Fintech fortunes, DAO dreams, Asia’s retailer revival

Keeping up with the latest technology money movements

Despite the decline in venture capital activity, there is still a mountain of money flowing through startups today. TechCrunch+ is launching a series of posts looking at recent notable venture rounds, exit activity and other news related to the financial side of building new tech companies.

While banks deal with the crisis started by the failure of well-known startup-friendly Silicon Valley Bank, tech startups are still more than busy raising capital. They are also looking for exits. More the former than the latter, given the frozen IPO market. But while we wait for the reawakening of an important starting point for startups, we can still follow where and how the money flows into their world.

Notable laps of the week

Etoro reloads at $3.5 billion valuation

• After the SPAC deal failed to complete, consumer trading service eToro was left without an expected new tranche of capital and a new valuation tag. However, it had previously secured a promise of new funds if the SPAC deal fell through, capital that it has now raised.
• The round is significant for its size (nine figures), industry (fintech has taken a valuation in recent quarters) and underlying financial results. Despite some growth since 2020 in 2022, the company shrank compared to the 2021 period last year. This means we are seeing a massive consumer fintech company re-evaluate under difficult conditions. Fintech entrepreneurs should take note.

Seed Club Ventures sneaks out of stealth with $25 million to make DAO dreams come true

• Many assumed that interest in DAOs, or decentralized autonomous organizations, had faded over the past year along with the crypto bros’ fortunes. But it turns out there are still a number of people very invested in the concept of local communities making their own decisions about how to spend millions of dollars.
• Seed Club Ventures, a 63-member consortium of VCs, individual investors, family offices and various entities that still believe in web3, recently came out of stealth with a $25 million fund to help DAOs do just that .
• This matters because $25 million is going to go to really early-stage projects that build much-needed tools for DAOs. It has already supported projects such as Guild, Stability AI, Lens and Metalabel. Such tools will actually help take DAOs to a level where they can realize some, if not all, of the potential that fully decentralized systems provide.

IntegrityNext Raises $109M to Help Companies Ensure Their Supply Chains Are ESG Compliant

• There is a lot of politics surrounding environmental, social and governance (ESG) investment policies for good reason: Complying with ESG norms requires companies to examine the breadth and depth of their business to ensure that things are done responsibly. It can be expensive, tedious and take a very long time.
• Munich-based IntegrityNext is doing something very special to help companies solve that problem: It helps companies audit their supply chains so they can quickly find out where and how they can optimize their supply chain and comply with ESG requirements.
• This collection is really good news for European companies, because they will have an easier time adopting previously “nice-to-have” ESG policies that will soon become “must-haves” as regulations in the EU are tightened.

Kream is racing to a $742 million valuation because fashion geeks like the circular economy

• In a world of abundance, some things are rare, which is why luxury retail platforms exist. Kream, spun out of Korean e-commerce giant Naver, has only been around for two years, but the company has seen incredible success as fashion-savvy customers flock to its store, looking for high-end, rare sneakers, watches, bags, accessories and clothing.
• Kream’s $168 million fundraising is interesting because the company will be investing heavily in its peers to build a retail network that spans a large area of ​​Asia — meaning someone in Japan can buy limited-edition sneakers that only launched in Japan.
• It is also good news for Asia’s growing resale market, as it signals consumer interest in collectibles and other luxury items, which could drive further investment in this area.

Kredivo Raises Giant $270M Series D to Make Credit More Accessible to Underbanked Asians

• It’s no secret that the massively underbanked population in Asia’s developing economies is a huge market for fintech to disrupt, and Kredivo, which aims to increase access to credit in Indonesia and Vietnam, has certainly struck gold with a user base roughly the size of Indonesia’s credit card population.
• The company’s oversubscribed $270 million Series D is proof that there is growth to be had in making people’s lives easier and helping them access banking services easily and seamlessly.

Other startup and venture capital news

The downturn in business is slowing down even the fastest startup categories

• It’s a sad reality of the world that even diamonds have no takers at times, and it seems to be finding out right now in startup land: Even formerly hot API startups are suffering from the decline in venture capital.
• Per data from GGV, which tracks funding into 63 API companies, startups in this category raised about $2.15 billion in 2022, less than half of what they raised a year earlier. The number of agreements has also decreased. In the fourth quarter of 2022, such startups raised a paltry $134 million, which is lower than in the previous three quarters of the year. It must be tough.
• We care about this because even though API startups are leading the way with usage-based pricing models, which are arguably the future of software sales, they are still subject to greater market pressure. Their struggle indicates that no matter how hot a sector you are in, dollars are likely to become increasingly difficult to come by.

Coinbase executives are angry that the SEC is counting on their parade

• The crypto world is not happy with how lawmakers are treating it. Coinbase’s CEO recently pretty much said that the government should just make up its mind about regulations already after the SEC sent it a Wells notice, which basically means the government is going to come after Coinbase and companies like it for “violations of the the federal securities laws.”
• We pretty much agree with Coinbase here: There really isn’t much precedent for what the crypto world is going through, and adapting the SEC’s nearly century-old laws to the crypto economy feels very much like a square peg-triangle hole situation.
• Clearly, the SEC really needs to cement its belief in how crypto should be traded so that the wider ecosystem can just follow the rules.

Roofstock cuts 27% of employees in second round of layoffs

• Proptech startups are having a moment, and their employees seem to be paying for it. Rising mortgage rates and the general housing slump haven’t been good for companies that depended on people realizing their American dream.
• But buying a house in this economy? A lot of people basically said, “yeah, right,” which basically led Roofstock, which lets people buy and sell rental properties in dozens of U.S. markets, to decide to lay off 27% of its staff for the second time in less than two quarters.
• The company is trying to stay afloat in a declining housing market, which makes sense, but what doesn’t is that it was valued at $1.9 billion just a year ago. This is not good news for the wider proptech market right now.

4 Indian investors explain how their investment strategy has changed since 2021

• Indian startups started 2022 with pretty good prospects as the global slowdown in business had not reached the country yet. But it did, leading to a 70% drop in funding in the second half of the year.
• While we’re sure investors in the country saw it coming, how did they calibrate their sensors to the new climate? After asking some investors, Jagmeet found that, for one thing, they slowed down, chose to make safer bets and generally made sure their portfolio companies have enough runway to last as long as this downturn is going to last.
• Indian investors are also asking their startups to take a step back, strengthen their business models and focus on the fundamentals to get to the next milestone. And if necessary, raise a down round, because life > death.

As the tech IPO market reopens, keep an eye out for HR unicorns

• Do you hear that? That’s Alex giggling in excited anticipation of all the S-1s we’re likely to get if HR unicorns keep growing as fast as they have.
• The startup group’s ARR growth and regular EBITDA production—and therefore valuations—seem to be almost immune to the downturn as unicorns like Deel, Velocity Global, Gusto, and Ripple continue to grow into new markets and categories.
• This means that when IPO season arrives, HR technology companies will likely be among the first out of the gate. However, we are curious about one thing: How long can the startups in question grow without going to war with each other, perhaps in the form of price cuts?