The pandemic has just pushed edtech mainstream, but language-learning startup Duolingo had already spent the past decade figuring out how to build a successful edtech app.

In our latest installment of the EC-1 series, Natasha Mascarenhas goes deep with the company to understand how it found product-market fit, then figured out how to grow like a consumer tech startup and monetize like a SaaS startup. After a record 2020, the Pittsburgh-based company also opened up about its plans for the future, including a focus on speaking a new language (in addition to listening, reading and writing).

Here’s more from Natasha about what’s inside:

Part 1: Origin story “How a bot-fighting test turned into edtech’s most iconic brand, Duolingo” (3,300 words/13 minutes) — looks at how Guatemalan immigrant entrepreneur Luis von Ahn pivoted from fighting bot attacks on login screens with squiggly text to building one of edtech’s great success stories.Part 2: Product-led growth strategy “The product-led growth behind edtech’s most downloaded app” (3,000 words/12 minutes) — analyzes the tactics and tradeoffs that an edtech company has to evaluate as it grows from thousands to 500 million registered learners.Part 3: Monetization “How Duolingo became fluent in monetization” (2,800 words/11 minutes) — examines how Duolingo experimented with a variety of different business models to match its unique community, and why it chose subscription in the end.Part 4: New initiatives and future outlook “Duolingo can’t teach you how to speak a language, but now it wants to try” (3,100 words/12 minutes) — explores how Duolingo is launching new business lines, its chances for success, and how the company is attempting to expand its main product from basic language fluency to mastery while adding speaking skills to the mix.

Want this kind of coverage on a different company or sector. Check out our ever-growing list of EC-1s, which include recent profiles of Klaviyo, StockX, Tonal and more.

Thanks for reading!

Eric Eldon
Managing Editor, Extra Crunch (subbing in for Walter again)

Amid the IPO gold rush, how should we value fintech startups

If there has ever been a golden age for fintech, it surely must be now.

As of Q1 2021, the number of fintech startups in the U.S. crossed 10,000 for the first time ever — well more than double that if you include EMEA and APAC. There are now three fintech companies worth more than $100 billion (Paypal, Square and Shopify) with another three in the $50 billion-$100 billion club (Stripe, Adyen and Coinbase).

Yet, as fintech companies have begun to go public, there has been a fair amount of uncertainty as to how these companies will be valued on the public markets. This is a result of fintechs being relatively new to the IPO scene compared to their consumer internet or enterprise software counterparts. Furthermore, fintechs employ a wide variety of business models: Some are transactional, while others are recurring or have hybrid business models.

And fintechs now have a multitude of options in terms of how they choose to go public. They can take the traditional IPO route, pursue a direct listing or merge with a SPAC. Given the multitude of variables at play, valuing these companies and then predicting public market performance is anything but straightforward.

How to attract large investors to your direct investing platform

Many fintech startups have tried to become a market-maker between investors and investment opportunities.

However, the challenge with this two-sided market is: How do you get the investors to show up?

It’s hard enough to get retail investors, but family offices and other large check writers are even more challenging to lure.

Analytics as a service: Why more enterprises should consider outsourcing

With an increasing number of enterprise systems, growing teams, a rising proliferation of the web and multiple digital initiatives, companies of all sizes are creating loads of data every day.

This data contains excellent business insights and immense opportunities, but it has become impossible for companies to derive actionable insights from this data consistently due to its sheer volume.

The analytics-as-a-service (AaaS) market is expected to grow to $101.29 billion by 2026. Organizations that have not started on their analytics journey or are spending scarce data engineer resources to resolve issues with analytics implementations are not identifying actionable data insights.

Through AaaS, managed services providers (MSPs) can help organizations get started on their analytics journey immediately without extravagant capital investment.

MSPs can take ownership of the company’s immediate data analytics needs, resolve ongoing challenges, and integrate new data sources to manage dashboard visualizations, reporting and predictive modeling — enabling companies to make data-driven decisions every day.

Will fintech unicorn Flywire’s proposed IPO reach escape velocity?

Flywire, a Boston-based magnet for venture capital, filed to go public Monday.

