Three years ago, we released the first edition of the Matrix Fintech Index. We believed then, as we do now, that fintech represents one of the most exciting major innovation cycles of this decade. In 2020, all the long-term trends forcing change in this sector continued and even accelerated.

The broad movement away from credit toward debit, particularly among younger consumers, represents one such macro shift. However, the pandemic also created new, unforeseen drivers. Among them, millennials decamped from their rentals in crowded cities to accelerate their first home purchases to the benefit of proptech companies and challenger mortgage players alike.

E-commerce saw an enormous acceleration in growth rates, furthering adoption of online payments platforms. Lastly, low interest rates and looming inflation helped pave the way for the price of Bitcoin to charge toward $30,000. In short, multiple tailwinds combined to produce a blockbuster year for the category.

In this year’s refresh of the Matrix Fintech Index, we’ll divide our attention into three parts. First, a look at the public stocks’ performance. Second, liquidity. Third, we highlight one major trend in the sector: Buy Now Pay Later, or BNPL.

Public fintech stocks rose 97% in 2020

For the fourth straight year, the publicly traded fintechs massively outperformed the incumbent financial services providers as well as every mainstream stock index. While the underlying performance of these companies was strong, the pandemic further bolstered results as consumers avoided appearing in-person for both shopping and banking. Instead, they sought — and found — digital alternatives.

Our own representation of the public fintechs’ performance is the Matrix Fintech Index — a market cap-weighted index that tracks the progress of a portfolio of 25 leading public fintech companies. The Matrix fintech Index rose 97% in 2020, compared to a 14% rise in the S&P 500 and a 10% drop for the incumbent financial service companies over the same time period.

 

E-commerce undoubtedly stood out as a major driver. As a category, retail e-commerce grew 35% YoY as of Q3, propelling PayPal and Shopify to add over $160 billion of market capitalization over the year. For its part, PayPal in the third quarter signed up 15 million net new active accounts (its highest ever).

This morning, investor and SPAC raconteur Chamath Palihapitiya announced two new blank-check deals involving Latch and Sunlight Financial.

Latch, an enterprise SaaS company that makes keyless-entry systems, has raised $152 million in private capital, according to Crunchbase. Sunlight Financial, which offers point-of-sale financing for residential solar systems, has raised north of $700 million in venture capital, private equity and debt.

We’re going to chat about the two transactions.

There’s no escaping SPACs for a bit, so if you are tired of watching blind pools rip private companies into the public markets, you are not going to have a very good next few months. Why? There are nearly 300 SPACs in the market today looking for deals, and many will find one.

The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.

Think of SPACs are increasingly hungry sharks. As a shark get hungrier while the clock winds down on its deal-making window, it may get less choosy about what it eats (take public). There are enough SPACs on the hunt today that they would be noisy even if they were not time-constrained investment vehicles. But as their timers tick, expect their deal-making to get all the more creative.

This brings us back to Chamath’s two deals. Are they more like the Bakkt SPAC, which led us to raise a few questions? Or more akin to the Talkspace SPAC, which we found pretty reasonable? Let’s find out.

Keyless locks = Peloton for real estate

Let’s start with the Latch deal.

New York-based Latch sells “LatchOS,” a hardware and software system that works in buildings where access and amenities matter. Latch’s hardware works with doors, sensors and internet connectivity.

The company has raised a number of private rounds, including a $126 million deal in August of 2019 that valued the company at $454.3 million on a post-money basis, according to PitchBook data. The company raised another $30 million in October of 2020, though its final private valuation is not known.

As Chamath tweeted this morning, Latch is merging with TS Innovation Acquisitions Corp, or $TSIA. The SPAC is associated with Tishman Speyer, a commercial real estate investor. You can see the synergies, as Latch’s products fit into the commercial real estate space.

Up front, Latch is not a company that is only reporting future revenues. It has a history as an operating entity. Indeed, here’s its financial data per its investor presentation:

Doing some quick match, Latch grew booked revenues 50.5% from 2019 to 2020. Its booked software revenues grew 37.1%, while its booked hardware top line expanded over 70% during the same period.

That could be due to strong hardware installation fees, which could later result in software revenues; the company claims an average of a six-year software deal, so hardware revenues that are attached to new software incomes could low key declaim long-term SaaS revenues.

