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European challenger bank Bunq raises $228 million at $1.9 billion valuation
Amsterdam-based challenger bank Bunq has been self-funded by its founder and CEO Ali Niknam for several years. But the company has decided to raise some external capital, leading to the largest Series A round for a European fintech company.
The startup is raising $228 million (€193 million) in a round led by Pollen Street Capital. Bunq founder Ali Niknam is also participating in the round — he’s investing $29.5 million (€25 million) while Pollen Street Capital is financing the rest of the round.
As part of the deal, Bunq is also acquiring Capitalflow Group, an Irish lending company that was previously owned by … Pollen Street Capital.
Founded in 2012, Ali Niknam has already invested quite a bit of money into his own company. He poured $116.6 million (€98.7 million) of his own capital into Bunq — that doesn’t even take into account today’s funding round.
But it has paid off as the company expects to break even on a monthly basis in 2021. The company passed €1 billion in user deposits earlier this year. So why is the company raising external funding after turning down VC firms for so many years?
“Everything has a right time. In the beginning of Bunq, it was important to get a laser user focus in the company. Having to also focus on fundraises and the needs of investors distracts. Bunq now is mature enough to start scaling up significantly, so more capital is welcome,” Niknam said.
In particular, the company expects to acquire smaller companies to fuel its growth strategy. Challenger banks have also represented a highly competitive market over the past years in Europe. It’s clear that there will be some consolidation at some point.
Bunq offers bank accounts and debit cards that you can control from a mobile app. It works particularly well if your friends and family are also using Bunq as you can instantly send money, share a bunq.me payment link with other people, split payments and more.
In particular, if you’re going on a weekend trip, you can start an activity with your friends. It creates a shared pot that lets you share expenses with everyone. If you live with roommates, you can also create subaccounts to pay for bills from that account.
The company offers different plans that range from €2.99 per month to €17.99 per month — there’s also a free travel card with a limited feature set. By choosing a subscription-based business model, the startup has a clear path to profitability as most users are paid users.
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California has no water and lots of liquidity
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.
Danny, Natasha, and Alex were on deck this week, with Grace on the recording and edit. But, if you want to hear more about Robinhood, this is not the episode for you. If you want to learn more about the consumer fintech company’s IPO filing this is the episode you want. Basically, Robinhood filed after we had wrapped taping, so we had to do a special pod for the news.
So, this is the everything-but-Robinhood episode. And here’s what’s inside of it:
- Startup and investor tensions at Bessemer and Hinge Health. Natasha has the latest.
- Didi’s IPO, and what’s going on with Chinese IPOs more generally. Also SentinelOne’s expensive and notable debut.
- And then all things Duolingo, including TechCrunch’s overview and more in-depth look.
- From the venture capital side of things, Zipline raised $250 million, Daylight raised $5 million, Articulate raised $1.5 billion, Acceleprise rebranded to Forum Ventures, and Peanut put together a micro-fund.
- We closed with Neeva, Brave, and other alternative search tools. Alex has a piece coming on the subject, once he gets around to finishing it.
A four-episode week! With only Grace handling production! She’s amazing.
Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday morning at 7:00 a.m. PST, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.
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8 founders, leaders highlight fintech and deep tech as Bristol’s top sectors
The U.K. is gaining in popularity as a great place to start a tech firm. The country is quickly catching up to China on the tech investment front, with VC investments reaching a record of $15 billion in 2020, according to TechNation. A global health crisis notwithstanding, London remained a favorite for investors. U.K. cities made up a fifth of the top 20 European cities, with names such as Oxford, Dublin, Edinburgh and Cambridge rising to the fore in 2020.
Bristol proved especially popular among tech investors last year — local businesses raked in an impressive $414 million in 2020, making it the third-largest U.K. city for tech investment. The city also has the most fintech startups per head in the U.K. outside London, according to Whitecap’s 2019-2020 Ecosystem Report.
Efforts by the city’s private and public sectors to modernize the city have helped it rank among the top smart cities in the U.K., attracting a bevy of tech entrepreneurs. Its proximity to London has meant that it is a good alternative for founders looking for a more affordable stay while letting them tap the capital’s financial resources. The University of Bristol also has the largest robotics department in Europe.
