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What we can learn from edtech startups’ expansion efforts in Europe
It’s a story common to all sectors today: investors only want to see ‘uppy-righty’ charts in a pitch. However, edtech growth in the past 18 months has ramped up to such an extent that companies need to be presenting 3x+ growth in annual recurring revenue to even get noticed by their favored funds.
Some companies are able to blast this out of the park — like GoStudent, Ornikar and YouSchool — but others, arguably less suited to the conditions presented by the pandemic, have found it more difficult to present this kind of growth.
One of the most common themes Brighteye sees in young companies is an emphasis on international expansion for growth. To get some additional insight into this trend, we surveyed edtech firms on their expansion plans, priorities and pitfalls. We received 57 responses and supplemented it with interviews of leading companies and investors. Europe is home 49 of the surveyed companies, six are based in the U.S., and three in Asia.
Going international later in the journey or when more funding is available, possibly due to a VC round, seems to make facets of expansion more feasible. Higher budgets also enable entry to several markets nearly simultaneously.
The survey revealed a roughly even split of target customers across companies, institutions and consumers, as well as a good spread of home markets. The largest contingents were from the U.K. and France, with 13 and nine respondents respectively, followed by the U.S. with seven, Norway with five, and Spain, Finland, and Switzerland with four each. About 40% of these firms were yet to foray beyond their home country and the rest had gone international.
International expansion is an interesting and nuanced part of the growth path of an edtech firm. Unlike their neighbors in fintech, it’s assumed that edtech companies need to expand to a number of big markets in order to reach a scale that makes them attractive to VCs. This is less true than it was in early 2020, as digital education and work is now so commonplace that it’s possible to build a billion-dollar edtech in a single, larger European market.
But naturally, nearly every ambitious edtech founder realizes they need to expand overseas to grow at a pace that is attractive to investors. They have good reason to believe that, too: The complexities of selling to schools and universities, for example, are widely documented, so it might seem logical to take your chances and build market share internationally. It follows that some view expansion as a way of diversifying risk — e.g. we are growing nicely in market X, but what if the opportunity in Y is larger and our business begins to decline for some reason in market X?
International expansion sounds good, but what does it mean? We asked a number of organizations this question as part of the survey analysis. The responses were quite broad, and their breadth to an extent reflected their target customer groups and how those customers are reached. If the product is web-based and accessible anywhere, then it’s relatively easy for a company with a good product to reach customers in a large number of markets (50+). The firm can then build teams and wider infrastructure around that traction.
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Privacy-oriented search app Xayn raises $12M from Japanese backers to go into devices
Back in December 2020 we covered the launch of a new kind of smartphone app-based search engine, Xayn.
“A search engine?!” I hear you say? Well, yes, because despite the convenience of modern search engines’ ability to tailor their search results to the individual, this user-tracking comes at the expense of privacy. This mass surveillance might be what improves Google’s search engine and Facebook’s ad targeting, to name just two examples, but it’s not very good for our privacy.
Internet users are admittedly able to switch to the U.S.-based DuckDuckGo, or perhaps France’s Qwant, but what they gain in privacy, they often lose in user experience and the relevance of search results, through this lack of tailoring.
What Berlin-based Xayn has come up with is personalized, but a privacy-safe web search on smartphones, which replaces the cloud-based AI employed by Google et al. with the innate AI in-built into modern smartphones. The result is that no data about you is uploaded to Xayn’s servers.
And this approach is not just for “privacy freaks”. Businesses that need search but don’t need Google’s dominant market position are increasingly attracted by this model.
And the evidence comes today with the news that Xayn has now raised almost $12 million in Series A funding led by the Japanese investors Global Brain and KDDI (a Japanese telecommunications operator), with participation from previous backers, including the Earlybird VC in Berlin. Xayn’s total financing now comes to more than $23 million.
It would appear that Xayn’s fusion of a search engine, a discovery feed and a mobile browser has appealed to these Asian market players, particularly because Xayn can be built into OEM devices.
The result of the investment is that Xayn will now also focus on the Asian market, starting with Japan, as well as Europe.