Update: Adding some clarity here, the above are “booked” revenues, which I’ve made more clear, not actual revenues. Its net revenues, better known as actual revenues, were $18 million, with $14 million of that coming from hardware. So, today, the company is certainly more hardware-heavy than I first thought. Damn non-S-1 filings!

While some were quick to note that the company is far from pure-SaaS — correct — I suspect that the model that could get some traction amongst investors is that this feels a bit like Peloton for real estate. How so? Peloton has large hardware incomes up front from new users, which convert to long-term subscription revenues. Latch may prove similar, albeit for a different customer base and market.

Per the deal’s reported terms, Latch will be worth $1.56 billion after the transaction. The combined entity will have $510 million in cash, including $190 million from a PIPE — a method of putting private money into a public entity — from “BlackRock, D1 Capital Partners, Durable Capital Partners LP, Fidelity Management & Research Company LLC, Chamath Palihapitiya, The Spruce House Partnership, Wellington Management, ArrowMark Partners, Avenir and Lux Capital.”

Goalsetter, a platform that helps parents teach their kids financial literacy, announced the raise of a $3.9 million seed round this morning, led by Astia.

PNC Bank, Mastercard, U.S. Bank, Northwestern Mutual Future Ventures, Elevate Capital, Portfolia’s First Step and Rising America Fund and Pipeline Angels also participated in the round. The round also saw participation from a handful of individual investors including Robert F. Smith, Kevin Durant, Chris Paul, Baron Davis, Sterling K. Brown, Ryan Bathe, CC Sabathia and Amber Sabathia.

Goalsetter launched in 2019 out of the Entrepreneurs Roundtable Accelerator. Founded by Tanya Van Court, who lost over $1 million in the 2001 bubble burst, the platform teaches financial literacy to children of all ages, helping them learn economic concepts, lingo and the principles of financial health.

After long stints at Nickelodeon and ESPN, Van Court understands deeply how kids learn and what keeps their attention. She vowed to make sure that her children were never ignorant of what it takes to protect their wealth and create more.

The app also allows parents to give allowances through the app, and even pay out their own specified amount for every quiz question the kid gets right in the app. Plus, family and friends can give “goal cards” instead of gift cards, helping kids save for the things they really want in the future.

The company recently launched a debit card for kids, as well, letting parents control the way the card is used and even lock it until their kids have passed the week’s financial literacy quiz.

Families save an average of $120 a month on the platform, and Van Court says that two families saved over $10,000 in the last year.

The company is also launching a massive campaign next week for Black History Month with the goal of closing the wealth gap among Black children and kids of color through financial education.

“It’s one thing to put a debit card into your teenager’s hands,” said Van Court. “That’s great. That teaches them how to spend money. It’s another thing to teach kids the core concepts about how to build wealth, or to know the difference between putting your money into an investment account, or putting your money into a CD versus a mutual fund versus a savings account. We teach what interest rates are, and what compound interest means. Our focus is on financial education because it’s not enough to teach kids how to spend.”

Goalsetter raised $2.1 million in 2019 and now adds this latest round to that for a total of $6 million raised. This latest round was oversubscribed, giving Van Court the opportunity to be super selective about her investors.

“Every single one of these investors has a demonstrated commitment prior to people marching in the streets in April, to social justice and to investing in diversity and inclusion initiatives and people,” said Van Court. “Every single one of them. That was really important because we were oversubscribed and we had the luxury of being able to pick who our investors were. Every one of the investors that we invited to our table were investors who we knew invited folks who look like us in 2019 and 2018 and 2017 to their table.”

Virgin Orbit isn’t slowing down after joining the exclusive club of small launch companies that have made it to orbit — the company just announced that it’s flying a payload on behalf of the Royal Netherlands Air Force (RNAF). This is the first-ever satellite being put up by the Dutch Ministry of Defense, and it’s a small satellite that will act as a test platform for a number of different communications experiments.