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Bristol is also home to an important startup accelerator, SETsquared. A collaborative effort by the five universities of Bath, Bristol, Exeter, Southampton and Surrey, the accelerator has supported over 4,000 entrepreneurs and helped their startups raise a total of £1.8 billion. Other startup support players include the new Science Creates VC fund, set up by entrepreneur Harry Destecroix, and TechSPARK Engine Shed.
Key emerging startups from Bristol include Graphcore, Open Bionics, Ultraleap, Immersive Labs and Five AI.
To get a better idea of the state of the tech ecosystem and the investor outlook for this city, we surveyed founders, leaders and executives involved in nurturing Bristol’s startup ecosystem.
The survey revealed that the city has a robust renewable, zero-carbon and fintech startup landscape. Robotics, VR, bio, quantum, digital and deep tech are also areas showing promise. As for the investing scene, although Bristol has a healthy angel network, the city lacks institutional VC, but with London only a drive or train ride away, this has not proved a significant problem.
We surveyed:
- Coralie Hassanaly, innovation consultant, DRIAD
- Pete Read, CEO and founder, Persona Education
- Kiran Krishnamurthy, CEO, AI Labs
- Simon Hall, director, Airway Medical
- Ben Miles, CEO, Spin Up Science
- Rupert Baines, ex-CEO, UltraSoC
- Mathieu Johnsson, CEO and co-founder, Marble
- Chris Erven, CEO, KETS Quantum Security
Coralie Hassanaly, innovation consultant, DRIAD
Which sectors is Bristol’s tech ecosystem strong in? What are you most excited by? What does it lack?
Bristol is strong in renewable and zero-carbon innovation, fintech and robotics. It’s weak in industry 4.0.
Which are the most interesting startups in Bristol?
Graphcore, LettUs Grow, Open Bionics, Ultraleap and YellowDog.
What are the tech investors like in Bristol? What’s their focus?
A lot of focus on fintech, I think.
With the shift to remote working, do you think people will stay in Bristol or will they move out? Will others move in?
Bristol is a great middle ground between a large dynamic city (plus it’s not far from London) and access to nice countryside area. With remote working we can expect it will attract new residents in the next few years.
Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
Aimee Skinner, Abigail Frear and Stuart Harrison.
Where do you think the city’s tech scene will be in five years?
Second major city in U.K. innovation.
Pete Read, CEO and founder, Persona Education
Which sectors is Bristol’s tech ecosystem strong in? What are you most excited by? What does it lack?
Bristol is strong in media/animation, edtech, social impact, health and science. I’m most excited by edtech and the possibility to reach and positively impact millions of students via online learning. It’s weaker in hardware and fintech.
Which are the most interesting startups in Bristol?
Kaedim, Persona Education and One Big Circle.
What are the tech investors like in Bristol? What’s their focus?
There are several very active tech investment networks coming from several angles, e.g., university-led, groups of private angels and tech incubators. The great thing is they all collaborate and share resources, ideas and expertise in initiatives such as The Engine Shed and Silicon Gorge.
With the shift to remote working, do you think people will stay in Bristol or will they move out? Will others move in?
More people are moving in, as Bristol has a great urban lifestyle with easy access to the countryside and Southwest/Wales holiday spots, and an international airport 20 minutes from the center.
Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
Jerry Barnes at Bristol PE Club; Abby Frear at TechSPARK; Briony Phillips at Rocketmakers; Jack Jordan-Connelly at SETsquared.
Where do you think the city’s tech scene will be in five years?
It’s developing rapidly with lots of support, so it will be bigger, attracting more investment and definitely more on the international scene five years from now.
Kiran Krishnamurthy, CEO, AI Labs
Which sectors is Bristol’s tech ecosystem strong in? What are you most excited by? What does it lack?
Our tech ecosystem is strong in the aerospace and defense sector. We are excited by the scope and scale of digital transformation opportunities with AI available in this sector. The main weakness in this sector is the slow pace of transformation, especially now due to the pandemic.
Which are the most interesting startups in Bristol?
Graphcore and YellowDog.
What are the tech investors like in Bristol? What’s their focus?
Compared to the U.K. tech sector average, Bristol has a very low proportion of established companies (4% versus 8%), a higher proportion of seed stage companies (42% versus 37%), and a higher death rate (21% versus 17%). It’s a particularly young ecosystem.
With the shift to remote working, do you think people will stay in Bristol or will they move out? Will others move in?
It is possible that people moving out of London will come into Bristol due to the transport links, strong ecosystem and beautiful nature of the city.
