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Despite flat growth, ride-hailing colossus Didi’s US IPO could reach $70B

2021, June 12 - 2:11am

Didi filed to go public in the United States last night, providing a look into the Chinese ride-hailing company’s business. This morning, we’re extending our earlier reporting on the company to dive into its numerical performance, economic health and possible valuation.

Recall that Didi has raised tens of billions worth of private capital from venture capitalists, private equity firms, corporations and other sources. The size of the bet riding on Didi is simply massive.

Didi is approaching the American public markets at a fortuitous moment. While the late-2020 IPO fervor, which sent offerings from DoorDash and others skyrocketing after their debuts, has cooled, valuations for public companies remain high compared to historical norms. And Uber and Lyft, two American ride-hailing companies, have been posting numbers that point to at least a modest recovery in the ride-hailing industry as COVID-19 abates in many parts of the world.

As further grounding, recall that Didi has raised tens of billions worth of private capital from venture capitalists, private equity firms, corporations and other sources. The size of the bet riding on Didi is simply massive. As we explore the company’s finances, then, we’re more than vetting a single company’s performance; we’re examining what sort of returns an ocean of capital may be able to derive from its exit.

In that vein, we’ll consider GMV results, revenue growth, historical profitability, present-day profitability and what Didi may be worth on the American markets, given current comps. Sound good? Into the breach!

Inside Didi’s IPO filing

Starting at the highest level, how quickly has gross transaction volume (GTV) scaled at the company?

GTV

Didi is historically a business that operates in China but has operations today in more than a dozen countries. The impact and recovery of China’s bout with COVID-19 is therefore not the whole picture of the company’s GTV results.

COVID-19 began to affect the company starting in the first quarter of 2020. From the Didi F-1 filing:

Core Platform GTV fell by 32.8% in the first quarter of 2020 as compared to the first quarter of 2019, and then by 16.0% in the second quarter of 2020 as compared to the second quarter of 2019.

The dips were short-lived, however, with Didi quickly returning to growth in the second half of the year:

Our businesses resumed growth in the second half of 2020, which moderated the impact on a year-on-year basis. Our Core Platform GTV for the full year 2020 decreased by 4.8% as compared to the full year 2019. Both our China Mobility and International segments were impacted, but whereas the GTV for our China Mobility segment decreased by 6.6% from 2019 to 2020, the GTV for our International segment increased by 11.4% from 2019 to 2020.

Holding to just the Chinese market, we can see how rapidly Didi managed to pick itself up over the last year. Chinese GTV at Didi grew from 25.7 billion RMB to 54.6 billion RMB from the first quarter of 2020 to the first quarter of 2021; naturally, we’re comparing a more pandemic-impacted quarter at the company to a less-affected period, but the comparison is still useful for showing how the company recovered from early-2020 lows.

The number of transactions that Didi recorded in China during the first quarter of this year was also up more than 2x year over year.

On a whole-company basis, Didi’s “core platform GTV,” or the “sum of GTV for our China Mobility and International segments,” posted numbers that are less impressive in growth terms:

Image Credits: Didi F-1 filing

You can see how quickly and painfully COVID-19 blunted Didi’s global operations. But seeing the company settle back to late-2019 GTV numbers in 2021 is not super bullish.

Takeaway: While Didi managed an impressive GTV recovery in China, its aggregate numbers are flatter, and recent quarterly trends are not incredibly attractive.

Revenue growth
Categories: Business News

Lydia partners with Cashbee to add savings accounts

2021, June 12 - 1:31am

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.

Lydia raises another $86 million to build a European financial super app

Fintech startups are increasingly focusing on profitability

 

Categories: Business News

Last day to save $100 on passes to TC Early Stage 2021: Marketing & Fundraising

2021, June 12 - 1:12am

Now that we have your attention, know this: Prices go up tonight on passes to TC Early Stage 2021: Marketing & Fundraising. If you’re an early-stage founder (pre-seed through Series A), don’t miss this chance to save $100 on our two-day virtual event dedicated to helping you build a stronger startup. It’s one of the best investments you’ll ever make.