The satellite is called BRIK-II — not because it’s the second of its kind, but rather because it’s named after Brik, the first airplane ever owned and operated by the RNAF. This mission is one of Virgin Orbit’s first commercial operations after its successful test demonstration and will fly sometime later this year. It’s also being planned as a rideshare mission, with other payloads expected to join — likely from the U.S. Department of Defense, which is working with Virgin Orbit’s dedicated U.S. defense industry subsidiary VOX Space on planning what they’ll be adding to the mission load out.

This upcoming mission is actually a key demonstration of a number of Virgin Orbit’s unique advantages in the launch market. For one, it’ll show how the U.S. DOD and its ally defense agencies can work together in the space domain when launching small communications satellites. Virgin Orbit is also going to use the mission as an opportunity to show off its “late-load integration” capabilities — effectively, how it can add a payload to its LauncherOne rocket just prior to launch.

For this particular flight, there’s no real reason to do a late-load integration, since there’s plenty of lead time, but part of Virgin’s appeal is being able to nimbly add satellites to its rocket just before the carrier jet that flies it to its take-off altitude leaves the runway. Demonstrating that will go a long way to help illustrate how it differentiates its services from others in the launch market, such as Rocket Lab and SpaceX.

A startup called BlackCart is tackling one of the key challenges with online shopping: an inability to try on or test out the merchandise before making a purchase. That company, which has now closed on $8.8 million in Series A funding, has built a try-before-you-buy platform that integrates with e-commerce storefronts, allowing customers to ship items to their home for free and only pay if they choose to keep the item after a “try on” period has lapsed.

The new round of financing was led by Origin Ventures and Hyde Park Ventures Partners, and saw participation from Struck Capital, Citi Ventures, 500 Startups and several other angel investors, including Christian Sullivan of Republic Labs, Dean Bakes of M3 Ventures, Greg Rudin of Menlo Ventures, Jordan Nathan of Caraway Cookware and First National Bank CFO Nick Pirollo, among others.

The Toronto-based company last year had raised a $2 million seed.

BlackCart founder Donny Ouyang had previously founded online tutoring marketplace Rayku before joining a seed-stage VC fund, Caravan Ventures. But he was inspired to return to entrepreneurship, he says, after experiencing a personal problem with trying to order shoes online.

Realizing the opportunity for a “try before you buy” type of service, Ouyang first built BlackCart in 2017 as a business-to-consumer (B2C) platform that worked by way of a Chrome extension with some 50 different online merchants, largely in apparel.

This MVP of sorts proved there was consumer demand for something like this in online shopping.

Ouyang credits the earlier version of BlackCart with helping the team to understand what sort of products work best for this service.

“I think, in general, for try-before-you-buy, anything that’s moderate to higher price points, lower frequency of purchase, where the customer makes a considered purchase decision — those perform really well,” he says.

Two years later, Ouyang took BlackCart to 500 Startups in San Francisco, where he then pivoted the business to the B2B offering it is today.

The startup now provides a try-before-you-buy platform that integrates with online storefronts, including those from Shopify, Magento, WooCommerce, Big Commerce, SalesForce Commerce Cloud, WordPress and even custom storefronts. The system is designed to be turnkey for online retailers and takes around 48 hours to set up on Shopify and around a week on Magento, for example.

BlackCart has also developed its own proprietary technology around fraud detection, payments, returns and the overall user experience, which includes a button for retailers’ websites.

Because the online shoppers aren’t paying upfront for the merchandise they’re being shipped, BlackCart has to rely on an expanded array of behavioral signals and data in order to make a determination about whether the customer represents a fraud risk. As one example, if the customer had read a lot of helpdesk articles about fraud before placing their order, that could be flagged as a negative signal.

BlackCart also verifies the user’s phone number at checkout and matches it to telco and government data sets to see if their historical addresses match their shipping and billing addresses.

After the customer receives the item, they are able to keep it for a period of time (as designated by the retailer) before being charged. BlackCart covers any fraud as part of its value proposition to retailers.

BlackCart makes money by way of a rev share model, where it charges retailers a percentage of the sales where the customers have kept the products. This amount can vary based on a number of factors, like the fraud multiplier, average order value, the type of product and others. At the low end, it’s around 4% and around 10% on the high end, Ouyang says.

The company has also expanded beyond home try-on to include try-before-you-buy for electronics, jewelry, home goods and more. It can even ship out makeup samples for home try-on, as another option.

