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Extra Crunch roundup: BNPL bonanza, scraping Toast’s S-1/A, early-stage SaaS pricing
Are founders in fundraising mode short-sighted when it comes to working with Chinese venture funds?
Runa Capital’s Asia business development manager Denis Kalinin studied data from iTjuzi, a database of Chinese venture capitalists, and found:
“…Chinese funds invested around $250 billion in 2020 (three times higher than the figure reported in Crunchbase). This figure puts Chinese VC investments only 30% lower than investments by U.S. funds, but three times that of U.K. funds and 12.5 times more than German funds.”
The pandemic, geopolitical tensions and other factors led many Chinese venture funds to pare back their international investments, but that’s largely “because during COVID, China’s economy recovered much faster than other countries’,” writes Kalinin.
His analysis covers multiple angles: Chinese investments in Europe are catching up with those in Asia and the United States, half of China’s top cross-border investors are CVCs, and investors are particularly interested in fintech, deep tech and digital health at the moment.
“Chinese investors can bring value to foreign startups, but you need to study their expertise and how it can be useful for you.”
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Today at 2 p.m. PT/5 p.m. ET on Twitter Spaces, Managing Editor Danny Crichton and immigration law attorney Sophie Alcorn will discuss whether remote work is making H-1B visas less critical for international founders.
It’s a provocative question: If remote teams are becoming the norm, tech hubs are decentralizing and investors are comfortable cutting checks after a Zoom call, how important is it to do business as a startup inside the U.S?
It’s sure to be an interesting conversation; to get a reminder, please follow @TechCrunch on Twitter.
Thanks very much for reading Extra Crunch this week!
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
Toast looks toward $18B valuation in upcoming IPO
Image Credits: Nigel Sussman (opens in a new window)
Toast released an early IPO price range of $30 to $33 per share on Monday, and Alex Wilhelm digs into the S-1/A filing to “better understand how to value vertical SaaS startups that are pursuing a payments-and-SaaS business approach.”
Is the restaurant software startup worth the $18 billion valuation it’s aiming for?
3 keys to pricing early-stage SaaS products
Image Credits: Peter Dazeley (opens in a new window) / Getty Images
Every founder who launches an enterprise software startup has to figure out the “right” pricing model for their products.
It’s a consequential decision: Per-seat licenses are easy to manage, but what if customers prefer a concurrent licensing model?
“Early pricing discussions should center around the buyer’s perspective and the value the product creates for them,” says Ridge Ventures partner Yousuf Khan, who previously worked as a CIO.
“Of course,” he notes, “self-evaluation is hard, especially when you’re asking someone else to pay you for something you’ve created.”
Is India’s BNPL 2.0 set to disrupt B2B?
Image Credits: jayk7 / Getty Images
India’s mom-and-pop businesses are experiencing a digital transformation that’s creating new e-commerce opportunities; smartphones have replaced paper records, and a new government-backed instant payments system is disrupting how value is exchanged.
But instead of importing legacy credit systems, buy now, pay later systems are the “next step for solving the digital B2B puzzle,” writes Anubhav Jain, co-founder and CEO of Rupifi.
What to make of Freshworks’ first IPO price range
Image Credits: scyther5 / Getty Images
Freshworks, which develops and offers a variety of business software tools, set an IPO price range of $28 to $32 per share on Monday, meaning its valuation could reach nearly $10 billion, Alex Wilhelm writes.
“It appears that the Freshworks IPO is pretty reasonably priced as is, though a boost to its price range is not out of the question if public market investors decide that they are bullish on its future growth prospects. We just don’t see dramatic upside.”
ish on its future growth prospects. We just don’t see dramatic upside.”
Here’s what your BNPL startup could be worth
Image Credits: Nigel Sussman (opens in a new window)
The multibillion-dollar exits of Japanese startup Paidy (to PayPal) and Australian buy now, pay later company Afterpay (to Square) “provided hard market proof that what BNPL startups are building has value beyond simple operating results,” Alex Wilhelm writes in The Exchange.