Flywire is a global payments company that attracted more than $300 million as a startup, according to Crunchbase, most recently raising a $60 million Series F last month. We don’t have its most recent valuation, but PitchBook data indicates that the company’s February 2020, $120 million round valued Flywire at $1 billion on a post-money basis.

So what we’re looking at here is a fintech unicorn IPO. A great way to kick off the week, to be honest, though we thought that Robinhood would be the next such debut.

Fintech venture capital activity has been hot lately, which makes the Flywire IPO interesting. Its success or failure could dictate the pace of fintech exits and fintech startup valuations in general, so we have to care about it.

First, what does Flywire do and with whom does it compete? Then, a closer look at its financial results as we hope to get our hands around its revenue quality, aggregate economics and growth prospects.

After that, we’ll discuss valuations and which venture capital groups are set to do well in its flotation.

As Q2’s lull fades, unicorn IPOs are revving up

If it feels like IPO news slowed for a few weeks at the start of the second quarter, your gut is correct. Investors previously told The Exchange that the first, third and fourth quarters of 2021 would be hot periods for public debuts, but that Q2 would be slower. Their argument revolved around reporting cadences and how long it takes for certain periods of accounting work to be completed.

So we weren’t surprised when the second quarter’s IPO cycle began to feel a bit soft compared to the rapid-fire first quarter. And, as we’ve all heard in recent days, the great SPAC rush is slowing.

But that hasn’t stopped a number of firms from defying expectations and going public all the same.

SAP CEO Christian Klein looks back on his first year

SAP CEO Christian Klein was appointed co-CEO with Jennifer Morgan in October 2019. He became sole CEO just as the pandemic was hitting full force across the world last April.

He was put in charge of a storied company at 39 years old. By October, its stock price was down and revenue projections for the coming years were flat.

That is definitely not the way any CEO wants to start their tenure, but the pandemic forced Klein to make some decisions to move his customers to the cloud faster. That, in turn, had an impact on revenue until the transition was completed. While it makes sense to make this move now, investors weren’t happy with the news.

There was also the decision to spin out Qualtrics, the company his predecessor acquired for $8 billion in 2018. As he looked back on the one-year mark, Klein sat down with TechCrunch to discuss all that has happened and the unique set of challenges he faced.

Forerunner’s Eurie Kim and Oura’s Harpreet Rai discuss betting on consumer hardware

Forerunner General Partner Eurie Kim and Oura CEO Harpreet Rai joined us on Extra Crunch Live to discuss the process of taking Oura to the next level — and beyond — as the product found a second (or third) life during the pandemic through partnerships with sports leagues like the NBA.

And as we’re wont to do, we asked the pair to take a look at a handful of user-submitted pitch decks.

How to break into Silicon Valley as an outsider

Domm Holland, co-founder and CEO of e-commerce startup Fast, appears to be living a founder’s dream.

His big idea came from a small moment in his real life. Holland watched as his wife’s grandmother tried to order groceries, but she had forgotten her password and wasn’t able to complete the transaction.

He built a prototype of a passwordless authentication system where users would fill out their information once and would never need to do so again. Within 24 hours, tens of thousands of people had used it.

Shoppers weren’t the only ones on board with this idea. In less than two years, Holland has raised $124 million in three rounds of fundraising, bringing on partners like Index Ventures and Stripe.

Although the success of Fast’s one-click checkout product has been speedy, it hasn’t been effortless.

For one thing, Holland is Australian, which means he started out as a Silicon Valley outsider.

Holland talks about how he built his network, why it’s important — not just for fundraising but for building the entire business — and how to avoid the mistakes he sees new founders make.

Revel’s Frank Reig shares how he built his business and what he’s planning

It’s only been three years since they hit the streets, but Revel’s blue electric mopeds have already become a common sight in New York, San Francisco and a growing number of U.S. cities.

However, Revel founder and CEO Frank Reig set his sights far beyond building a shared moped service.

In fact, since the beginning of 2021, Revel has launched an e-bike subscription service, an EV charging station venture and an all-electric rideshare service driven by a fleet of 50 Teslas.

We caught up with Reig to talk about what he learned from building the company, how Revel’s business strategy has evolved and what lies ahead.