Once integrated on a website, BlackCart claims its merchants typically see conversion increases of 24%, average order values climb by 51% and bottom-line sales growth of 27%.

To date, the platform has been adopted by more than 50 medium-to-large retailers, as well as e-commerce startups, like luxury sneaker brand Koio, clothing startup Dia&Co, online mattress startup Helix Sleep and cookware startup Caraway, among others. It’s also under NDA now with a top-50 retailer it can’t yet name publicly, and has contracts signed with 13 others that are waiting to be onboarded.

Soon, BlackCart aims to offer a self-serve onboarding process, Ouyang notes.

“This would be later, end of Q2 or early Q3,” he says. “But I think for us, it will still be probably 80% self-serve, and then larger enterprises will want to be handheld.”

With the additional funding, BlackCart aims to shift to paying the merchant immediately for the items at checkout, then reconciling afterwards in order to be more efficient. This has been one of merchants’ biggest feature requests, as well.

The funding will also allow BlackCart to expand its remotely distributed 10-person team to around 50 by year-end, including engineers, product specialists, customer support staff and sales.

More broadly, it aims to quickly capitalize on the growth in the e-commerce market, driven by the COVID-19 pandemic.

“[We want to] take advantage of the favorable macroeconomic situation to scale as quickly as possible,” Ouyang explains. “We’re hoping to get to around $250 million in transactions through our platform by the end of 2021. And this would be driven by both engineering and sales hires, and just pushing it up,” he says.

Longer-term, Ouyang envisions adding more consumer-facing features to BlackCart’s platform, like on-demand returns where a courier comes to the house to pick up your return, for example.

“Our firm is excited to partner with BlackCart as it makes try-before-you-buy the standard in online shopping,” said Prashant Shukla of Origin Ventures, who now sits on BlackCart’s board, as result of the new financing. “Its underwriting technology provides merchants with peace of mind, and its best-in-class consumer experience delivers significant sales and conversion lifts. Digital Native generations expect to be able to shop online exactly as they would in a retail store, and BlackCart is the only company providing this experience,” he adds.

Payments for consumers have made a huge shift to the online world in the last year, a time when they have moved more of their purchasing to the internet to minimize in-person transactions in the midst of a virus-based health pandemic. Today, a startup that has built a similar kind of payments infrastructure — but specifically targeting small businesses and the payments they need to make — has raised a big round of funding to double down on its own slice of the market.

Melio, which provides a platform for SMBs to pay other companies electronically using bank transfers, debit cards or credit — along with the option of cutting paper checks for recipients if that is what the recipients request — has closed $110 million in funding at a valuation that the company said was now $1.3 billion.

The company’s focus to date has been building and growing a system to replace the paper invoices, snail mail and bank transfers that might take multiple days to clear and still dominate payments for small and medium enterprises. The company was founded in Israel but has to date focused a lot of its attention on the U.S. market, where it saw growth of 2,000% last year (it doesn’t disclose the actual number of customers that it has). CEO Matan Bar said that this is where the company will continue to focus for now.

This latest round was led by Coatue and also included participation from previous backers Accel, Aleph, Bessemer Venture Partners, Corner Ventures, General Catalyst and Latitude. It caps off a huge year for the company, which raised $130 million in 2020 (and $256 million overall), with other recent backers including others like American Express and Salesforce.

The latter two are strategic backers: AmEx is one of the options given to customers paying other businesses through Melio’s rails.

Salesforce, meanwhile, is not yet an integration partner, but Bar — who co-founded the company with Ilan Atias and Ziv Paz (respectively CTO and COO) — described its interest as similar to that of Intuit-owned accounting giant QuickBooks. QuickBooks connects with Melio so that users of one can seamlessly import activity from one platform into the other, and Bar hinted that there is an interest from the CRM giant, which provides a number of other business and productivity tools, to work together in a similar fashion.

Bar came to found Melio on the heels of years of experience in peer-to-peer payments focused on the consumer market. He previously ran PayPal’s business unit focused on peer-to-peer payments, which included Venmo in the U.S. and equivalent services (not branded Venmo) outside of it. He came to PayPal, which at the time was a part of eBay, through eBay’s acquisition of his previous startup, a social gifting platform called The Gifts Project.

