourne, Polhill, Millbrook, Middleton, Bellr, Fertile Fibre and Horticus.
Anni Noel-Johnson, the CEO of the company, was the VP of Trading and Strategy at Farfetch. Sproutl CTO Andy Done also worked at Farfetch at some point as director of Data Engineering.
Hollie Newton is also going to be a key team member at Sproutl. She previously wrote a best-selling gardening book called “How to Grow.” She’s now the chief creative officer at Sproutl.
This is key to understanding Sproutl’s growth strategy. The company plans to provide a ton of content on all things related to your garden — the startup has already released a jargon buster. You might end up on Sproutl the next time you’re looking for gardening advice on Google.
And it’s also going to differentiate the platform from all-encompassing e-commerce platforms, such as Amazon. Other e-commerce companies focused on one vertical in particular, such as ManoMano, have been quite successful. With the right focus, Sproutl could quickly build a loyal customer base as well.
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Extra Crunch roundup: Finding GTM, China’s edtech clampdown and how to define growth
Early-stage startups tend to claim that their go-to-market strategy is fully operational. In reality, GTM is a stark numbers game, and even with a solid plan in place, it can be easily foiled by common problems like turf battles and poor communication.
Finding GTM fit is a milestone for any startup that includes everything from expanding the engineering team to launching your first media buy. But how do you know when you’ve reached that magic moment?
“You have to consider three metrics: gross churn rate, the magic number and gross margin,” says Tae Hea Nahm, co-founder and managing director of Storm Ventures.
High churn means customers aren’t delighted, low gross margins mean poor unit economics, and that so-called magic number?
“You can calculate it by taking new ARR divided by your marketing and sales spending,” Nahm writes. “But keep in mind that the magic number is a lagging indicator, and it may take you a few quarters to see a positive result.”
Full Extra Crunch articles are only available to members.
Use discount code ECFriday to save 20% off a one- or two-year subscription.
If you are methodical in your approach to building a larger customer base, it is not difficult to foster steady growth.
Marketers who shift with whichever way the wind is blowing — or blindly follow someone else’s idea of best practices — are less likely to be successful.
“The not-so-secret secret here is that the key to great retention is really simple,” said growth expert Susan Su recently at TechCrunch Early Stage: Marketing and Fundraising. “It is building a product that solves a real and especially persistent problem for people.”
In conversation with Managing Editor Eric Eldon, Su delved into several issues, including tips on how founders should discuss growth with investors, and her methods for developing a sample qualitative growth model.
“I firmly believe that every founder should try their hand at growth,” said Su.
Thanks very much for reading Extra Crunch this week!
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
How we built an AI unicorn in 6 years
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Few startups go to market with the exact product their founders first envisioned.
Today, Tractable is known for developing tech that allows drivers to upload photos of their vehicles after a collision so its AI can assess the damage. Its first paying customer, however, used Tractable to inspect plastic pipe welds.
And as fate would have it, that customer also fired them just as the founders were raising their first round.
“We struck gold with car insurance,” says co-founder Alex Dalyac, as it was “a huge and inefficient market in desperate need of modernization.”
In an Extra Crunch guest post, he shares several takeaways from the last six years spent scaling a unicorn that have value for founders of all stripes. Step one?
“Search for complementary co-founders who will become your best friends,” advises Dalyac.
The European VC market is so hot it may skip its summer holiday
Image Credits: Nigel Sussman (opens in a new window)
Alex Wilhelm and Anna Heim continued their exploration of the scorching global VC market, this time taking a look at Europe.
For perspective, they analyzed data from Dealroom and spoke to four VCs about the continent’s investment climate:
- Diana Koziarska, SMOK Ventures
- Vinoth Jayakumar, Draper Esprit
- Simon Schmincke, Creandum
- Javier Santiso, Mundi Ventures
“There’s little indication that what we’ve seen thus far from Europe in 2021 will slow in Q3 or Q4,” Alex and Anna write.
“Even though Europe has a reputation for lengthy summer vacations, investors don’t expect much — if any — slowdown to come in Europe during this sun-drenched quarter.”
Startups and investors are turning to micromobility subscriptions
Image Credits: Bryce Durbin
“Amid the chaos of the COVID-19 pandemic and the murky path to profitability for shared electric micromobility, an increasing number of companies have turned to subscriptions,” Rebecca Bellan writes in a roundup about the future of micromobility.
“It’s a business model that some founders and investors argue hits the profit center sweet spot — an approach that appeals to customers who are wary of sharing as well as paying upfront to own a scooter or e-bike, all while minimizing overhead costs and depreciation of assets.”