Leif-Nissen Lundbæk, co-founder and CEO of Xayn said: “We proved with Xayn that you can have it all: great results through personalization, privacy by design through advanced technology and a convenient user experience through clean design.”
He added: “In an industry in which selling data and delivering ads en masse are the norm, we choose to lead with privacy instead and put user satisfaction front and center.”
The funding comes as legislation such as the EU’s GDPR or California’s CCPA have both raised public awareness about personal data online.
Since its launch, Xayn says its app has been downloaded around 215,000 times worldwide, and a web version of its app is expected soon.
Over a call, Lundbæk expanded on the KDDI aspect of the fund-raising: “The partnership with KDDI means we will give users access to Xayn for free, while the corporate — such as KDDI — is the actual customer but gives our search engine away for free.”
The core features of Xayn include personalized search results; a personalized feed of the entire internet, which learns from their Tinder-like swipes, without collecting or sharing personal data; and an ad-free experience.
Naoki Kamimeada, partner at Global Brain Corporation said: “The market for private online search is growing, but Xayn is head and shoulders above everyone else because of the way they’re re-thinking how finding information online should be.”
Kazuhiko Chuman, head of KDDI Open Innovation Fund, said: “This European discovery engine uniquely combines efficient AI with a privacy-protecting focus and a smooth user experience. At KDDI, we’re constantly on the lookout for companies that can shape the future with their expertise and technology. That’s why it was a perfect match for us.”
In addition to the three co-founders (Leif-Nissen Lundbæk, chief executive officer, Professor Michael Huth, chief research officer, and Felix Hahmann, chief operations officer), Dr Daniel von Heyl will come on board as chief financial officer. Frank Pepermans will take on the role of chief technology officer and Michael Briggs will join as chief growth officer.
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European refurbished electronics marketplace Refurbed raises $54M Series B
Refurbed, a European marketplace for refurbished electronics which raised a $17 million Series A round of funding last year, has now raised a $54 million Series B funding led by Evli Growth Partners and Almaz Capital.
They are joined by existing investors such as Speedinvest, Bonsai Partners and All Iron Ventures, as well as a group of new backers — Hermes GPE, C4 Ventures, SevenVentures, Alpha Associates, Monkfish Equity (Trivago Founders), Kreos, Expon Capital, Isomer Capital and Creas Impact Fund.
Refurbed is an online marketplace for refurbished electronics that are tested and renewed. These then tend to be 40% cheaper than new, and come with a 12-month warranty. The company claims that in 2020, it grew by 3x and reached more than €100 million in GMV.
Operating in Germany, Austria, Ireland, France, Italy and Poland, the startup plans to expand to three other countries by the end of 2021.
Riku Asikainen at Evli Growth Partners said: “We see the huge potential behind the way Refurbed contributes to a sustainable, circular economy.”
Peter Windischhofer, co-founder of refurbed, told me: “We are cheaper and have a wider product range, with an emphasis on quality. We focus on selling products that look new, so we end up with happy customers who then recommend us to others. It makes people proud to buy refurbished products.”
The startup has 130 refurbishers selling through its marketplace.
Other players in this space include Back Market (raised €48 million), Swappa (U.S.) and Amazon Renew. Refurbed also competes with Rebuy in Germany and Swapbee in Finland.
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Spendesk raises $118 million for its corporate spend management service
French startup Spendesk has announced earlier today that it has raised a $118 million funding round (€100 million) led by General Atlantic. Overall, the company has raised $189 million (€160 million) since its inception.
Existing investors Index Ventures and Eight Road Ventures participated once again in today’s funding round.
Spendesk, as the name suggests, focuses on all things related to spend management. Originally founded in startup studio eFounders, the startup first offered virtual and physical company cards for employees. While corporate cards are quite popular in the U.S., many small and medium companies in France can’t give a card to every single employee.
That’s why spending your company’s money can be a cumbersome process. You can borrow your boss’ card but they’ll have to trust you with it. You can pay with your own personal card but you want to be reimbursed as quickly as possible.
By combining a SaaS platform with corporate cards, it opens up a ton of possibilities. For instance, you can create an approval workflow for expensive purchases. You can set different budgets for different teams.