Brex, Ramp tout their view of the future as Divvy is said to consider a sale to Bill.com

Divvy, a Utah-based corporate spend unicorn, is considering selling itself to Bill.com for a price that could top $2 billion. For the fintech sector, it’s big news.

Corporate spend startups including Ramp and Brex are raising rapid-fire rounds at ever-higher valuations and growing at venture-ready cadences. Their growth and the resulting private investment were earned by a popular approach to offering corporate cards, and, increasingly, the group’s ability to build software around those cards that took into account a greater portion of the functionality that companies needed to track expenses, manage spend access and, perhaps, save money.

It makes sense to see Bill.com decide to take on the yet-private corporate spend startups that are playing the field; why not absorb a growing customer base and fend off competition in a single move?

To get a better handle on how the startups that compete with Divvy feel about the deal, TechCrunch reached out to both Ramp CEO Eric Glyman, and Brex CEO Henrique Dubugras.

4 strategies for building a digital health unicorn

It’s an entrepreneur’s market in digital health today, with startups raising record-breaking funding at soaring valuations and debuting on public markets to eager investors.

The massive influx of capital to healthcare should not be surprising; the pandemic has made it starkly clear that digital health is the future of healthcare.

To that end, we should anticipate additional healthcare exits worth more than $1 billion in the near term. Which again, is great for entrepreneurs — as long as they understand how hard it is to build a unicorn in healthcare. Today, becoming a unicorn requires founders who are long on vision and operational experience.

During the pandemic, lots of investors jumped in to invest in digital health for the first time. But we’ve been investing for more than a decade.

Here are four instrumental strategies to building a unicorn in digital health that we know work.

One CMO’s honest take on the modern chief marketing role

There’s no shortage of commentary around the chief marketing officer title these days, and certainly no lack of opinions about the role’s responsibilities and meaning within a company.

There’s a reason for that. CMO is the shortest tenured C-suite role — the average tenure of a CMO is the lowest of all C-suite titles at 3.5 years.

That’s because the chief marketing officer’s role is increasingly complex. Qualifications require broad, strategic thinking while also maintaining tactical acumen across several functions. There’s a big disparity in what companies expect from CMOs. Some want a strategist with an eye for go-to-market planning, while others want a focus on close alignment with sales in addition to brand awareness, content strategy and lead generation.

Other companies want their CMO to emphasize product marketing and management. Ask 10 CMOs how they define their role and you’ll get 10 different answers.

Here, a tenured CMO shares his honest take on what the role actually means, plus the key attributes of today’s modern CMO.

Despite gains, gender diversity in VC funding struggled in 2020

People have been discussing the importance of expanding opportunities for women in venture capital and startup entrepreneurship for decades. And for some time it appeared that progress was being made in building a more diverse and equitable environment.

The prospect of more women writing checks was viewed as a positive for female founders, a cohort that has struggled to attract more than a fraction of the funds that their male peers manage. All-female teams have an especially tough time raising capital compared to all-male teams, underscoring the disparity.

Then COVID-19 arrived and scrambled the venture and startup scene, creating a risk-off environment during the end of Q1 and the start of Q2 2020. Following that, the venture world went into overdrive as software sales became a safe harbor in the business world during uncertain economic times. And when it became clear that the vaunted digital transformation of businesses large and small was accelerating, more capital appeared.

But data indicate that the torrent of new capital has not been distributed equally — indeed, some of the progress that female founders made in recent years may have eroded.

How to make sure your legal team is M&A ready

When it comes to acquiring or merging a business with another, it’s imperative that decision-makers know why they’re pursuing a deal and its potential impact on the company, good and bad.

Mergers and acquisitions (M&A) may indeed be the best route to success, but there’s a lot of room for problems, and many leaders underestimate the role in-house legal teams can play in mitigating these problems and facilitating progress until they’re locked into a deal.

And that’s when issues become much more difficult to resolve and plans unravel.

While a CEO and board might fully appreciate in-house counsel, it’s equally important the team is supported across a company — from marketing to product development — in order to ensure an efficient closing and successful integration. The best way to do that is by bringing in-house counsel into the process early and often.

Beyond the fanfare and SEC warnings, SPACs are here to stay

The number of SPACs in the deep tech sector was skyrocketing, but a combination of increased SEC scrutiny and market forces over the past few weeks has slowed the pace of new SPAC transactions.