It’s Now O’clock: Buy your pass here before the sale expires tonight at 11:59 p.m. (PT).

Why should you attend TC Early Stage 2021? Chloe Leaaetoa, the founder of Socicraft and an Early Stage 2020 attendee, explains:

What you learn at Early Stage is so much better than the random information you find on YouTube. You get to interact with industry experts and ask them specific questions. It’s like a mini bootcamp, and you’re going to walk away with a lot of knowledge.

What can you expect at Early Stage 2021? The first day is packed with presentations designed to help you learn (or deepen your knowledge of) essential startup skills — product fit, growth marketing, fundraising and a whole bunch more. We’ve tapped some of the best startup ecosystem experts who will not only impart their wisdom, but they’ll also take and answer your questions.

Check out the event agenda and our roster of speakers.

We’re talking an interactive experience — from which you’ll take away tips and advice that you can implement in your business now when you need it most. Case in point, again from Chloe Leaaetoa:

Sequoia Capital’s session, Start with Your Customer, looked at the benefits of storytelling and creating customer personas. I took the idea to my team, and we identified seven different user types for our product, and we’ve implemented storytelling to help onboard new customers. That one session alone has transformed my business.

Day two is all about the TC Early-Stage Pitch-Off. Tune in and watch as 10 early-stage founders bring the heat. Each team will deliver a five-minute pitch in front of TC editors, global investors, press and hundreds of attendees. After each team pitches, they’ll engage in a five-minute Q&A with our panel of top VC judges.

You’ll learn so much by watching those pitches and hearing the VC’s questions. It’s a great way to improve your own pitch deck. And if notetaking is not your forte, don’t stress. All sessions, including the pitch-off, will be available courtesy of video-on-demand.

TC Early Stage 2021: Marketing & Fundraising takes place July 8-9, but you have just hours left before the early bird flies south and the prices head north. It’s now o’clock — beat the deadline and register here before 11:59 p.m. (PT) tonight.

Is your company interested in sponsoring or exhibiting at Early Stage 2021: Marketing & Fundraising? Contact our sponsorship sales team by filling out this form.

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Categories: Business News

Insurtech is hot on both sides of the Atlantic

2021, June 12 - 12:47am

The U.S. insurance technology market is hot and has been for years now. Back in early 2020, to pick an example, TechCrunch reported on a wave of funding events among domestic insurtech marketplaces. Those companies have since gone on to raise hundreds of millions of dollars more.

And after a long period of incubation, we’ve seen neoinsurance players from the U.S. like Root and Metromile go public. Hippo is working to join the cohort.

The Exchange explores startups, markets and money. 

Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.

So from the perspective of venture capital activity, startup growth and exits, insurtech is proving itself in the States. Even if growth remains the name of the game in insurance tech and profits are often scarce.

What about other markets? The recent Wefox round caught The Exchange’s eye. A $650 million insurtech round would have commanded our attention regardless of its location. But to see a European insurance technology startup raise that amount of cash made us wonder if there’s as much money present for the EU market’s insurtech startups as we’ve seen here in the U.S.

After all, with business-focused neoinsurance provider Embroker raising a big round this week in the United States, to pick an example, it seems that attacking the massive and antiquated insurance market is good startup sport. Why wouldn’t that concept apply to Europe?

To find out more, we got in touch with a number of VCs from Europe to hear their perspectives on what’s happening on the ground, including folks from Accel, Astorya.vc and Insurtech Gateway. To ground us, we collated the biggest recent rounds from the EU insurance technology market. Let’s go!

A quick note on insurtech exits

Venture capitalists and startup founders get paid when they generate an exit. Lately, exits in the space have featured a number of IPOs.

The older a startup gets, the more it has to deal with public-market investors. Crossover funds and the like make their appearance before unicorns go public. And then former startups have to pitch not the venture capital market, but the public markets. It’s a different game.