Over time, Spendesk has expanded beyond cards to manage expenses and invoice processing. It tries to automate some repetitive accounting tasks as well. Employees are automatically reminded that they have to attach a receipt for each transaction. You can export everything to Xero, Datev, Sage, Cegid or Netsuite.
If that pitch sounds familiar, it’s because there are a handful of European startups that are all doing well in this field. Soldo recently raised $180 million while Pleo snatched $150 million at a $1.7 billion valuation.
And yet, Spendesk doubled its revenue over the past year. Its team grew from 150 to 300 employees and it plans to double its headcount again over the next couple of years.
It means two things — the market opportunity is important and many customers are switching from old school workflows to modern SaaS products. That’s why three startups can grow at the same time.
“Traditionally, finance teams haven’t been equipped with the tools that can support this transformation,” Spendesk co-founder and CEO Rodolphe Ardant said in a statement. “In the past few years we have built the reference spend management solution for finance teams in Europe, which frees businesses and their people from administrative constraints of spending and managing money at work. While our solution is about empowering finance teams, we are actually delivering value to the entire business through the finance team.”
Spendesk currently has 3,000 clients, including Algolia, Soundcloud, Curve, Doctolib, Gousto, Raisin, Sezane and Wefox.
Image Credits: Spendesk
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PowerZ raises $8.3 million for its video game focused on education
French startup PowerZ has raised another $8.3 million (€7 million at today’s exchange rate) including $1.2 million (€1 million) in debt — the rest is a traditional equity round. The company is both an edtech startup and a video game studio with an ambitious goal — it wants to build a game that is as engaging as Minecraft or Fortnite, but with a focus on education.
In February, PowerZ launched the first version of its game on computers. It doesn’t have a lot of content, but the company wanted to start iterating as quickly as possible. Aimed at kids who are six years old and over, PowerZ teleports the player into a fantasy world with cute dragons and magic spells.
“The idea is really to build a sort of Harry Potter,” co-founder and CEO Emmanuel Freund told me. “You have this world that is super nice and very interesting. Like with Hogwarts, you want to come back regularly, and the story will progress over a very long time.”
15,000 children tried out the first chapter. On average, they spent four hours in the game. I asked whether Freund was satisfied with those metrics. He told me he thought his company’s vision was “completely validated.”
Bpifrance Digital Venture, RAISE Ventures and Bayard are investing in today’s round. Existing investors Educapital, Hachette Livres, Pierre Kosciusko-Morizet and Michaël Benabou are also investing once again.
Image Credits: PowerZ
Now, it’s time to add content, expand to other platforms and launch new languages. When it comes to content, the company wants to partner with other game studios. They’re going to create new islands and design games that make you learn new stuff. Zero Games, Opal Games and ArkRep are the first third-party studios to contribute to PowerZ.
When those new chapters are available, kids will be able to practice mental calculation, geometry, vocabulary, foreign languages, sign language, but also astronomy, photography, architecture, sculpture, cooking, wildlife, yoga, etc.
“Basically we want to position ourselves as a publisher,” Freund said. “The only thing we want to keep in-house is the main storyline.”
As for new platforms, PowerZ is launching its game on the iPad this week. The company realized that launching on computers was a mistake. Adults are already using computers or don’t want to leave your kid on the computer. That’s why PowerZ is starting with the iPad and the iPhone will follow suite. In 2022, the company expects to release its game on the Nintendo Switch and potentially other game consoles.
While the game is only available in French for now, the startup is also thinking about launching an English version soon.
“The game is completely free right now. We have an idea to monetize it. We’ll copy every other games with in-app purchases for visual items,” Freund said.
When you look further down the roadmap, PowerZ has some radically ambitious goals. Freund believes that educational games will become mainstream really quickly. Many companies don’t want to develop this kind of stuff because screens are bad for kids.
“If we just say that screens are bad, we’ll end up with an Amazon product to learn math. I feel a sense of urgency to develop an educational platform for screens that can scale,” Freund told me.