The correction is an inevitable step on the path to mainstreaming SPACs as an alternative to IPOs, but it won’t cause them to go away.

Instead, blank-check vehicles will evolve and will occupy a small and specialized — but important — part of the startup financing landscape.

Qualcomm AI research head Jilei Hou spoke with VentureBeat about the company's investment focus and broader mission.Read More

I received a lot of positive feedback on my post highlighting the 2nd annual Emerge Virtual 5k Run so …

It’s time for the 10th Annual Happy Smackah 5k Fun Run and Walk.  

This would have been the 11th Annual, but due to the COVID-19 pandemic, we canceled the May 2020 event. But, it’s back, this time as a Virtual 5k in 2021. You can run it anytime between May 8th and June 8th. Register online!

Amy and I have been long-time supporters of Happy Smackah – a unique “focused giving” event in our community with a unique origin story.  

Happy Smackah originated as a fundraiser for Dan Cribby, a Longmont educator who initially was diagnosed with strep, woke up days later to shoulder pain, and went to the hospital. He was becoming septic and was diagnosed with necrotizing fasciitis (“flesh-eating disorder”). He was air-lifted to Denver, where, to save his life, they amputated his shoulder, clavicle, and left arm, commonly known as a forequarter amputation. He was kept in a coma and required many surgeries to debride and skin graft his entire torso. 

The community came together to support Dan through his ordeal. While he was enduring his surgeries and treatment, his wide social circle of students, teachers, and parents organized a 5k.  Nearly 700 showed up that day for Dan, and Dan was there too, miraculously, fresh out of the hospital.

The event has continued over the past decade to pay it forward from the Cribby’s. The community nominates an individual facing medical hardship and provides them fundraising support to help with their situation. It also creates a powerful connection through people attending the 5k event, which generally has about 1,000 participants. 

This year’s Smackah is Kaylee Stiffler, a senior at Longmont High School. A caring, clever, and down-to-earth teenager, she was born with congenital nevus, which is essentially a mole or birthmark on any part of the body. Kaylee’s is on her face, covering her cheek, nose, and eye. Four years ago, it started growing, changing, bleeding, and impacting her eyesight. She’s had 14 surgeries in the past five years. The Boulder Daily Camera just wrote a great update on Kaylee and her amazing attitude despite her challenges.  

Together you can help us help Kaylee. Please sign up, find a great place to run or walk a 5K, get outdoors and do it, and prepare for an even better year as we continue to re-open our communities safely.

The post Another Virtual 5K in Boulder As Spring Emerges in Full Bloom appeared first on Feld Thoughts.

In non-aerobatic fixed-wing aviation, spins are an emergency. If you don’t have spin recovery training, you can easily make things worse, dramatically increasing your chances of crashing. Despite the life-and-death consequences, licensed amateur pilots in the United States are not required to train for this. Uncontrolled spins don’t happen often enough to warrant the training.

Startups can enter the equivalent of a spin as well. My startup, Kolide, entered a dangerous spin in early 2018, only a year after our Series A fundraise. We had little traction and we were quickly burning through our sizable cash reserves. We were spinning out of control, certain to hit the ground in no time.

All spins start with a stall — a reduction in lift when either the aircraft is flying too slowly or the nose is pointed too high. In Kolide’s case, we were doing both.

First, we raised too much money too fast. In order to justify the post-money valuation that came with the raise, we set unattainable goals. To make matters worse, we lacked the confidence in our product and strategy, so we developed our solution with hesitancy, underspending in critical areas. As a result, we were flying too steep and too slow. We stalled.

If a stall isn’t corrected promptly, a spin can develop. Flat spins are one of the worst. Once the flat spin starts, there are a number of techniques experienced pilots should perform to recover the aircraft. Nearly all of these techniques require a critical resource, altitude — or, put another way, time.

Just like amateur pilots, startup CEOs don’t receive spin recovery training. When Kolide was spinning out of control, the vast majority of the advice I received was to cut our losses and sell the company or return the money to the investors.

At the time, I didn’t find any promising examples of companies with these same problems successfully recovering; I found only smoldering wreckage. By February 2019, my co-founders departed.