That’s the impression that The Exchange got chatting with the CEO of Root, Alex Timm, this earnings cycle. He noted that public tech-focused investors don’t always grok the insurance elements of his business, while insurance investors don’t always grok the tech side of Root.

Categories: Business News

Freelancer marketplace Toptal sues Andela and ex-employees, alleging theft of trade secrets

2021, June 11 - 11:33pm

The war for talent in the tech world can be brutal — and so, it turns out, can the war between platforms that help companies source it. In the latest developement, Toptal — a marketplace for filling engineering and other tech roles with freelance, remote workers — has filed a lawsuit against direct competitor Andela and several of its employees, alleging the theft of trade secrets in pursuit of “a perfect clone of its business”, according to the complaint. All of the Andela employees previously worked at Toptal.

Toptal’s lawsuit, filed in the Supreme Court of the State of New York and embedded below, alleges that the employees reneged on confidentiality, non-solicitation and non-compete agreements with Toptal. Toptal also alleges interference with contract, unfair competition and misappropriation of trade secrets.

While both Toptal and Andela have built businesses around the idea of remote freelancers filling tech jobs — a concept that has increased in profile and acceptance as people shifted to remote work during the pandemic — the pair only emerged as very direct competitors in the last year or so.

Toptal was co-founded by CEO Taso Du Val in 2010, and since then it has grown to become one of the world’s most popular on-demand talent networks. The company matches skilled tech personnel like engineers, software developers, designers, finance experts and product managers to clients across the globe. According to company data, it currently serves over 1,000 clients in more than 10 countries.

Andela, on the other hand, only recently turned to using a similar approach. Founded in 2014 in Lagos, Andela’s original business model was based on building physical hubs to source, vet, train and house talent across the continent. It did this in Kenya, Nigeria, Rwanda and Uganda.

However, Andela struggled with scaling and operating that business model, and in 2019 it laid off 400 developers. Early last year as the pandemic took hold, it laid off a further 135 employees. However this time around it did so with a strategy pivot in mind: after testing satellite models in Egypt and Ghana, the talent company decided to go forego physical hubs completely and go remote, first across Africa in 2020 and globally this year.

“We thought, ‘What if we accelerated [the African remote network] and just enabled applicants from anywhere?’ Because it was always the plan to become a global company. That was clear, but the timing was the question,” Andela CEO Jeremy Johnson told TechCrunch in April.

Andela begins global expansion in 37 countries months after going remote across Africa

Yet Toptal believes Andela’s choice to scrap its hubs and source remote talent from everywhere was specifically to replicate Toptal’s business model — and success.

“Until recently, Andela operated an outsourcing operation focused on in-person, on-site hubs in Africa,” Toptal notes in the complaint. “Over the course of the past year, Andela has moved away from its prior focus on in-person hubs situated in Africa and is engaging in a barely disguised attempt to become a clone of Toptal.”

Toptal claims that for Andela to pull off a “perfect clone of its business,” it poached key Toptal employees to exploit their knowledge, and that the ex-employees knowingly breached their confidentiality and non-solicitation obligations to Toptal.

Companies often try to uncover each other’s trade secrets by poaching, and many blatantly copy a competitor and do so without repercussions. On top of this, these two are hardly the only two places to for tech talent to connect with remote freelance job opportunities. Others include Fiverr, Malt, Freelancer.com, LinkedIn, Turing, Upwork and many more.

In a global economy with an estimated 1 billion so-called knowledge workers, and with freelancers accounting for some 35% of the world’s workforce, it’s a pretty gigantic market, which you could alternately look at as a major opportunity, but also a ripe field for many players with multiple permutations of the marketplace concept.

So why is Toptal crying foul play? The company says its ex-employees have not only revealed Toptal’s trade secrets and confidential information to compete unfairly but are also poaching additional Toptal personnel, clients and the talent that Toptal matches and sources to clients.

The ex-employees cited by Toptal include Sachin Bhagwata, vice president of enterprise; Martin Chikilian, head of talent operations; Courtney Machi, vice president of product; and Alvaro Oliveira, executive vice president of talent operations. Toptal says three additional former employees in non-executive roles breached express covenants not to compete in their agreements with Toptal.