He breaks down the value of Afterpay, Paidy and Klarna using a simple metric: What would you pay for $1 of BNPL GMV?
3 methodologies for automated video game highlight detection and capture
Image Credits: mikkelwilliam (opens in a new window) / Getty Images
Video game livestreaming is booming.
Twitch has an average of almost 3 million concurrent viewers; by comparison, on the night of the 2020 U.S. presidential election, CNN’s livestream averaged 1.1 million.
The most successful streamers use their ad revenue and sponsorship money to hire video editors and social media teams to make them look good, but new automated tools are giving part-time streamers the ability to spotlight their best moments as well.
Have ‘The Privacy Talk’ with your business partners
Image Credits: Boris Zhitkov (opens in a new window) / Getty Images
A data breach costs a company an average of $3.8 million, Marc Ellenbogen, Foursquare’s general counsel, notes in a guest post, adding up to a “concrete financial incentive to having The Privacy Talk.”
What is it?
“It’s the conversation that goes beyond the written, publicly posted privacy policy and dives deep into a customer, vendor, supplier or partner’s approach to ethics,” he writes.
If you think the talk doesn’t apply to you, think again.
Advanced rider assistance systems: Tech spawned by the politics of micromobility
Image Credits: Alexander Spatari (opens in a new window) / Getty Images
In an effort to “reassure local administrations that micromobility is safe, compliant and a good thing for cities,” scooter operators are “implementing technology similar to advanced driver assistance systems (ADAS) usually found in cars,” Rebecca Bellan writes.
She breaks down how the tech could help prevent unwanted behavior and explores the cost for scooter operators and opportunities for startups.
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DealHub raises $20M Series B for its sales platform
DealHub.io, an Austin-based platform that helps businesses manage the entire process of their sales engagements, today announced that it has raised a $20 million Series B funding round. The round was led by Israel Growth Partners, with participation from existing investor Cornerstone Venture Partners. This brings DealHub’s total funding to $24.5 million.
The company describes itself as a ‘revenue amplification’ platform (or ‘RevAmp,’ as DealHub likes to call it) that represents the next generation of existing sales and revenue operations tools. It’s meant to give businesses a more complete view of buyers and their intent, and streamline the sales processes from proposal to pricing quotes, subscription management and (electronic) signatures.
“Yesterday’s siloed sales tools no longer cut it in the new Work from Anywhere era,” said Eyal Elbahary, CEO & Co-founder of DealHub.io. “Sales has undergone the largest disruption it has ever seen. Not only have sales teams needed to adapt to more sophisticated and informed buyers, but remote selling and digital transformation have compelled them to evolve the traditional sales process into a unique human-to-human interaction.”
The platform integrates with virtually all of the standard CRM tools, including Salesforce, Microsoft Dynamics and Freshworks, as well as e-signature platforms like DocuSign.
The company didn’t share any revenue data, but it notes that the new funding round follows “continued multi-year hyper-growth.” In part, the company argues, demand for its platform has been driven by sales teams that need new tools, given that they — for the most part — can’t travel to meet their (potential) customers face-to-face.
“Revenue leaders need the agility to keep pace with today’s fast and ever-changing business environment. They cannot afford to be restrained by rigid and costly to implement tools to manage their sales processes,” said Uri Erde, General Partner at Israel Growth Partners. “RevAmp provides a simple to operate, intuitive, no-code solution that makes it possible for sales organizations to continuously adapt to the modern sales ecosystem. Furthermore, it provides sales leaders the visibility and insights they need to manage and consistently accelerate revenue growth. We’re excited to back the innovation DealHub is bringing to the world of revenue operations and help fuel its growth.”
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Freshworks (re-)launches its CRM service
Freshworks, the customer and employee engagement company that offers a range of products, from call center and customer support software to HR tools and marketing automation services, today announced the launch of its newest product: Freshworks CRM. The new service, which the company built on top of its new Freshworks Neo platform, is meant to give sales and marketing teams all of the tools they need to get a better view of their customers — with a bit of machine learning thrown in for better predictions.