What Robinhood’s warnings about crypto trading say about Coinbase’s near-term future
Image Credits: Nigel Sussman (opens in a new window)
After noting that Robinhood anticipates a decline in revenue in the third quarter as a result of slowing crypto trading, Alex Wilhelm got to thinking about what that forecast means for Coinbase.
“The now-public unicorn has lived through crypto ups and crypto downs,” he writes. “A decline in consumer interest in the next few months or quarters is not a huge deal, assuming one keeps a long enough perspective and the crypto-infused future that its fans expect comes to pass.”
But will it?
Dear Sophie: Should we look to Canada to retain international talent?
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie,
I handle people ops as a consultant at several different tech startups. Many have employees on OPT or STEM OPT who didn’t get selected in this year’s H-1B lottery.
The companies want to retain these individuals, but they’re running out of options. Some companies will try again in next year’s H-1B lottery, even though they face long odds, particularly if the H-1B lottery becomes a wage-based selection process next year.
Others are looking into O-1A visas, but find that many employees don’t yet have the experience to meet the qualifications. Should we look at Canada?
— Specialist in Silicon Valley
Silicon Valley comms expert Caryn Marooney shares how to nail the narrative
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Caryn Marooney, a Silicon Valley communications professional turned venture capitalist, spoke extensively on storytelling at TechCrunch Early Stage: Marketing and Fundraising.
Throughout her time in Silicon Valley, she helped companies like Salesforce, Amazon, Facebook and more launch products and sharpen their messaging. In 2019, she left Facebook, where she was VP of technology communication, and joined Coatue Management as a general partner.
Marooney uses the acronym RIBS to describe her basic strategy for startup messaging: Relevance, Inevitability, Believability and keeping it Simple.
Canada’s startup market booms alongside hot global VC investment
Image Credits: Nigel Sussman (opens in a new window)
For The Exchange, Alex Wilhelm and Anna Heim looked at Canada’s VC market in the first half of 2021, and if you’ve been reading their work, you know what’s coming.
Canada, like the rest of the globe, was absolutely scorching in the first half.
“Canada’s venture capital results now rival those of the entire Latin American region, with exits and mega-deals coming in roughly on par in the second quarter, and a similar number of total venture capital rounds in the period,” they write.
“That caught our attention.”
Greylock’s Mike Duboe explains how to define growth and build your team
With more venture funding flowing into the startup ecosystem than ever before, there’s never been a better time to be a growth expert.
At TechCrunch Early Stage: Marketing and Fundraising earlier this month, Greylock Partners’ Mike Duboe dug into a number of lessons and pieces of wisdom he’s picked up leading growth at a number of high-growth startups, including StitchFix. His advice spanned hiring, structure and analysis, with plenty of recommendations for where growth teams should be focusing their attention and resources.
Last-mile delivery in Latin America is ready to take off
Image Credits: Erlon Silva/TRI Digital (opens in a new window) / Getty Images
Thanks to sprawling fulfillment centers, seamless logistics networks and ubiquitous internet access, consumers in many regions can now order groceries and a new set of cookware during breakfast and reasonably expect everything to arrive in time for dinner.
In Latin America, a lack of technology infrastructure makes delivery operations complex, and these supply chains are often managed with spreadsheets, paper and pen.
Algorithms that manage delivery routes or automatically dispatch drivers “are almost unheard of in the Latin America retail logistics sector,” says Bob Ma, an investor at WIND Ventures.
But thanks to growing consumer demand and expanding investment in last-mile delivery startups, Ma says the region is at a turning point.
Since Latin America’s middle class has grown 50% in the last decade and e-commerce constitutes just 6% of all retail, several unicorns have emerged in recent years, with more waiting in the wings.
China’s expected edtech clampdown may chill a key startup sector
Image Credits: Nigel Sussman (opens in a new window)
China’s edtech industry is estimated to be worth $100 billion, but its leaders are reportedly considering a plan that would require these firms to operate as non-profits.
“When it comes to control, the Chinese government doesn’t mind wiping out a few dozen billion dollars in market cap here and there,” writes Alex Wilhelm in this morning’s edition of The Exchange.
“That’s not a great system.”
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WhenThen’s no-code payments platform attracts $6M from European VCs Stride and Cavalry
The payments space — amazingly — remains up for grabs for startups. Yes, dear reader, despite the success of Stripe, there seems to be a new payments startup virtually every other day. It’s a mess out there! The accelerated growth of e-commerce due to the pandemic means payments are now a booming space. And here comes another one, with a twist.
WhenThen has built a no-code payment operations platform that, they claim, streamlines the payment processes “of merchants of any kind”. It says its platform can autonomously orchestrate, monitor, improve and manage all customer payments and payments ops.