As Bar describes it, PayPal “was the first time I experienced what the digitization of payments looked like as they were shifting from cash to mobile payments. Consumers were buying online instead of at brick-and-mortar stores, and even when they were getting physical items, they were paying online.” What he quickly realized, though, was that the same was not applying to the businesses themselves.

“There are still trillions being transferred via paper checks in the B2B space,” he said, with paper invoices and paper checks dominating the market. “The space is way behind other payment areas. I would be talking with SMB owners who would be using fancy Square or PayPal point of sale devices, but when they had to pay, say, a coffee bean supplier, they stuffed checks in envelopes. That’s very intriguing obviously, and it triggered our interest.”

Interestingly this isn’t a problem that hasn’t been identified before, but many of the solutions, such as Bill.com or Tipalti, are really designed for larger enterprises. “They are too overwhelming for SMBs,” he said. “Even their names say it all: Accounts Payable Automation Solutions. It’s about tens of thousands of payments, and accounting departments, not an order from a wine shop.”

That formed the basis of what the startup started to build, which has been, in essence, a very pared-down version of these other payments platforms with SMB needs in mind.

The first of these is a focus on cashflow, Bar said. Specifically, the Melio platform lets payments be made automatically but businesses themselves can delay the timing on when money actually leaves their accounts: “Buyers keep cash longer, vendors get paid faster,” is how Bar describes it.

This is in part enabled by the tech that Melio has built, which builds in risk assessment, as well as fraud management, and balances payments across the whole of its platform to send money in and out without the need for the company to raise debt to back up those payments.

“We leverage data to assess risk,” said Bar. “Every dollar in this round is going towards R&D and sales and marketing. We don’t need the capital in our model.” It also works with the likes of AmEx and its own credit system in cases where people are paying on credit, but Bar also noted that currently most of the transactions that happen on its platform are not credit based. Most are bank transfers.

While others like Stripe have also built B2B payment services to pay out suppliers, Bar points out that what it has created is unique in that it is a standalone service: no need to be a part of Stripe’s wider ecosystem of services to use this if you already use another payments provider you are happy with.

Given that focus on cashflow for SMBs, what’s also interesting is the low bar to entry that Melio has built into its platform. Specifically, the service is completely free for businesses to use — that is, no fee is charged — as long as companies are making bank transfers or using debit cards. It takes a 2.9% fee when a business elects to use a credit card for a transaction (and even then Melio says that the fee is tax deductible in the U.S.).

He noted that one of the reasons that Melio has to date targeted the U.S. market is because of how antiquated it still is. “The average bank transfer still takes three to four business days, if you don’t want to take any risk,” he said. “We have developed models to do it same day. We take the risk that the buyer might not have the funds in that account but think about how that impacts cash flows. With Melio you still pay in three days, but money will be delivered the same day. That is how you can keep cash longer, without a payments risk.”

Targeting a market that remains very underserved at a time when so much has gone virtual in payments is why investors are also interested.

“Melio has identified both the opportunity and duty to help small businesses manage their finance remotely and improve cash flow, in normal times as well as during this crisis, as physical payments supply chains are interrupted and overwhelmed,” said Michael Gilroy, a general partner at Coatue, in a statement. “Going digital is the only way small businesses can compete against larger rivals and stay ahead of the curve.”

In terms of more product development, Bar said that the company has received “a lot of incoming interest from partners to enable B2B payments within their products on their product,” similar to what QuickBooks is doing and Salesforce is likely to do. “Payments are contextual and they want to enable a quicker way to get there. The SMB is underserved. And yes, from a unit economics it’s much better to go after Nike. But this is also to really create some financial inclusion. We want to enable services for the small shop that the big guys already have.”

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

This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here — and make sure to check out last week’s main ep, which was super-packed and a real treat.

This morning the news was heavy, so here’s your rundown to get you into the show:

New funds for Clubhouse! TechCrunch has the story here, but I wonder why the app needs more money this soon. You can lay your own bets on how it performs, but at least it’s fun to see consumer stuff get funded.Postmates staff are heading for the exits, and there’s an IPO coming up that is both huge and under your radar.Chamath is doing the SPAC thing again. Again. And Taboola is also going public via a SPAC.IMVU raised $35 millionPula raised $6 millionWolt raised $530 millionAnd the hungry SPAC market is only going to get more busy in the coming months. Brace yourself, we are merely a boat on the waves of the news. And this is the latest squall.