Freshworks CRM is essentially a rebrand of the company’s Freshsales service, combined with the company’s capabilities of its Freshmarketer marketing automation tool.
“Freshworks CRM unites Freshsales and Freshmarketer capabilities into one solution, which leverages an embedded customer data platform for an unprecedented and 360-degree view of the customer throughout their entire journey,” a company spokesperson told me.
The promise here is that this improved CRM solution is able to provide teams with a more complete view of their (potential) customers thanks to the unified view — and aggregated data — that the company’s Neo platform provides.
The company argues that the majority of CRM users quickly become disillusioned with their CRM service of choice — and the reason for that is because the data is poor. That’s where Freshworks thinks it can make a difference.
“Freshworks CRM delivers upon the original promise of CRM: a single solution that combines AI-driven data, insights and intelligence and puts the customer front and center of business goals,” said Prakash Ramamurthy, the company’s chief product officer. “We built Freshworks CRM to harness the power of data and create immediate value, challenging legacy CRM solutions that have failed sales teams with clunky interfaces and incomplete data.”
The idea here is to provide teams with all of their marketing and sales data in a single dashboard and provide AI-assisted insights to them to help drive their decision making, which in turn should lead to a better customer experience — and more sales. The service offers predictive lead scoring and qualification, based on a host of signals users can customize to their needs, as well as Slack and Teams integrations, built-in telephony with call recording to reach out to prospects and more. A lot of these features were already available in Freshsales, too.
“The challenge for online education is the ‘completion rate’. To increase this, we need to understand the ‘Why’ aspect for a student to attend a course and design ‘What’ & ‘How’ to meet the personalized needs of our students so they can achieve their individual goals,” said Mamnoon Hadi Khan, the chief analytics officer at Shaw Academy. “With Freshworks CRM, Shaw Academy can track the entire student customer journey to better engage with them through our dedicated Student Success Managers and leverage AI to personalize their learning experience — meeting their objectives.”
Pricing for Freshworks CRM starts at $29 per user/month and goes up to $125 per user/month for the full enterprise plan with more advanced features.
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Freshworks acquires IT orchestration service Flint
Customer engagement company Freshworks today announced that it has acquired Flint, an IT orchestration and cloud management platform based in India. The acquisition will help Freshworks strengthen its Freshservice IT support service by bringing a number of new automation tools to it. Maybe just as importantly, though, it will also bolster Freshworks’ ambitions around cloud management.
Freshworks CPO Prakash Ramamurthy, who joined the company last October, told me that while the company was already looking at expanding its IT services (ITSM) and operations management (ITOM) capabilities before the COVID-19 pandemic hit, having those capabilities has now become even more important, given that a lot of these teams are now working remotely.
“If you take ITSM, we allow for customers to create their own workflow for service catalog items and so on and so forth, but we found that there’s a lot of things which were repetitive tasks,” Ramamurthy said. “For example, I lost my password or new employee onboarding, where you need to auto-provision them in the same set of accounts. Flint had integrated with Freshservice to help automate and orchestrate some of these routine tasks and a lot of customers were using it and there’s a lot of interest in it.”
He noted that while the company was already seeing increased demand for these tools earlier in the year, the pandemic made that need even more obvious. And given that pressing need, Freshworks decided that it would be far easier to acquire an existing company than to build its own solution.
“Even in early January, we felt this was a space where we had to have a time-to-market advantage,” he said. “So acquiring and aggressively integrating it into our product lines seemed to be the most optimal thing to do than take our time to build it — and we are super fortunate that we placed the right bet because of what has happened since then.”
The acquisition helps Freshworks build out some of its existing services, but Ramamurthy also stressed that it will really help the company build out its operations management capabilities to go from alert management to also automatically solving common IT issues. “We feel there’s natural synergy and [Flint’s] orchestration solution and their connectors come in super handy because they have connectors to all the modern SaaS applications and the top five cloud providers and so on.”