Where do you think the city’s tech scene will be in five years?
I wouldn’t be surprised if Bristol turns out to be San Francisco of Europe!
Simon Hall, director, Airway Medical
Which sectors is Bristol’s tech ecosystem strong in? What does it lack?
Bristol is strong in the medtech, veterinary, industrial sectors.
With the shift to remote working, do you think people will stay in Bristol or will they move out? Will others move in?
Others have moved in.
Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
SETsquared.
Where do you think the city’s tech scene will be in five years?
We will see massive growth in five years.
Ben Miles, CEO, Spin Up Science
Which sectors is Bristol’s tech ecosystem strong in? What are you most excited by? What does it lack?
Our sector is weak in entrepreneurial ambition among researchers, and so suffers from low rates of deep tech spinout activity from leading universities. We are most excited by the step change in activity we have seen in the past two years and culture shift towards innovation.
Which are the most interesting startups in Bristol?
Rosa Biotech, Albotherm and CytoSeek.
What are the tech investors like in Bristol? What’s their focus?
Medium strength in shallow tech; currently weak in deep tech.
With the shift to remote working, do you think people will stay in Bristol or will they move out? Will others move in?
People are moving in.
Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
Spin Up Science, Science Creates and Science Angel Syndicate.
Where do you think the city’s tech scene will be in five years?
Very strong in deep tech with an invested local community of entrepreneurs, incubators and investors.
Rupert Baines, ex-CEO, UltraSoC
Which sectors is Bristol’s tech ecosystem strong in? What are you most excited by? What does it lack?
Bristol is strong in wireless (5G, 60 GHz, etc.), semiconductors (especially processors, AI/ML and parallel architectures), robotics and other hard tech/deep tech.
Which are the most interesting startups in Bristol?
Graphcore, Ultraleap, Blu Wireless and Five AI.
What are the tech investors like in Bristol? What’s their focus?
It’s limited. There are some angels, but few locally focused funds.
With the shift to remote working, do you think people will stay in Bristol or will they move out? Will others move in?
Much the same: People choose to live in Bristol/Bath for quality of life. Much of the work is already external — commuting to London.
Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
Nigel Toon, Simon Knowles, Stan Boland, David May and Nick Sturge.
Where do you think the city’s tech scene will be in five years?
Much stronger, with more processor and hardware activity.
Mathieu Johnsson, CEO and co-founder, Marble
Which sectors is Bristol’s tech ecosystem strong in? What are you most excited by? What does it lack?
Bristol has a strong robotics, aerospace and renewables scene. I’m most excited to see how the legacy in aerospace in Bristol will translate to future industry-defining companies. The ecosystem is weak on the investor side, though London VCs are less than a two-hour train journey away.
Which are the most interesting startups in Bristol?
Graphcore, Ultraleap and Open Bionics.
With the shift to remote working, do you think people will stay in Bristol or will they move out? Will others move in?
I believe Bristol will become more attractive.
Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
Tom Carter at Ultraleap, and Joel Gibbard at Open Bionics.
Where do you think the city’s tech scene will be in five years?
Getting closer to London and Cambridge.
Chris Erven, CEO, KETS Quantum Security
Which sectors is Bristol’s tech ecosystem strong in? What are you most excited by? What does it lack?
Bristol has a strong biotech, quantum, digital, science-based/deep tech ecosystem. I’m excited by this eclectic city with exciting people that think differently.
Which are the most interesting startups in Bristol?
Any QTEC, SETsquared, or UnitDX members and alumni.
What are the tech investors like in Bristol? What’s their focus?
Very early/nascent, mostly angels.
With the shift to remote working, do you think people will stay in Bristol or will they move out? Will others move in?
Probably move in! Beautiful green spaces around, lots of interesting, independent shops. And (just about) commutable from London.
Who are the key startup people in the city (e.g., investors, founders, lawyers, designers)?
The incubators — QTEC, QTIC, SETsquared and UnitDX; Bristol Private Equity Club; Harry Destecroix.
Where do you think the city’s tech scene will be in five years?
Buzzing. More great startups and VCs moving in.
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Emergence’s Lotti Siniscalco and Retail Zipline’s Melissa Wong will join us on Extra Crunch Live
For all that’s said about fundraising and working alongside investors, rarely do we get to see founders and their investors in candid conversation with one another. Extra Crunch Live is changing that. On the weekly live show, we sit down with founders and the VCs who funded them to talk about how they came together on the deal, what stood out about the other party that led to their commitment and how they operate today. We also (usually) take a walk through their early pitch decks to get a feel for how success starts.