Despite this tell-tale sign of imminent demise, I was ultimately able to recover and put us on track for a great fundraise. Here’s how I recreated the engineering process.

Buying time

Kolide had a lot going for it that enabled me to recover the company, but by far the most important was that we recognized we were in a spin very early, and we had enough cash remaining (and therefore sufficient time) to execute a recovery plan. Even waiting just a few more months would have likely changed the outcome.

Income-share agreements, or ISAs, are a way to bring flexibility to the often steep financial costs of higher education. The financial model allows a student to learn at zero upfront cost, and then pay any costs through a percentage of future income over time.

While the model has caught fire from a variety of trade schools and bootcamps, it’s a hard service to offer at scale. It required underwriting a risky group of people — and that costs money. Just last week, a leader in the ISA space Lambda School laid off 65 employees amid a broader restructuring.

It’s here that a startup like Blair, which graduated Y Combinator in 2019, could be of use. The startup today helps universities finance and offer income-share agreements, or ISAs, to students. The startup has two services: a capital arm (Blair Capital) for which it secured a $100 million debt facility, and a services arm (Blair Servicing) that helps manage the flow of money, which just got a new tranche of capital to expand

The company told TechCrunch that it has raised a $6.3 million round led by Tiger Global. Other investors include Rainfall and 468 Capital, along with angels such as Teachable’s Ankur Nagpal and Vouch’s Sam Hodges. The raise came on top of a $1.1 million pre-seed round, bringing Blair’s total capital raised to date at $7.4 million.

A big portion of the venture capital money will go toward doubling or tripling Blair’s San Francisco team, said CEO Mike Mahlkow. It is especially investing in engineering and product, as well as a few senior hires in finance, compliance and the service side.

Notably, Blair’s eight person team is fully male. The lack of gender diversity, even as an early-stage startup with a handful of employees, could hurt its competitive advantage, recruiting prospects, and performance over time. About 25 percent of the employees are LGBT and 37.5% identify as non-white.

Blair started as a tool to underwrite students with loans that would pay for college, a sum that would eventually be repaid through an income-share agreement. It was similar to an Affirm for Education, where it could help students get access with low or nonexistent upfront costs.

“The model worked very well until March last year,” Mahlkow said. “And then the debt market was fairly dead, so we needed to shift our focus to a more software-like approach.” Now, Blair focuses on building ISA-based programs for schools, and underwrites loans based on certain programs at certain schools that have historical returns.

Most companies use its servicing piece — aka an operating system for offering ISAs — but a number of companies turn to Blair to help finance the costs of offering an ISA. Either colleges and bootcamps finance the ISA themselves and put it on the balance sheet, or they sell it to a company like Blair to get the money upfront and get repaid eventually.

Blair Servicing takes a percent of money from an ISA once a student is employed post-graduation, and Blair Capital takes a base fee plus a portion for the ISA as well.

While the company did not share exact numbers, it did say it has doubled its customers since February, tripling revenue during the same time period. Of course, a bet from the ever-ravenous Tiger Global is a statement. And, unlike his new investor, Mahlkow plans to keep growth sustainable and lean. Long-term, Blair is betting that outcome-based financing could get traction in more than just a savvy startup bootcamp but in how recruiting and placement works in various industries. The startup is in talks with a sports association and large companies that are working on upskilling and reskilling their workforces. Incentives are key in edtech, and Blair speaking that language as an early-stage startup is key as the sector moves more into the spotlight.

Robotic process automation (RPA) has certainly been getting a lot of attention in the last year, with startups, acquisitions and IPOs all coming together in a flurry of market activity. It all seemed to culminate with UiPath’s IPO last month. The company that appeared to come out of nowhere in 2017 eventually had a final private valuation of $35 billion. It then had the audacity to match that at its IPO. A few weeks later, it still has a market cap of over $38 billion in spite of the stock price fluctuating at points.

Was this some kind of peak for the technology or a flash in the pan? Probably not. While it all seemed to come together in the last year with a big increase in attention to automation in general during the pandemic, it’s a market category that has been around for some time.