While some of the allegations focus on the expertise of the employees, one of the trade secret allegations more directly references Toptal’s technology.

Toptal claims Machi tapped into her extensive knowledge of Toptal’s “proprietary software platform” and used that to help transform Andela “from a group of outsourcing hubs situated in various African locations into a fully remote, global company like Toptal.”

Asked to comment on the suit, Johnson at Andela said he believes Toptal is suing Andela for being competitive.

“With regards to the situation overall, I can say that frivolous lawsuits are the price of doing anything that matters,” he told TechCrunch in an email. “And this is the kind of baseless bullying and fear tactics that make employees want to leave in the first place. We will defend ourselves and our colleagues vigorously.”

Toptal has an unconventional story for a company that started only a decade ago. It is one of the few companies in the Valley that doesn’t issue stock options to its investors or employees. Even Du Val’s co-founder, Breanden Beneschott, was ousted from the company without any shares, according to an article from The Information.

How did it pull this off? In 2012, Toptal raised a $1.4 million seed via convertible notes and investors were entitled to 15% of the company, according to The Information article.

But there was one condition: Toptal had to raise more money.

However, the company hasn’t needed to secure additional capital because of its profitability and growing revenue ($200 million annually as of 2018, per The Information). So investors are stuck in limbo — as are employees who joined hoping that the company would raise money down the line so their stock options would convert.

The Information story strikes a distinct note of resentment, noting that some employees felt “tricked out of stock in a company that Du Val has said publicly is worth more than $1 billion.”

Given that situation, TechCrunch asked Du Val if he thought it played any role in employee departures, and ex-employee relations.

“The issuance of stock options does not excuse theft of trade secrets,” he replied. “Also, there are more than 800 full-time people at Toptal [but] the complaint names seven individual defendants.”

The full complaint is embedded below.

View this document on Scribd

Categories: Business News

The huge TAM of fake breaded chicken bits

2021, June 11 - 11:00pm

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

We’re closing our survey soon, so this is your last chance (probably) to get your voice heard!

Despite it being a short week, as always, it was a busy, busy time. We had Grace on the dials today, and Danny, Natasha and Alex making chit-chat about the tech world. As with every week this year, we had to cut and cut and cut to get the show down to size. Here’s what made it in in the end:

Thanks for hopping along with us this week and every week. Quick programming note: Natasha will take Alex’s spot on the Monday show for next week since he’s out, so be nice, and send her stuff to mention.

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday morning at 7:00 a.m. PST, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

Network security startup ExtraHop skips and jumps to $900M exit

Categories: Business News

Fresha raises $100M for its beauty and wellness booking platform and marketplace

2021, June 11 - 7:06pm

Beauty and wellness businesses have come roaring back to life with the decline of COVID-19 restrictions, and a startup that’s built a platform that caters to the many needs of small enterprises in the industry today is announcing a big round of funding to grow with them.

Fresha — a multipurpose commerce tool for independent wellness and beauty businesses such as hair, nail and skin salons, yoga instructors and more, based first and foremost around a completely free subscription platform for those businesses to schedule bookings from customers — has picked up $100 million.

Fresha plans to use the funds to expand the list of countries where it operates, to grow the categories of companies that use its services (mental health practitioners is one example; fitness is another) and to build more services complementing what it already provides, helping customers do their work by providing them with more insights and data about what they do already. It will also be making acquisitions to expand its customer base.

General Atlantic is leading this Series C, with Huda Kattan, Michael Zeisser of FMZ Ventures and Jonathan Green of Lugard Road Capital also participating, along with past investors Partech, Target Global and FJ Labs.

Fresha has raised $132 million to date, and it’s not disclosing its valuation. But as a point of reference, when it closed its Series B (as Shedul; the company rebranded in February 2020), it was valued at $105 million.

Chances are that figure is significantly higher now.