Hugs, and we are back Thursday, if not before. Stay safe!

In a year marred by the coronavirus pandemic, it seems that early-stage startups on the African continent are continuing to see some notable growth, both in terms of their business and from investors looking to back them. 

Microtraction, an early-stage venture capital firm based in Lagos, Nigeria, saw funding nearly quadruple for its portfolio.

In a review of the year published last week, the firm noted that 21 companies in its portfolio have raised more than $33 million in funding. This represents nearly four-fold growth over a year ago, when its portfolio raised $6 million (and just $3 million in 2018). The companies’ combined valuation stands at more than $147 million, according to the firm.

Founded by Yele Bademosi in 2017, Microtraction arrived on the continent’s early-stage investment scene with all intent to be “the most accessible and preferred source of pre-seed funding for African tech entrepreneurs.”

Bademosi, who returned to Nigeria from the U.K. in 2015, worked as the general manager for Starta Africa, an online community for African tech entrepreneurs. After his stint there, he saw the need to plug the gap of early-stage funding in Nigeria and the continent at large with Microtraction.

Microtraction does not specify the size of its fund, but what is more clear is that it has attracted a great deal of attention and has built a strong network in part because of who backs it. 

Michael Seibel, the CEO of Y Combinator, is a global advisor and an investor in the firm, and so is Andy Volk, the head of ecosystem for Google Sub-Saharan Africa. Other investors include Pave Investments and U.S.-based angel investor Chris Schultz.

Being entrepreneurs in the past, some of these investors know what it takes to build a startup in the U.S. But it’s completely different in Africa. With no on the ground knowledge as to which startups to fund but an interest to do so, for portfolio diversification and other personal reasons, Microtraction and a few other early-stage investors present the best bets to accomplish this goal.

At first, Microtraction’s standard deal was to offer portfolio startups $15,000 in exchange for a 7.5% equity. But as a sign of how the market is firming up, that changed last year, and now the firm invests $25,000 for 7% equity.

Microtraction revealed that it accepted more than 500 applications from startups in Nigeria, Ghana, Zambia and Mauritius in its first full year of operation (though, just eight of those companies got investments).

The introductory batch was all Nigerian: four fintech startups — Cowrywise, Riby, Wallets Africa and ThankUCash; a crypto-exchange startup, BuyCoins; a SaaS platform, Accounteer; an edtech startup, Schoolable; and healthtech startup, 54gene.

2019 saw the local VC firm invest in six companies. This time there was a representative outside Nigeria — Ghanaian fintech startup Bitsika. The Nigerian startups included social commerce startup Sendbox; events startup Festival Coins; and communications-as-a-service platform Termii. The rest were unannounced.

Half of its portfolio companies are backed by YC and other global accelerators

Last year (the one this latest review covers), Microtraction announced seven startups. The latest selection includes Nigerian fintech startups Evolve Credit and Chaka; edtech startup Gradely; bus-hailing platform PlentyWaka; and Kenyan credit data marketplace CARMA.

Of the total investments raised in 2019 and 2020, 54gene contributed more than half of those numbers by raising $4.5 million in seed and a $15 million Series A investment. With an ingenious solution to solve the underrepresentation of African genomics data in global genomics research, 54gene got accepted into the winter batch in January 2019, the same month it officially launched.

Excluding 54gene, there were six other African-focused startups in the YC W19 batch. Two out of the six, Schoolable and Wallets Africa, were Microtraction portfolio companies. Others accepted into YC before and after include BuyCoins, Cowrywise, Termii and two unannounced startups.

Microtraction-backed ThankUCash and a second unannounced startup have also joined cohorts at 500 Startups. On the other hand, Festival Coins is the only startup to be selected into Google for Startups Accelerator. With all accounted for, 11 out of the 21 startups are either backed by Y Combinator, 500 Startups or Google for Startups.