PowerZ wants to reach hundreds of thousands of children as quickly as possible. And just like Fortnite or Minecraft, the company believes its game can act as a platform for other stuff that can evolve over time.
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ManoMano raises $355 million for its home improvement e-commerce platform
French startup ManoMano has raised a Series F funding round of $355 million led by Dragoneer Investment Group. The company operates an e-commerce platform focused on DIY, home improvement and gardening products. It is currently available in six European countries. Following today’s funding round, the company has reached a valuation of $2.6 billion.
In addition to Dragoneer Investment Group, Temasek, General Atlantic, Eurazeo, Bpifrance’s Large Venture fund, Aglaé Ventures, Kismet Holdings and Armat Group are also participating.
“We operate in Europe and we are the industry leader in online sales,” co-founder and co-CEO Philippe de Chanville told me. In France in particular, the company has been profitable for a couple of years already. In 2020 alone, the company’s gross merchandise volume doubled to €1.2 billion ($1.42 billion at today’s rate).
So why did the company raise given that it’s already in a strong position to replicate the same model in other European markets? Because they could and because they didn’t need to. With a high valuation, ManoMano could raise quite a bit of money without having to sell a significant chunk of its equity.
In addition to France, the startup operates in Spain, Italy, Belgium, Germany and the U.K. With today’s funding round, the company wants to develop its activities in the U.K. and Germany in particular — they are Europe’s two biggest markets for home improvement and gardening.
ManoMano sells products to hobbyists and also targets the B2B market with ManoManoPro. It’s already working well in France with very small teams (1 to 5 employees) and the company is expanding this offering to Spain and Italy.
The startup will also invest more heavily in its product and build a better logistics infrastructure. “For the logistics part, we work with third-party logistics companies — we are a tech company,” co-founder and co-CEO Christian Raisson told me.
ManoMano doesn’t have its own warehouses and doesn’t own any inventory. That’s why ManoMano plans to recruit 1,000 people over the next 18 months and most of them will be tech profiles.
While ManoMano has 7 million clients, sales of home improvement and gardening items still mostly happen in brick-and-mortar stores. The startup is well aware that it’s not just a matter of having the best products at good price points.
ManoMano works with advisors (or Manodvisors) so that experts can give advice whenever customers need some tips. Overall, customers have initiated 2.3 million conversations with advisors in 2020. Recommendations and advice will be key to gain market shares. And the company is now well capitalized to innovate on this front and differentiate itself from other e-commerce platforms.
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Aircall raises $120 million for its cloud-based phone system
Aircall has raised a $120 million Series D round led by Goldman Sachs Asset Management. Following today’s funding round, the company has reached unicorn status, which means it has a valuation above $1 billion — this is the 16th French unicorn.
The startup has been building a cloud-based phone system for call centers, support lines and sales teams. It integrates with Salesforce, HubSpot, Zendesk, Slack, Intercom and other popular CRM, support and communication systems.
Aircall customers can create local numbers and set up an interactive voice response directory. The service manages the call queue for you and your agents can start answering inbound calls. Agents can transfer calls and put customers on hold. Admins can see analytics, monitor calls and see how everyone is doing.
In addition to Goldman Sachs Asset Management, existing investors DTCP, eFounders, Draper Esprit, Adam Street Partners, NextWorldCap and Gaia are also participating once again in today’s funding round.
As a cloud-based software product, Aircall works well with remote or hybrid teams. For the past year, many companies have been looking for a new phone system with various lockdowns taking place around the world. And Aircall has capitalized on this influx of customers.
When it comes to metrics, it means that signups increased by 65% in 2020. New customers include Caudalie, OpenClassrooms and Too Good To Go. Overall, Aircall has 8,500 customers. 15% of them are based in France, 35% in the U.S. and 50% in other countries.
With the new funding round, the company plans to iterate on its product with new integrations with third-party tools, and in particular industry-specific integrations. There will be new offices in London and Berlin as well as new hires in the company’s existing offices based in New York, Paris, Sydney and Madrid.
The company also plans to control a bigger chunk of its tech stack. It means that it’ll collaborate with big telecommunications companies to leverage their networks. You can also expect more product features with better transcription and better sentiment analysis.