But Flint’s technology will also help Freshworks build out its ability to help its users manage workloads across multiple clouds, an area where it is going to compete with a number of startups and incumbents. Since the company decided that it wants to play in this field, an acquisition also made a lot of sense given how long it would take to build out expertise in this area, too.
“Cloud management is a natural progression for our product line,” Ramamurthy noted. “As more and more customers have a multi-cloud strategy, we want to give them a single pane of glass for all the work workloads they’re running. And if they wanted to do cost optimization, if you want to build on top of that, we need the basic plumbing to be able to do discovery, which is kind of foundational for that.”
Freshworks will integrate Flint’s tools into Freshservice and likely offer it as part of its existing tiered pricing structure, with service orchestration likely being the first new capability it will offer.
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Freshworks acquires AnsweriQ
Customer engagement platform Freshworks today announced that it has acquired AnsweriQ, a startup that provides AI tools for self-service solutions and agent-assisted use cases where the ultimate goal is to quickly provide customers with answers and make agents more efficient.
The companies did not disclose the acquisition price. AnsweriQ last raised a funding round in 2017, when it received $5 million in a Series A round from Madrona Venture Group.
Freshworks founder and CEO Girish Mathrubootham tells me that he was introduced to the company through a friend, but that he had also previously come across AnsweriQ as a player in the customer service automation space for large clients in high-volume call centers.
“We really liked the team and the product and their ability to go up-market and win larger deals,” Mathrubootham said. “In terms of using the AI/ML customer service, the technology that they’ve built was perfectly complementary to everything else that we were building.”
He also noted the client base, which doesn’t overlap with Freshworks’, and the talent at AnsweriQ, including the leadership team, made this a no-brainer.
AnsweriQ, which has customers that use Freshworks and competing products, will continue to operate its existing products for the time being. Over time, Freshworks, of course, hopes to convert many of these users into Freshworks users as well. The company also plans to integrate AnsweriQ’s technology into its Freddy AI engine. The exact branding for these new capabilities remains unclear, but Mathrubootham suggested FreshiQ as an option.
As for the AnsweriQ leadership team, CEO Pradeep Rathinam will be joining Freshworks as chief customer officer.
Rathinam told me that the company was at the point where he was looking to raise the next round of funding. “As we were going to raise the next round of funding, our choices were to go out and raise the next round and go down this path, or look for a complementary platform on which we can vet our products and then get faster customer acquisition and really scale this to hundreds or thousands of customers,” he said.
He also noted that as a pure AI player, AnsweriQ had to deal with lots of complex data privacy and residency issues, so a more comprehensive platform like Freshworks made a lot of sense.
Freshworks has always been relatively acquisitive. Last year, the company acquired the customer success service Natero, for example. With the $150 million Series H round it announced last November, the company now also has the cash on hand to acquire even more customers. Freshworks is currently valued at about $3.5 billion and has 2,700 employees in 13 offices. With the acquisition of AnsweriQ, it now also has a foothold in Seattle, which it plans to use to attract local talent to the company.
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Accel closes new $550M fund for India
Accel, one of the world’s most influential venture capitalist firms, is getting more bullish on India.
The Silicon Valley-headquartered firm, which largely focuses on early-stage investments, said today it has closed $550 million for its sixth venture fund in India.
This is a significant amount of capital for Accel’s efforts in the country, where it began investing 15 years ago and has infused roughly $1 billion through all its previous funds.
Anand Daniel, a partner for Accel in India, told TechCrunch in an interview that the VC fund will continue to focus on identifying and investing in seed and early-stage startups.
But the fund realized it needed more money so it could actively participate in follow-on rounds (later-stage financing rounds) of its portfolio startups. The announcement today follows Accel’s similar recent push in Europe and Israel, where it closed a $575 million fund.
“We also selectively do growth investments for companies that are scaling well, such as Swiggy, UrbanClap, BlackStone and Bounce. We have continued to back them through Series B and Series C rounds,” he said.