Shedul, the booking platform for salons and spas, raises $20M Series B at a $105M valuation

Fresha’s current range of services include a free-to-use platform for booking appointments; free software for managing accounts; a payments service that includes both a physical point of sale and digital interface; and a wider marketplace both to provide goods to the businesses (B2B); and for the businesses to sell goods to customers (B2C).

The London-based company has 50,000 business customers and 150,000 stylists and professionals in 120+ countries (mostly in the U.K., the U.S., Canada, Australia, New Zealand and Europe), with some 250 million appointments booked to date.

And while many businesses did have to curtail how they operated (and in some countries had to stop operating altogether), Fresha found that it was attracting a lot of new business in part because of its “free” model that meant customers didn’t have to pay to maintain a booking platform at a time when they weren’t taking bookings, but could use Fresha to generate revenues in other ways (such as through the sale of goods, vouchers for future services and more.)

So in a year when you might have thought that a company based around providing services to industries that were hard hit by COVID would have also been hard-hit, in fact Fresha saw a 30x increase in card payment transactions versus the year before, and more than $12 billion worth of booking appointments made on its platform.

In a market that is very crowded with tech companies building platforms to book beauty (and other) services and to manage the business of independent retailers — they include giants like Lightspeed POS, as well as smaller players like Booksy (which also recently raised) and StyleSeat, but also players like Square and PayPal, and many others — the core of Fresha’s offering is a booking platform built as a totally free product.

Why free? To attract more users to its other services (such as payments, which do come at a price), and because co-founders William Zeqiri (CEO) and Nick Miller (product chief) — pictured above, respectively left and right — think this the only way to build a business like this in a crowded market.

“We believe that software is a commodity,” said Zeqiri in an interview. “A lot of our competitors are beating each other on price to the bottom. We wanted to consolidate the supply side of the software, gather data about the businesses, how they use what they use.”

That data led, first, to identifying the need for and building out software and launching its B2B and B2C marketplaces, and the idea is that it will likely lead to more products as it continues to mature, whether it’s better analytics for its current customers so that they can better price or develop their services accordingly, or entirely new tools for new categories of users.

Booksy raises $70M war chest to acquire salon appointment apps, expand internationally

Meanwhile, the services that it already provides, like payments, have taken off like a shot, not least because they’ve served a need for any virtual transactions, like selling vouchers or items.

Miller noted that while a lot of its customers actually interface with tech with a lot of reluctance — they are the essence of “physical” retailers when you think about it — they also found themselves having to use more digital services simply because of circumstances. “Looking back at what happened, tech adoption accelerated for our customers,” said Miller. He said that current customers usage for the point-of-sale systems and online payments is roughly equal.

Looking ahead, Fresha’s investor list is notable for its strategic mix and might shed some light on how it grows. Kattan, a “beauty influencer” and the founder of Huda Beauty, is investing by way of HB Investments, a strategic venture arm; while Zeisser’s FMZ focuses on “experience economy” investments today, but he himself has a long history working at tech companies building marketplaces, including years with Alibaba as head of its U.S. investment practice. These speak to areas where Fresha is likely interested in expanding its reach — more marketplace activity; and perhaps more social media angles and exposure for its customers at a time when social media really has become a key way for beauty and wellness businesses to market themselves.

“Fresha has emerged as a leader powering the beauty and wellness industry,” said Aaron Goldman, Global co-head of financial services and managing director at General Atlantic, in a statement. “William, Nick and the Fresha team have built a product that is resonating with the market and creating long-term value through the intersection of its payments, software and marketplace offerings. We are thrilled to be partnering with the company and believe Fresha has significant opportunity to further scale its innovative platform.”

“I’ve witnessed firsthand the positive impact Fresha has for beauty entrepreneurs,” added Kattan. “The company is a force for good in the growing community of beauty professionals around the globe, who are increasingly adopting a self-employed approach. By making top business software accessible without any subscription fees, Fresha lets professionals focus on what they do best — offering great experiences for their customers.”

All B2B startups are in the payments business

Categories: Business News

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