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Mediflash is a freelancer marketplace for health professionals
Meet Mediflash, a new French startup that wants to improve temp staffing in healthcare facilities, such as nursing homes, clinics and mental health facilities. The company positions itself as an alternative to traditional temp staffing agencies. They claim to offer better terms for both caregivers and institutions.
“It costs a small fortune to health facilities while caregivers are paid poorly,” co-founder Léopold Treppoz told me.
Traditional temp staffing agencies hire caregivers and nurses on their payroll. When a facility doesn’t have enough staff, they ask their usual temp staffing agency. The agency finds someone and charges the facility.
“When we started, we thought we would do a temp staffing agency, but more digital, more tech,” Treppoz said. But the startup realized they would face the same issues as regular temp staffing agencies.
Instead, they looked at other startups working on freelancer marketplaces for developers, project managers, marketing experts and more. In France, a few of them have been quite successful, such as Comet, Malt, StaffMe and Brigad — some of them even run a vertical focused on health professionals. But Mediflash wants to focus specifically on caregivers.
Professionals signing up to Mediflash are freelancers. Mediflash only acts as a marketplace that connects health facilities with caregivers. The company says caregivers can expect more revenue — up to 20% — while facilities end up paying less.
Of course, it’s not a fair comparison as temp staffing agencies hire caregivers. As a freelancer, you don’t have the same benefits as a full-time employee. And in particular, you can’t get unemployment benefits.
“But a lot of caregivers say that this isn’t an issue because there is a lot of demand [from health facilities],” Treppoz said. On the platform, you’ll find students in nursing school who want to earn a bit of money, professionals who already have a part-time job looking for additional work as well as full-time substitute caregivers.
Usually, facilities just want someone for three days because they’re running short on staff. Mediflash is well aware that health facilities usually work with one temp staffing agency and that’s it. That’s why the startup has a sales team that has to talk with each facility one by one. Right now, the startup is mostly focused on Metz, Nancy and Strasbourg.
Mediflash recently raised a $2 million funding round (€1.7 million) led by Firstminute Capital. Several business angels are also participating, such as Alexandre Fretti (Malt), Alexandre Lebrun (Nabla), Simon Dawlat (Batch.com) and Marie Outtier (Aiden.ai, acquired by Twitter).
So far, the company has managed 1,400 substitute days. Mediflash takes a cut on each transaction. The company now plans to expand to other cities all around the country.
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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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June makes product analytics more accessible
Meet June, a new startup that wants to make it easier to create analytics dashboards and generate reports even if you’re not a product analytics expert. June is built on top of your Segment data. Like many no-code startups, it uses templates and a graphical interface so that non-technical profiles can start using it.
“What we do today is instant analytics and that’s why we’re building it on top of Segment,” co-founder and CEO Enzo Avigo told me. “It lets you access data much more quickly.”
Segment acts as the data collection and data repository for your analytics. After that, you can start playing with your data in June. Eventually, June plans to diversify its data sources.
“Our long-term vision is to become the Airtable of analytics,” Avigo said.
If you’re familiar with Airtable, June may look familiar. The company has built a template library to help you get started. For instance, June helps you track user retention, active users, your acquisition funnel, engagement, feature usage, etc.
Image Credits: June
Once you pick a template, you can start building a report by matching data sources with templates. June automatically generates charts, sorts your user base into cohorts and shows you important metrics. You can create goals so that you receive alerts in Slack whenever something good or bad is happening.
Advanced users can also use June so that everyone in the team is using the same tool. They can create custom SQL queries and build a template based on those queries.
The company raised a seed round of $1.85 million led by Point Nine. Y Combinator, Speedinvest, Kima Ventures, eFounders and Base Case also participated, as well as several business angels.
Prior to June, the startup’s two co-founders worked for Intercom. They noticed that the analytics tool was too hard to use for many people. They didn’t rely on analytics to make educated decisions.
There are hundreds of companies using June every week and that number is growing by 10% per week. Right now, the product is free but the company plans to charge based on usage.
Image Credits: June
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