At the risk of being accused of bias, I’ll say this: Accel India is a rare Indian fund that had credible exits and more promising exits in the pipeline. They’re also some of the nicest people to work with. https://t.co/aZGjDgSQKe
— JPK (@therealjpk) December 2, 2019
Like in many other markets, Accel’s track record in India is quite impressive. It participated in the seed financing round of e-commerce firm Flipkart, which was then valued at $4 million post-money. Walmart bought a majority stake in Flipkart last year for $16 billion. (This helped Accel net more than $1 billion in return from Flipkart.)
Accel, which has nine partners and more than 50 members in total in India, also invested in the seed round of SaaS giant Freshworks, which is now valued at more than $3 billion, food delivery startup Swiggy, also valued at north of $3 billion, and recently turned unicorn BlackBuck. Accel has been the first institutional investor for 85% of startups in its portfolio.
The VC firm says 44 of the 100-odd startups in its India portfolio today are valued at over $100 million each. In total, including Flipkart’s $21 billion market value, Accel’s portfolio firms have created $44 billion in market value.
Some of the investments Accel has made in India
“When we started our first fund in India in 2005, the world was a very different place. Just 1 in 50 Indians had access to the internet and mobile phone ownership was nascent. Yet we firmly believed that India was on the cusp of a big change,” the firm said in a statement.
“Today, the opportunity ahead is significantly bigger than when we started in 2005: India can now digitally identify 1.3 billion people, has 600 million internet users and 150 million online transacting customers with a national payments platform that processes $20 billion a month.”
Daniel said moving forward Accel will continue to focus on consumer, business-to-business, fintech, healthcare and global SaaS categories. “We have nine partners with their own areas of interest. They invest from their own conviction and finance seed rounds. If we see a particular sector evolving, then we do a deeper thesis work,” he said.
“We then develop deeper confidence for the space. For example, back in the day we invested in mobility startup TaxiForSure, long before Uber had arrived in India. That helped us understand mobility well. We have used those learnings to invest in several more mobility startups.”
Accel’s growing interest in India comes at a time when several other giants, including SoftBank and Prosus Ventures, have also become more active in the nation — though they tend to finance later-stage rounds.
For Indian startups that are already having their best year, this can only be good news.
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Freshworks raises $150M Series H on $3.5B valuation
Freshworks, a company that makes a variety of business software tools, from CRM to help-desk software, announced a $150 million Series H investment today from Sequoia Capital, CapitalG (formerly Google Capital) and Accel on a hefty $3.5 billion valuation. The late-stage startup has raised almost $400 million, according to Crunchbase data.
The company has been building an enterprise SaaS platform to give customers a set of integrated business tools, but CEO and co-founder Girish Mathrubootham says they will be investing part of this money in R&D to keep building out the platform.
To that end, the company also announced today a new unified data platform called the “Customer-for-Life Cloud” that runs across all of its tools. “We are actually investing in really bringing all of this together to create the “Customer-for-Life Cloud,” which is how you take marketing, sales, support and customer success — all of the aspects of a customer across the entire life cycle journey and bring them to a common data model where a business that is using Freshworks can see the entire life cycle of the customer,” Mathrubootham explained.
While Mathrubootham was not ready to commit to an IPO, he said they are in the process of hiring a CFO and are looking ahead to one day becoming a public company. “We don’t have a definite timeline. We want to go public at the right time. We are making sure that as a company that we are ready with the right processes and teams and predictability in the business,” he said.
In addition, he says he will continue to look for good acquisition targets, and having this money in the bank will help the company fill in gaps in the product set should the right opportunity arise. “We don’t generally acquire revenue, but we are looking for good technology teams both in terms of talent, as well as technology that would help give us a jumpstart in terms of go-to-market.” It hasn’t been afraid to target small companies in the past, having acquired 12 already.
Freshworks, which launched in 2010, has almost 2,500 employees, a number that’s sure to go up with this new investment. It has 250,00 customers worldwide, including almost 40,000 paying customers. These including Bridgestone Tires, Honda, Hugo Boss, Toshiba and Cisco.
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