The startup’s opportunity has arisen because service providers across different verticals increasingly want to get into open banking and provide their own payment solutions and financial services.
Founded six months ago, WhenThen has now raised $6 million, backed by European VCs Stride and Cavalry.
The founders, Kirk Donohoe, Eamon Doyle and Dave Brown, are three former Mastercard Payment veterans.
Based out of Dublin, CEO Donohoe told me: “We see traditional businesses embracing e-comm, and e-comm merchants now operating multiple business models such as trade supply, marketplace, subscription, and more. There is no platform that makes it easy for such businesses to create and operate multiple payment flows to support multiple business models in one place — that’s where we step in.”
He added: “WhenThen is helping e-commerce digital platforms build advanced payment flows and payment automation, in minutes as opposed to months. When you start to integrate different payment methods, different payment gateways, how you want the payment to move from collection through to payout gets very, very complex. I’ve been doing this for over a decade now, as an entrepreneur building different businesses that had to accept, collect and pay payments.”
He said his founding team “had to build very complex payment flows for large merchants, airlines, hotels, issuers, and we just found it was ridiculous that you have to continue to do the same thing over and over again. So we decided to come up with WhenThen as a better way to be able to help you build those flows in minutes.”
Claude Ritter, managing partner at Cavalry, said: “Basic payment orchestration platforms have been around for some time, focusing mostly on maximizing payment acceptance by optimizing routing. WhenThen provides the first end-to-end payment flow platform to equip businesses with the opportunity to control every stage of the payment flow from payment intent to payout.”
WhenThen supports a wide range of popular payment providers such as Stripe, Braintree, Adyen, Authorize.net, Checkout.com, etc., and a variety of alternative and locally preferred payment methods such as Klarna Affirm, PayPal and BitPay.
“For brave merchants considering global reach and operating multiple business models concurrently, I believe choosing the right payment ops platform will become as important as choosing the right e-commerce platform. Building your entire e-comm experience tightly coupled to a single payment processor is a hard correction to make down the line — you need a payment flow platform like WhenThen”, added Fred Destin, founder of Stride.VC.
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E-commerce logistics startup Locad gets $4.9M seed round led by Sequoia Capital India’s Surge
E-commerce is booming in Southeast Asia, but in many markets, the fragmented logistics industry is struggling to catch up. This means sellers run into roadblocks when shipping to buyers, especially outside of major metropolitan areas, and managing their supply chains. Locad, a startup that wants to help with what it describes as an “end-to-end solution” for cross-border e-commerce companies, announced today it has raised a $4.9 million seed round.
The funding was led by Sequoia Capital India’s Surge (Locad is currently a part of the program’s fifth cohort), with participation from firms like Antler, Febe Ventures, Foxmont, GFC and Hustle Fund. It also included angel investors Alessandro Duri, Alexander Friedhoff, Christian Weiss, Henry Ko, Huey Lin, Markus Bruderer, Dr. Markus Erken, Max Moldenhauer, Oliver Mickler, Paulo Campos, Stefan Mader, Thibaud Lecuyer, Tim Marbach and Tim Seithe.
Locad was founded in Singapore and Manila by Constantin Robertz, former Zalora director of operations Jannis Dargel and Shrey Jain, previously Grab’s lead product manager of maps. It now also has offices in Australia, Hong Kong and India. The startup’s goal is to close the gap between first-mile and last-mile delivery services, enabling e-commerce companies to offer lower shipping rates and faster deliveries while freeing up more time for other parts of their operations, such as marketing and sales conversions.
Since its founding in October 2020, Locad has been used by more than 30 brands and processed almost 600,000 items. Its clients range from startups to international brands, and include Mango, Vans, Payless Shoes, Toshiba and Landmark, a department store chain in the Philippines.
Locad is among a growing roster of other Southeast Asia-based logistics startups that have recently raised funding, including Kargo, SiCepat, Advotics and Logisly. Locad wants to differentiate by providing a flexible solution that can work with any sales channel and is integrated with a wide range of shipping providers.
Robertz told TechCrunch that Locad is able to keep an asset-light business model by partnering with warehouse operators and facility managers. What the startup brings to the mix is a cloud software platform that serves as a “control tower,” letting users get real-time information about inventory and orders across Locad’s network. The company currently has seven fulfillment centers, with four of its warehouses in the Philippines and the other three in Singapore, New South Wales, Australia and Hong Kong. Part of its funding will be used to expand into more Asia-Pacific markets, focusing on Southeast Asia and Australia.
Locad’s seed round will also used to add integrations to more couriers and sales channels (it can already be used with platforms like Shopify, WooCommerce, Amazon, Shopee, Lazada and Zalora), and develop new features for its cloud platform, including more data analytics.
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