Getting into these global accelerators is a surefire way to receive follow-up investment, ranging from $125,000 to $150,000. From the outside in, startups see Microtraction and other early-stage VC firms like Ventures Platform as a means to that end. There have also been arguments that these firms build startups to be “YC or any global accelerator ready.”

However, Dayo Koleowo, a partner at Microtraction alongside Chidinma Iwueke, debunks it saying there’s no formula behind the numbers we see. He believes YC and other accelerators share the same fundamentals with Microtraction, which revolves around the team, the market and traction.

“We love super technical teams that understand the industry they are in and are likely to succeed without us. We are always looking for companies that are solving huge problems that a lot of people face,” he told TechCrunch. “Also, the tech and startup world moves fast, so we like teams who understand that and can show in real-time that they can execute. I believe that these global accelerators look for these same things.”

Typically, YC and other accelerators may perform extended due diligence and risk assessments before cutting cheques for any African startup without a local backer. Koleowo points out that this might be why Microtraction portfolio companies get accepted quicker. “The icing on the cake is that there is a level of de-risking that has been done by Microtraction and other local investors on the ground before these global accelerators step in,” he added.

That said, there’s no denying the significance of Microtraction’s advisory board in playing a part as to why half the firm’s portfolio are in global accelerators. Besides the names mentioned earlier, some of its past advisors included Lexi Novitske, former PIO at Singularity Investments; Dotun Olowoporoku, VC at Novastar Ventures; and Monique Woodward, ex-venture partner at 500 Startups.

And with the growing trends of globalization, plus the acceptance of a more decentralised approach to building and operations in the tech industry because of COVID-19, it’s a trend that might continue for a while.

Yac, the Orlando, Florida-based startup that’s digitizing voice messages for remote offices, has raised $7.5 million in a new round of funding.

The company’s service has garnered enough attention to pick up a pretty sizable new round from investors led by GGV Capital and a return investment from the Slack Fund.

Apparently, reinventing voicemail is a multi-million-dollar endeavor.

“The future of meetings will be asynchronous, in your ears and hands-free,” says Pat Matthews, the chief executive and founder of Active Capital, when the company announced its seed round nearly a year ago.

Co-founded by Justin Mitchell, Hunter McKinley and Jordan Walker, Yac was spun out of the digital agency SoFriendly, and was developed as a pitch for Product Hunt’s Maker Festival. The voice messaging service won that startup competition at the event and attracted the interest of Boost VC and its founder, the third-generation venture capitalist Adam Draper.

About six months after that seed round, Yac received outreach from Slack thanks to a referral from another entrepreneur. Throughout their negotiations last year, the teams used Yac to conduct due diligence, according to Mitchell. At the time of the company’s August announcement that Slack had come on to finance the company, Yac had a bit over 5,000 users on its service; it charges per seat, in the same way Slack does.

 

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Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. Click here if you want it in your inbox every Saturday morning.

Ready? Let’s talk money, startups and spicy IPO rumors.

We’re shaking things up this weekend in the newsletter, focusing on a series of larger themes and news items instead of having a few discrete sections. Why? Because there was too much to fit into our usual format. If you were a fan of the original layout, we’ll be back to it next week.

Today we’re talking Coinbase’s growth, how Juked.gg tapped the equity crowdfunding market, a noodle or two on the a16z media game, Talkspace’s SPAC, VC and founder predictions for 2021, and where’s the right place to found a company.

Sound good? Let’s get into it!

Coinbase’s deposits scale ahead of IPO

Thanks to Kazim Rizvi of Drop, parent company to Cardify which provides data on consumer spending, we have a look into how quickly deposits have scaled at American cryptocurrency platform Coinbase. As Coinbase has filed to go public, and we’re eagerly anticipating its eventual S-1 filing, we were stoked to get a directional look at how quickly consumer interest was growing for the assets it helps folks buy.

They are scaling rapidly. Using the first week of January 2019 as a baseline, by the last week of December 2020 deposits and withdrawals from Coinbase had grown by more than 12x apiece. That’s staggering growth, and while the data is somewhat volatile — and we’d treat it as directional instead of exact — on a week-to-week basis, it underscores how well companies like Coinbase may be performing as Bitcoin booms once again, bringing in more trading interest and consumer demand.