RPA allows companies to automate a group of highly mundane tasks and have a machine do the work instead of a human. Think of finding an invoice amount in an email, placing the figure in a spreadsheet and sending a Slack message to Accounts Payable. You could have humans do that, or you could do it more quickly and efficiently with a machine. We’re talking mind-numbing work that is well suited to automation.

In 2019, Gartner found RPA was the fastest-growing category in enterprise software. In spite of that, the market is still surprisingly small, with IDC estimates finding it will reach just $2 billion in 2021. That’s pretty tiny for the enterprise, but it shows that there’s plenty of room for this space to grow.

We spoke to five investors to find out more about RPA, and the general consensus was that we are just getting started. While we will continue to see the players at the top of the market — like UiPath, Automation Anywhere and Blue Prism — jockeying for position with the big enterprise vendors and startups, the size and scope of the market has a lot of potential and is likely to keep growing for some time to come.

To learn about all of this, we queried the following investors:

Mallun Yen, founder and partner, Operator CollectiveJai Das, partner and president, Sapphire VenturesSoma Somasegar, managing director, Madrona Venture GroupLaela Sturdy, general partner, CapitalGEd Sim, founder and managing partner, Boldstart Ventures

We have seen a range of RPA startups emerge in recent years, with companies like UiPath, Blue Prism and Automation Anywhere leading the way. As the space matures, where do the biggest opportunities remain?

Mallun Yen: One of the fastest-growing categories of software, RPA has been growing at over 60% in recent years, versus 13% for enterprise software generally. But we’ve barely scratched the surface. The COVID-19 pandemic forced companies to shift how they run their business, how they hire and allocate staff.

Given that the workforce will remain at least partially permanently remote, companies recognize that this shift is also permanent, and so they need to make fundamental changes to how they run their businesses. It’s simply suboptimal to hire, train and deploy remote employees to run routine processes, which are prone to, among other things, human error and boredom.

Jai Das: All the companies that you have listed are focused on automating simple repetitive tasks that are performed by humans. These are mostly data entry and data validation jobs. Most of these tasks will be automated in the next couple of years. The new opportunity lies in automating business processes that involve multiple humans and machines within complicated workflow using AI/ML.

Sometimes this is also called process mining. There have been BPM companies in the past that have tried to automate these business processes, but they required a lot of services to implement and maintain these automated processes. AI/ML is providing a way for software to replace all these services.

Soma Somasegar: For all the progress that we have seen in RPA, I think it is still early days. The global demand for RPA market size in terms of revenue was more than $2 billion this past year and is expected to cross $20 billion in the coming decade, growing at a CAGR of more than 30% over the next seven to eight years, according to analysts such as Gartner.

That’s an astounding growth rate in the coming years and is a reflection of how early we are in the RPA journey and how much more is ahead of us. A recent study by Deloitte indicates that up to 50% of the tasks in businesses performed by employees are considered mundane, administrative and labor-intensive. That is just a recipe for a ton of process automation.

There are a lot of opportunities that I see here, including process discovery and mining; process analytics; application of AI to drive effective, more complex workflow automation; and using low code/no code as a way to enable a broader set of people to be able to automate tasks, processes and workflows, to name a few.

Laela Sturdy: We’re a long way from needing to think about the space maturing. In fact, RPA adoption is still in its early infancy when you consider its immense potential. Most companies are only now just beginning to explore the numerous use cases that exist across industries. The more enterprises dip their toes into RPA, the more use cases they envision.

I expect to see market leaders like UiPath continue to innovate rapidly while expanding the breadth and depth of their end-to-end automation platforms. As the technology continues to evolve, we should expect RPA to penetrate even more deeply into the enterprise and to automate increasingly more — and more critical — business processes.

Ed Sim: Most large-scale automation projects require a significant amount of professional services to deliver on the promises, and two areas where I still see opportunity include startups that can bring more intelligence and faster time to value. Examples include process discovery, which can help companies quickly and accurately understand how their business processes work and prioritize what to automate versus just rearchitecting an existing workflow.

