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Atlanta’s sundry startups join in global VC funding boom
Mailchimp is selling itself to Intuit in a transaction valued at $12 billion. The deal is a coup not only for companies that eschew venture capital backing — Mailchimp is famous for its bootstrapping history — but also for the city of its founding, Atlanta.
Mailchimp’s mega-exit comes in the same year that fellow Atlanta-based startup Calendly raised a massive $350 million round that valued the technology company north of $3 billion, per Crunchbase data.
The two companies underscore how possible it is to build large startups in markets outside of the traditional collection of cities most associated with technology entrepreneurship in the United States, like Boston, New York City and San Francisco, to name a few.
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Investors are taking note. CB Insights data through Q2 2021 indicates that startups in Atlanta are on a fundraising tear, already surpassing total capital raised in 2020 in just the first half of this year. The city’s venture acceleration is similar to fundraising gains we’ve seen in markets like Chicago.
The Exchange wanted to better understand the Atlanta market, especially regarding how bullish its local inventors are that its current pace of fundraising can continue, and what sort of external interest its startups are enjoying. So, we ran questions by Sean McCormick, the CEO of Atlanta-based SingleOps, a software startup that raised capital earlier this year; Atlanta Ventures’ A.T. Gimbel; and BLH Venture Partners’ Ashish Mistry. We also heard from Paul Noble, CEO of Verusen, a supply chain intelligence startup that raised an $8 million Series A round in January.
The picture that forms is one of a city enjoying a rising tide of venture activity, boosted by some local dynamics that may have helped some of its earlier-stage companies scale more cheaply than they might have in other markets. And there’s plenty of optimism to be found concerning the near future. Let’s explore.
A funding boom
It’s cliche at this point to note that a particular geography is experiencing record venture capital results; many cities, regions and countries are seeing startup capital inflows accelerate. But there are markets where the gains still stand out despite the generally warm climate for private capital investments into private companies.
Atlanta is one such market. Per CB Insights data, the U.S. city saw $2.17 billion in total investment during 2020. In the first quarter of 2021, Atlanta nearly matched its 2020 tally, with its startups collecting some $2.07 billion in total capital. Another $953 million was invested in the second quarter of the year; keep in mind that venture capital data is laggy, and thus what may appear to be a sharp decline may be ameliorated by later disclosures.
But with around $3 billion invested in the first half of 2021, already around a 50% gain on 2020’s full-year figures, it’s clear the city is seeing an unprecedented wave of venture investment.
Dollar volume is half the venture capital activity matrix, of course. The other key data line for the investment type is deal volume. There Atlanta’s activity is less superlative; Q1 2021 saw Atlanta startups attract 57 total deals, the second-best results that we have data for, narrowly losing to Q3 2017’s 59 deals.
But Q2 2021 saw Atlanta’s known venture deal volume fall to 42, a figure that is a slight miss from 2020’s average deal volume, measured on a quarterly basis. The same caveat regarding delayed data applies here, but perhaps not enough to completely close the gap between what we might have expected from Atlanta startups in terms of Q2 deal volume in the wake of the city’s super-active Q1.
Despite the somewhat slack Q2 2021 deal count in Atlanta, per current data, it’s clear that the city is enjoying record venture capital attention. What’s driving the uptick? Let’s find out.
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The second shot is kicking in
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.
First and foremost, Equity was nominated for a Webby for “Best Technology Podcast”! Drop everything and go Vote for Equity! We’d appreciate it. A lot. And even if we lose, well, we’ll keep doing our thing and making each other laugh. (Note: We are in last place, which is, well, something.)
Regardless, the Equity team got together once again this week to not only go over the news of the week, but also to do a little soul searching. You see, some news broke yesterday, so we figured that we had to talk about it in our usual style. So, here’s the rundown:
- Do you want to buy TechCrunch? Apparently you can? Albeit probably along with a few billion dollars’ worth of other assets — whatever is left of Yahoo and AOL — you can now own an NFT. A non-fungible TechCrunch. What is ahead for us? We don’t know. So if you do know, tell us. Until then we’ll just yo-yo gently between panic and optimism, as per usual.