On an upcoming episode of Extra Crunch Live, we’ll sit down with Emergence’s Lotti Siniscalco and Retail Zipline’s Melissa Wong to discuss all that and more. The event goes down on Wednesday, June 23 at 3 p.m. ET/noon PT. You can register to attend right here.
Siniscalco is a principal at Emergence Capital, investing in early-stage enterprise software companies. She currently serves on the board of directors at Whistic and High Alpha. Prior to Emergence, she was an investor in financial services and technology at Advent International, a PE firm, and led diligence for Ribbit Capital (also fintech focused) before that.
In other words, she’s an expert in fintech and can bring a wealth of wisdom to our conversation around fundraising and startup growth.
Melissa Wong, on the other hand, has spent 10 years in retail communications at Old Navy. It was here that she realized a problem that Zipline Retail, a retail communication and store execution platform, could solve and set out on her own venture.
Extra Crunch Live also features the ECL Pitch-off, where startups in the audience can virtually “raise their hand” to pitch their startup live on our stream. Our expert guests will give their feedback on each pitch. If you want to throw your hat in the ring, you have to show up.
Extra Crunch Live is accessible to everyone, but only Extra Crunch members can access the content on demand. We do these every week, so there are scores of episodes across a wide variety of startup sectors in the ECL Library. It’s but one of many reasons to become an Extra Crunch member. Join here.
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How contrarian hires and a pitch deck started Nubank’s $30 billion fintech empire
For most startups, the hardest early challenge is identifying a market and a product to serve it. That wasn’t the case for Nubank CEO David Velez, who understood the massive potential for success if he could break into Latin America’s most valuable economy with even a moderately modern banking offering.
Instead, the challenge was how to rebuild the concept of a bank in a country where banking is widely hated, all while the incumbents heavily entrenched with the state worked to block every move.
Nubank knew its market and geography, and through tenacious fundraising, inventive marketing and product development, and a series of contrarian hires, Velez and his team stripped bare the morass of Brazilian banking to build one of the world’s great fintech companies.
The challenge was how to rebuild the concept of a bank in a country where banking is widely hated, all while the incumbents heavily entrenched with the state worked to block every move.
In the first part of this EC-1, I’ll look at how Velez brought his skills and experience to bear on this market, how Nubank was founded in 2013, and how the team brought a Californian rather than Brazilian vibe to their first office on — no joke — California Street, in a neighborhood called Brooklin in the city of São Paulo.
The makings of an entrepreneur
The idea of being his own boss was ingrained in Velez from his earliest days in Colombia, where he grew up in an entrepreneurial family, with a father who owned a button factory. “I heard from my dad over and over again that you need to start your own company,” Velez said.
But years would pass and Velez still had no idea what he wanted to do. To “kill time,” and also to surround himself with entrepreneurial energy, Velez attended Stanford University — partially financed by the sale of some livestock — and then worked as an analyst at Goldman Sachs and Morgan Stanley before switching to venture capital at General Atlantic and Sequoia.
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One woman’s drive to make a neobank as magical as Disney
As we mentioned in part 1 of this EC-1, David Velez had two key co-founding roles he needed to fill to get started building Nubank. For one, he needed a CTO to lead the engineering side of the business, as Velez didn’t have an engineering background.
Edward Wible, an American computer science graduate who spent most of his career in private equity, would take that responsibility. He didn’t bring years of coding experience, but he had qualities that Velez considered more important: A strong belief in the potential of the product and an equally intense commitment to working on it.
Given the occasionally hostile reaction of most incumbent banks to their customers in Brazil, Nubank’s starkly contrasting openness and transparency has garnered a huge following.
That left an even more important role to fill — one that was much harder to define. This other co-founder would need to blend knowledge of the Brazilian market and local savvy with expertise in banking, all while embodying a Silicon Valley ethos of focusing on customers. This person would also have to work in São Paulo for minimal wages out of a small office with just one bathroom, all in the belief that their equity (both stock and sweat) would one day be worth it.
Velez would eventually stumble upon Cristina Junqueira, who was qualified to do all this, and much, much more.
