Andreessen Horowitz leads London fintech Sequence’s $19 million seed round

UK-based business payments startup Sequence has announced one of the largest seed rounds in European fintech this year.

US VC giant Andreessen Horowitz (a16z) led the $19m seed round – its 11th European investment this year – which gives Sequence a post-money valuation of $75m.

London-based Sequence is the brainchild of two second-time entrepreneurs: CEO Riya Grover, formerly co-founder and CEO of food delivery platform Feedr, and chairman Eamon Jubbawy, former co-founder of digital ID startup Onfido.

It’s tackling the clunky world of business invoicing and payments – something both founders say wasted precious time and resources on at their previous businesses, and some of the world’s biggest startups (like Deliveroo, Hopin and Pipe) have already enlisted Sequence to fix .

The problem

Most startups that take payments—whether they’re consumer companies in food delivery or retail, or SaaS companies that charge other businesses for their services—build their billing engine from scratch, Grover tells Sifted. This consumes a lot of their engineers’ time – which the founders prefer to be spent on core product work.

But payments are often not just a case of one identical repetitive transaction between two parties. Instead, they vary widely depending on a company’s pricing model.

Sequence’s founders say that when finance teams struggle with variable payments across spreadsheets, they miss countless data insight opportunities that can be critical to company growth.

The first complication simply surrounds the number of stakeholders in each transaction. Companies like Deliveroo, for example, have to split each end consumer’s payment between their drivers, restaurants and the Deliveroo platform itself.

The second appears mostly with SaaS companies, which tend to charge more the more people use their software. With a usage-based component, an invoicing system must be able to draw real-time data. But at the moment this is done almost entirely manually.

Other companies struggle when sales teams sell contracts that can vary wildly and are difficult to track and analyze.

This is what both Feedr and Onfido struggled with, Grover tells Sifted.

Feedr’s orders varied according to the number of employees and the special meals ordered. Onfido charged customers per background check that was performed.

“This made the challenge of invoicing and financial operations very acute,” Grover explains, “because it was difficult to know what to collect and then all that data was locked in a spreadsheet.

“That meant it was difficult to draw trends and insights from what different customers were charged, and which product lines were driving revenue.”

What does Sequence actually do?

Sequence has built a “low-code” modular software product so companies can pick and choose which elements of billing, payments and revenue data they need help tracking.

It is aimed at companies that typically collect payments from business customers via bank transfers or direct debit.

The pitch to customers is that once a company has its end-to-end billing and payment process automated with Sequence, it can start doing much more exciting things on top – like offering customers access to certain features, or giving them financial incentives based on their use.

“Imagine that an energy company could get customers discounts or awards based on certain behavioral patterns,” says Grover. “You can use this kind of data to understand how to optimize your prices or understand how to calculate sales commissions.

“There’s a lot that having streamlined usage and payment data can do for businesses to grow.”

Sequence charges a software fee for its core platform, but Grover says it’s largely free for businesses to get started. They can then choose whether to use Sequence’s invoicing product and/or the payment product and are charged per payment once they have signed up for these.

What’s next for Sequence?

Sequence is already working with unicorns on both sides of the Atlantic – including Pipe, Deliveroo, Omnipresent, Snyk and Reachdesk – to design the desired “stack” for their payments.

Being well connected in the European startup world has paid off for Grover and Jubbawy. A16z investors say that part of what attracted them to the company was the fact that they were already talking to the founders of unicorns Plaid, Intercom, Jeeves, GoCardless, Marshmallow, Lendable, Hopin, UiPath, Monzo and Comply Advantage – all of whom have now invested like angels in Sequence.

So far, Sequence has hired a team of 30 people from companies like Wise, Hopin and Revolut – and Grover tells Sifted that while they plan to ramp up hiring sometime next year, they’re doing so cautiously.

“Having built a business before, I’m very convinced that the optics of team size is a really flawed metric because team size growth doesn’t actually mean business growth,” she says.

“We’re at this really wonderful point where we’re well-resourced as a team, but we’re lean enough and nimble enough to move really quickly — and we really want to take advantage of that now.”

Who invests in Sequence?

• US VC firm a16z led the round, which is its sixth European fintech investment – ​​following Stoic and Maple rails earlier this year
• Salesforce Ventures
• First Minute Capital
• Crew Capital
• Passion Capita
• Dig ventures
• Fine Capital
• 9 meters
• Founders from Plaid, Intercom, Jeeves, GoCardless, Marshmallow, Lendable, Hopin, UiPath, Monzo and Comply Advantage.

How is the market?

As the economy slows and the consumer-facing fintech market loses its appeal, investors are shifting their attention to slightly less sexy business-facing fintechs that are making life easier for other startups.

CFO tools have long been ripe for innovation – many finance teams still rely on spreadsheets and siled data streams.

But European startups building tools for CFOs have raised $66.5 million so far this year – record amount. Meanwhile, the global accounting market was valued at $12 billion in 2020 and is expected to reach over $20 billion by 2026.

Sequence certainly isn’t alone in tackling this clunky operational problem — but it seems to be addressing a corner of a CFO’s job that other startups aren’t. Most focus on cash flow management (like Tidely or Sibill), business planning (like Pigment and Growblocks) or consolidation of bank accounts and financial data (like Airbank and Aurelia).

So far, we have not seen a specific focus on invoicing and payments for companies with variable usage business models. Older billing platforms like Chargebee have covered some of this, but they’re designed for fixed, recurring subscriptions — rather than the varied usage-based billing that Sequence targets. On the programmatic bank payment side of the business (ie initiating payments without manual intervention), GoCardless already handles direct debit, but they are mainly focused on consumer-facing businesses.

Sifted’s take

Sequence’s main challenge will be to prove that companies should replace the custom in-house billing and payment engines they’ve got their own engineers working on with Sequence’s shiny new APIs.

There is also a danger that other, slightly older, CFO tool startups will take advantage of the access to company payflows and financial data they already have and launch products similar to Sequences as add-ons for their existing customers.

But CFO tools are definitely taking off right now, and in the current economic climate, anything that makes it easier for business builders to devote resources to growth is likely to be a very attractive proposition.

Amy O’Brien is a reporter for Sifted. She tweets from @Amy_EOBrien and writes our fintech newsletter — You can register here.