The Cardify data also indicates a multiplying of new customer acquisition at Coinbase over the same time period, and deposits scaling alongside the price of Bitcoin. As Bitcoin has topped the $30,000 mark recently, sharply higher than in recent quarters, the price gains may have helped Coinbase not only a solid Q4 2020, but perhaps put it on a path for a bonkers Q1 2021 as well.

If we were 10/10 excited about the Coinbase S-1 before this dataset, we’re now a heckin’ 12/10.

Equity crowdfunding seven-figures for esports content

Esports is super cool and if you don’t agree, you are incorrect. But it doesn’t matter if you or I are right or not on the question, as the market has largely decided that competitive gaming is worth time, attention and investors’ money.

The proliferation of esports leagues and games and the like has led to a decidedly fragmented universe, however, lacking a central hub akin to what ESPN provides the world of traditional sports.

But not to worry, Juked.gg just raised capital to build a content hub for esports. This means that old folks like myself can still find out when tournaments are happening, and enjoy a dabble of League of Legends or Starcraft 2 pro play when we can, sans hunting around the internet for dates and times.

Juked.gg went through 500 Startups (more on its class here), catching our eye at the time as a neat nexus for esports-related content. Now flush with a little over $1 million that it raised on the Republic platform, it has big plans.

The Exchange spoke with Juked.gg’s co-founder and CEO Ben Goldhaber about his company’s performance to date. Per Goldhaber, Juked has scaled from 500 users when it launched in late 2019, to 50,000 in December of 2020. Ahead, Juked may invest more in journalism, more into social features, and more into user-generated content. We’ll have more on Juked as it gets its vision built, now powered by over a million dollars from 2,524 investors, each betting that the startup is building the right product to help unify a growing, if distributed, entertainment category.

The a16z media push

To preserve our collective sanity, I’m not going to bang on at length here, but building out content at a VC firm is not new. Hell, how long ago did the First Round Review launch? What a16z appears to have in mind is different in scale, not substance. We chatted about it on Equity this week, in case you need more on the matter.

Talkspace’s maybe-not-stupid SPAC

While it is enjoyable to mock SPACs, featuring as many do companies that are nascent to say the least, not all SPAC-led debuts are as silly as the rest. This is the case with the impending Talkspace deal, the deck for which you can read here.

What matters is this set of charts:

Look at that! Historical revenue growth! Improving gross margins! Rising gross profit!

You may argue that the company is not really worth an enterprise value of $1.4 billion that it will sport after its combination with Hudson Executive Investment Corp., but, hey, at least it’s a real business.

How VCs and founders see 2021 differently

Seed VC NFX dropped a VC and founder survey the other day that I’ve been meaning to share with you. You can read the whole thing here, if you’d like.

I have two pull-outs for you this morning:

VCs are more bullish on the economy than founders, with around 30% of founders expecting consumer spending to stay flat or decline, positions that only around 17% of VCs agreed with.And when it comes to leaving the Bay Area — yes, that chestnut again — 35% of founders have itchy feet, while just 20% of investors are similarly inclined. I think this is because the latter have houses in the Bay Area while most founders do not. But it should temper the view that all the money and talent are leaving. They aren’t.

There’s no place like no place

Initialized Capital put together some data on where founders think it is best to found a company. In 2020, nearly 42% of surveyed founders said the Bay Area. By 2021 that number had slipped to a little over 28%, with a plurality of 42% indicating that a distributed company is the best way to go.

I hear about this a lot from early-stage founders. They are often building what I call micro-multinationals, small companies that have a few employees in one country, and then a handful in others. Making that setup work is going to be a hotspot for HR software I reckon.

Regardless, the requirement of founding companies in the Bay Area is kaput. The advantages of founding there will linger much longer.

Coming up!

Coming up on The Exchange next week: The first entries of our new $50 million ARR series, featuring interviews with Assembly, SimpleNexus, Picsart, OwnBackup and others. And we have some $100 million ARR interviews in the can, as well.

Finally, to keep the The Powers That Be happy, The Exchange covered some neat stuff this week, including American VC results, fintech and unicorn venture capital, European and Asian venture capital results, how the IPO market is even more bonkers than you thought, and notes on what Qualtrics may be worth when it goes public.

Hugs, and let’s all get a nap in,

Alex