“Once someone said I was the glue of the operation, and that someone else was the brains. And I said, ‘No, I’m the glue and the brains, and I bet my brain is even better than his,”’ Junqueira said.
Junqueira didn’t just lead Nubank’s drive into the Brazilian market, she also upended age-old notions of what it means to be a 21st-century bank. Her inspiration was nothing short of Disney, and her mission was to create a bank as popular as the magical kingdom itself.
A bank. As popular as Disney. Sounds like a fairy tale, frankly.
Raised to be a doer
Unlike her co-founders Velez and Wible, Junqueira grew up in Nubank’s home market of Brazil. The eldest of four sisters, she remembers her parents — both dentists — always assiduously working to maintain their practice.
Their work ethic trickled down, but so did responsibility. As the oldest at home, she was forced to grow up quickly and take on responsibilities from an early age. “I remember being 11 years old and doing grocery shopping for the month,” she said. “I did everything very young.”
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How Nubank’s CX strategy made it one of the most loved digital banks
As we saw in parts 1 and 2 of this EC-1, by mid-2013, Nubank CEO David Velez had most of what he needed to get started. He’d brought on two co-founders, assembled ambitious engineering and operations teams, raised $2 million in seed funding from Sequoia and Kaszek, rented a tiny office in São Paulo, and was armed with a mission to deliver the kind of banking services that customers in a market as large and lucrative as Brazil’s should expect.
Despite being named Nubank, however, the startup couldn’t actually be a bank: Brazil’s laws made it illegal at the time for a foreigner-run company to operate a bank. That restriction required the team to develop an inventive product strategy to find a foothold in the market while they waited for a license directly from the country’s president.
Nubank was so adamant about differentiating itself from other banks that it chose Barney purple for its brand color and first credit card.
Nubank therefore pursued a credit card as its first offering, but it had to race against a clock counting quickly down to zero. At the time, Brazil didn’t have ownership restrictions on this product segment like it did with banking, but new rules were coming into force in just a few months in May 2014 that would block a company like Nubank from launching.
The company needed to execute rapidly over the next eight months if it wanted to be grandfathered into the existing regulations. The speed of operations was frantic to say the least, and the company would go on to work even faster, ultimately propelling itself into the stratosphere of fintech startups.
Full faith in credit
It’s easy to assume that the name Nubank refers to “new bank,” but that’s not really what the founders were going for. The word “nu” in Portuguese means “naked,” and Velez and his team wanted the name to reflect their vision: To build a 21st-Century bank without any of the shackles imposed by the traditional banks in Brazil.
The team wanted to offer services to as many people as possible, as there is a huge wealth gap in Brazil, where the minimum wage is around $200 a month.
Launching with just a credit card was both a strategic and practical business decision. Credit cards were widely used in the country, and everyone understood how they worked. Additionally, you could only use credit cards to shop online in Brazil, because debit cards weren’t accepted.
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Which Nubank will own the financial revolution?
Nubank’s first office, on California Street in the Brooklin neighborhood of São Paulo, makes for a great beginning to the company’s story. It wasn’t a Silicon Valley garage, but this tiny, one-bathroom rented house, where 30 people worked insane hours to push out the company’s debut credit card, lends just as well to an image of entrepreneurial spirit and drive.
As Nubank continues to make international waves, more and more VC investors are taking a look at the Brazilian ecosystem and could potentially fund other upstarts in the years to come.
But as Nubank’s story continued, the team eventually had to move out of that early office, and the next several offices, too. Eventually Nubank had to relocate to an eight-story building in São Paulo, which houses a large part of the company’s now 3,000-person team.
The startup reached decacorn status in far less than a decade, and it is growing faster than ever. When I interviewed CEO David Velez back in January to discuss Nubank’s $400 million Series G, he said, “We’ve gone from 12 million customers in 2019 to 34 million solely based on word of mouth.” By September last year, the company was onboarding 41,000 new customers per day.
In the five months since our interview, Nubank has managed to rope in a whopping 6 million customers to reach 40 million. It’s now valued at $30 billion.
Nubank’s present day headquarters in São Paulo, Brazil. Image Credits: NELSON ALMEIDA/AFP / Getty Images
Getting there hasn’t been easy. The company’s three co-founders, Velez, Edward Wible and Cristina Junqueira, had to make key strategic decisions about how to scale themselves to retain the company’s lead in the neobanking market. That lead is getting tougher to sustain every day. Nubank’s proliferating offerings and broader geographical remit has painted a massive target on its back, and a wide number of competitors have cropped up to run on the paths it pioneered.