- We also dug into the latest All Raise venture capital data, and the results were abysmal.
- Next up was the news that fintech startups are setting records in 2021, raising more capital than ever before. That brought us to the latest from Brex.
- And then there was a suspicious trend when three fintech companies focused on teen banking raised in one exhale. We talk Step, Greenlight and Current.
- Natasha talked about her last Startups Weekly post, in which she unpacked The MasterClass effect’s impact on edtech.
- And to close, we discussed the latest cool-kid venture capital funds. Sure memes are cool, but did you know that they can help you raise a $10 million fund? They can!
We are back Monday morning with our weekly kick-off show. Have a great weekend!
Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts!
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Venmo prototypes a debit card for teenagers
Allowance is going digital. Venmo has been spotted prototyping a new feature that would allow adult users to create for their teenage children a debit card connected to their account. That could potentially let parents set spending notifications and limits while giving kids more flexibility in urgent situations than a few dollars stuffed in a pocket.
Delving into children’s banking could establish a new reason for adults to sign up for Venmo, get them saving more in Venmo debit accounts where the company can earn interest on the cash and drive purchase frequency that racks up interchange fees for Venmo’s owner PayPal .
But Venmo is arriving late to the teen debit card market. Startups like Greenlight and Step let parents manage teen spending on dedicated debit cards. More companies like Kard and neo banking giant Revolut have announced plans to launch their own versions. And Venmo’s prototype uses very similar terminology to that of Current, a frontrunner in the children’s banking space with over 500,000 accounts that raised a $20 million Series B late last year.
The first signs of Venmo’s debit card were spotted by reverse engineering specialist Jane Manchun Wong, who has provided slews of accurate tips to TechCrunch in the past. Hidden in Venmo’s Android app is code revealing a “delegate card” feature, designed to let users create a debit card that’s connected to their account but has limited privileges.
A screenshot generated from hidden code in Venmo’s app, via Jane Manchun Wong
A set-up screen Wong was able to generate from the code shows the option to “Enter your teen’s info,” because “We’ll use this to set up the debit card.” It asks parents to enter their child’s name, birth date and “What does your teen call you?” That’s almost identical to the “What does [your child’s name] call you?” set-up screen for Current’s teen debit card.
When TechCrunch asked about the teen debit feature and when it might launch, a Venmo spokesperson gave a cagey response that implies it’s indeed internally testing the option, writing “Venmo is constantly working to identify ways to refine and enhance the user experience. We frequently test product offerings to understand the value it could have for our users, and I don’t have anything further to share right now.”
Typically, the tech company product development flow sees them come up with ideas, mock them up, prototype them in their real apps as internal-only features, test them externally with small percentages of real users, then launch them officially if feedback and data is positive throughout. It’s unclear when Venmo might launch teen debit cards, though the product could always be scrapped. It’d need to move fast to beat Revolut and Kard to market.
Current’s teen debit card
The launch would build upon the June 2018 launch of Venmo’s branded Mastercard debit card that’s monetized through interchange fees and interest on savings. It offers payment receipts with options to split charges with friends within Venmo, free withdrawls at MoneyPass ATMs, rewards and in-app features for reseting your PIN or disabling a stolen card. Venmo also plans to launch a credit card issued by Synchrony this year.
Venmo might look to equip its teen debit card with popular features from competitors, like automatic weekly allowance deposits, notifications of all purchases or the ability to block spending at certain merchants. It’s unclear if it will charge a fee like the $36 per year subscription for Current.
Current offers these features for parents who set up a teen debit card
Tech startups are increasingly pushing to offer a broad range of financial services where margins are high. It’s an easy way to earn cheap money at a time when unit economics are coming under scrutiny in the wake of the WeWork implosion. Investors are pinning their hopes on efficient financial services too, pouring $34 billion into fintech startups during 2019.
Venmo’s already become a popular way for younger people to split the bill for Uber rides or dinner. Bringing social banking to a teen demographic probably should have been its plan all along.
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