Like most Disney films, a fairy-tale ending seems in order, but it’ll take a few more rotations of the film wheel to get to the ending.
Early mistakes and ingredients for success
For the co-founding trio, it became increasingly clear that Nubank’s growing scale demanded critical strategic decisions on how to bring order to the company.
By 2018, the company had thousands of employees, millions of customers, and they still didn’t have a head of HR. Growth until then had been somewhat unstructured. According to Junqueira, waiting so long to hire a head of HR was one of their early mistakes, because it stunted their ability to grow. “[Good] people continue to be our biggest bottleneck,” she says.
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Extra Crunch roundup: EU insurtech, 30 years of ‘Crossing the Chasm,’ embedded finance’s endgame
This morning, Anna Heim and Alex Wilhelm dug into the EU insurtech market, interviewing European VCs and collating the biggest recent rounds to take the temperature of the waters across the pond:
- Alex Timm, CEO, Root
- Dan Preston, CEO, MetroMile
- Luca Bocchio, partner, Accel
- Florian Graillot, investor, Astorya.vc
- Stephen Brittain, director and founder, Insurtech Gateway
Several European-based insurtech startups entered unicorn territory this year, such as Bought By Many, which offers pet insurance; London-based Zego; and Alan, a French startup that raised a $220 million round.
According to Brittain, EU startups in this sector are “still at the very early stages of innovation,” having only shown “a fraction of what’s possible” in a market that is “as large as banking.” Interestingly, he predicted that AI will play a larger role in the future as companies deploy it for fraud detection, improved customer experiences and processing claims more quickly.
“We are fully expecting the next generation of AI-driven business to unlock real-time risk analysis, pricing and claims resolution in the next few years,” he said.
Thanks very much for reading Extra Crunch; I hope you have a safe, relaxing weekend.
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
What do these 4 IPOs tell us about the state of the market?
Image Credits: Nigel Sussman (opens in a new window)
Earlier this week, The Exchange assessed the looming Monday.com IPO before reading the tea leaves about that flotation and three others to sum up the overall state of the market.
So what do the Marqeta, Monday.com, Zeta Global and 1stDibs debuts tell us? We may have been too conservative.
Toast’s Aman Narang and BVP’s Kent Bennett on how customer obsession is everything
Image Credits: Bessemer Venture Partners / Toast
On a recent episode of Extra Crunch Live, we spoke to Toast founder Aman Narang and Kent Bennett of Bessemer Venture Partners about how they came together for a deal, what makes the difference for both founders and investors when fundraising, and the biggest lessons they’ve learned so far.
The episode also featured the Extra Crunch Live Pitch-Off, where audience members pitched their products to Bennett and Narang and received live feedback.
Extra Crunch Live is open to everyone each Wednesday at 3 p.m. EDT/noon PDT, but only Extra Crunch members are able to stream these sessions afterward and watch previous shows on-demand in our episode library.
AI startup investment is on pace for a record year
Image Credits: Nigel Sussman (opens in a new window)
Alex Wilhelm and Anna Heim solicited feedback from investors to get a temperature on the market for AI startup investments.
“The startup investing market is crowded, expensive and rapid-fire today as venture capitalists work to preempt one another, hoping to deploy funds into hot companies before their competitors,” they write. “The AI startup market may be even hotter than the average technology niche.”
But that’s not surprising. The Exchange was on it.
“In the wake of the Microsoft-Nuance deal, The Exchange reported that it would be reasonable to anticipate an even more active and competitive market for AI-powered startups,” Alex and Anna note. “Our thesis was that after Redmond dropped nearly $20 billion for the AI company, investors would have a fresh incentive to invest in upstarts with an AI focus or strong AI component; exits, especially large transactions, have a way of spurring investor interest in related companies.”
Their expectation is coming true: Investors reported a fierce market for AI startups.
Dear Sophie: What is a diversity green card and how do I apply for one?
Image Credits: Bryce Durbin/TechCrunch
Dear Sophie,
I started a tech company about two years ago, and ever since I’ve dreamed of expanding my company in the United States.
I would love to have a green card. Someone mentioned that I should apply for a diversity green card. Would you please provide me with more details about it and how to apply?
— Technical in Tanzania
How to start a company in 4 days
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Pulley founder and three-time YC alum Yin Wu offers a tactical guide to getting a startup running in four days. Yes, just four days.
“The logistics of setting up a startup should be simple, because over the long run, complicated equity setups and cap tables cost more money in legal fees and administration time,” Wu notes.
Read on for guidance on how to get your business going in less than a week.
Health clouds are set to play a key role in healthcare innovation
Image Credits: Natali_Mis / Getty Images
Innovaccer founder and CEO Abhinav Shashank and CTO Mike Sutten write in a guest column that the U.S. healthcare industry is in the middle of a massive transformation.
This shift, they write, “is being stimulated by federal mandates, technological innovation, and the need to improve clinical outcomes and communication between providers, patients and payers.”
Improving healthcare now means we need to process tremendous amounts of healthcare data. How do we do it? The cloud, which “plays a pivotal role in meeting the current needs of healthcare organizations.”
What SOSV’s Climate Tech 100 tells founders about investors in the space
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SOSV’s Benjamin Joffe and Meghan Hind round up a “who’s who” from the venture capital firm’s SOSV Climate Tech 100, a list of the best startups addressing climate change that SOSV has supported from the very beginning.
“What can founders learn from the list about climate tech investors? In other words, who invested in the Climate Tech 100?” they ask.
The fintech endgame: New supercompanies combine the best of software and financials
Image Credits: Donald Iain Smith (opens in a new window) / Getty Images
Now that we can transact from anywhere, a new, hybrid class of software companies with embedded financial services are scooping up consumers — and investors are following the action.
Using data from a Battery Ventures report about “the intersection of software and financial services,” this post examines why these companies can be so hard to value and offers a framework for better understanding their business models and investor appeal.
After 30 years, ‘Crossing the Chasm’ is due for a refresh
Image Credits: Grant Faint (opens in a new window) / Getty Images
Geoffrey Moore’s “Chasm,” a framework for marketing technology products that has been one of the canonical foundational concepts to product-market fit for three decades, needs a bit of an upgrade, Flybridge Capital’s Jeff Bussgang writes.
“I have been reflecting on why it is that we venture capitalists and founders keep making the same mistake over and over again — a mistake that has become even more glaring in recent years,” he writes.
Bussgang goes on to consider the Chasm — and propose tweaks for thinking about market size in the modern era.
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Lydia partners with Cashbee to add savings accounts
French startup Lydia is better known as the dominant app for peer-to-peer payments. But the company has been adding more features, such as a debit card, account aggregation, donations, money pots and more. This week, the company is adding savings accounts thanks to a partnership with French fintech startup Cashbee.
If you aren’t familiar with Cashbee, the company lets you open savings accounts through a mobile app. After connecting your bank account with Cashbee, you can transfer money back and forth between your bank account and a savings account.
Right now, Cashbee partners with My Money Bank for the savings accounts. Cashbee doesn’t keep your money, it just acts as a middle person between your bank account and My Money Bank. With those savings accounts, users can expect an interest rate of 0.6% after an introductory rate of 2% for a few months.
Lydia basically offers the same terms and conditions with a few differences. Instead of earning 2% interest for the first three months, Lydia users only earn more interest during the first two months.
The other big difference is that Lydia asks you to put at least €1,000 on your savings account when you open it. If you go through Cashbee’s app, you only have to put €10 or more. But users can do whatever they want after that when it comes to putting some money aside and withdrawing money from the savings account.
But the fact that Cashbee is seamlessly integrated in Lydia is interesting. It’s going to expose Cashbee to a lot more users as Lydia has more than 5 million users. It’s also an important feature if Lydia wants to become a financial super app.
This savings feature competes with Livret A, the most prevailing savings account in France. Everybody can open a Livret A in a retail bank. You get an interest rate of 0.5% net of taxes. On paper, 0.6% is better than 0.5%. But Cashbee’s savings accounts aren’t net of taxes.
If you’re a student and don’t pay any taxes, that’s a better deal. But many people pay 30% in taxes on accrued interests, which means that you end up earning 0.42% in interests net of taxes with a Cashbee account.
But it’s hard to beat the simplicity of Lydia’s solution here. For instance, you can save up to €1,000,000 on your savings account while the Livret A is limited to €22,950. In other words, if you’re already using Lydia to send, receive and spend money, you might want to check out those savings accounts.
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