GajiGesa, a fintech startup that provides earned wage access (EWA) and other services for workers in Indonesia, has added strategic investors to help it launch new services and expand its user base. Its new backers include OCBC NISP Ventura, the venture capital arm of one of Indonesia’s largest banks, and the founders of grab-and-go coffee chain Kopi Kenangan. GajiGesa also recently expanded beyond the enterprise space with a new employee management system for SMEs and micro-SMEs. Called GajiTim, the app is aimed at businesses with between five to 100 workers and has gained more than 50,000 active users since it was launched in mid-March.

The amount of GajiGesa’s latest funding was undisclosed. The startup, launched last year by husband-and-wife team Vidit Agrawal and Martyna Malinowska, announced a $2.5 million seed round led by Defy.vc and Quest Ventures in February. Over the last quarter, GajiGesa’s enterprise customer base has doubled to more than 60 companies, representing tens of thousands of workers.

GajiGesa is part of a new wave of startups focused on digitizing the 60 million small businesses in Indonesia. Others include digital bookkeeping apps like BukuWarung and BukuKas for very small businesses, including neighborhood stores; Moka and Jurnal for larger companies; and CrediBook, which focuses on B2B businesses.

Before starting GajiGesa, Agrawal’s experience included serving as Uber’s first employee in Asia, while Malinowska was former product lead at Standard Chartered’s SC Ventures and alternative credit-scoring platform LenddoEFL. They created GajiGesa to give workers an alternative to payday and other high-interest lenders by allowing them to access their earned wages immediately, instead of waiting for semi-monthly or monthly paychecks. (Other companies that offer similar services around the world include Square, London-based Wagestream and Gusto). Based on a recent survey, GajiGesa said more than 75% of workers at companies that use its EWA feature have stopped using informal lenders for short-term needs.

The founders of Kopi Kenangan, the grab-and-go coffee chain backed by investors like Sequoia Capital India, Alpha JWC and Horizons Ventures, have become prolific angel investors in other startups, and their network will help GajiGesa onboard more employers, Agrawal told TechCrunch. Its strategic partnership with Bank OCBC NISP, meanwhile, will help it launch more services.

“One thing we are realizing is that a lot of employees who use the earned wage aspect of GajiGesa are expecting more kinds of products, either a loan product or an insurance product, and that’s where an opportunity arises to partner with a bank,” Agrawal told TechCrunch. About two-thirds of Indonesia’s population is “unbanked,” meaning they don’t have a bank account, so this also gives Bank OCBC NISP a chance to onboard new customers.

“Having a bank as a partner allows us to structure the right interest rate, the right size of products and create a larger impact,” said Malinowska.

GajiGesa does not charge interest rates or require collateral, as users are pre-approved by their employers. Instead, companies can decide to charge fees or offer GajiGesa as part of a benefits package. When a worker withdraws money, GajiGesa asks why they are using the Earned Wage Access feature, and presents that data to companies in an anonymized and aggregated format.

This allows employers to see what needs their work base has and potentially develop new benefits. For example, one of the top three reasons workers use EWA is to pay medical bills. “This is a strong signal to an employer that if you’re trying to retain employees, especially a blue-collar employee, even a basic insurance product might be very attractive for the family,” said Agrawal.

GajiGesa also discovered that many workers, especially in Tier 2 to Tier 3 cities, use its EWA to fund family businesses instead of taking out loans for working capital.

“A lot of families in Indonesia often have one member working in a factory with fixed salaries, and they have micro-industries at home, for example making wafers or stickers to sell in their communities or online,” said Agrawal. “They were going to loan sharks previously or private lenders for very expensive rates so they can run their business, and now the family member who is working in a factory can withdraw capital to support the family business so they don’t need to go to loan sharks.”

GajiTim was launched because the startup saw many inbound inquiries from SMEs, like restaurants, small factories and general stores, that have a lot of part-time workers. These businesses often rely on paper systems, including punch time cards, to track working hours and calculate paychecks. But this often results in disputes, so having an app that counts working hours and earned wages in real time gives workers more transparency and helps companies save time. GajiTim also has access to GajiGesa’s flagship EWA service and allows it to bring more clients onto the platform.

 

SoftBank has picked its bet in China’s flourishing industrial robotics space. Youibot, a four-year-old startup that makes autonomous mobile robots for a range of scenarios, said it has notched close to 100 million yuan ($15.47 million) in its latest funding round led by SoftBank Ventures Asia, the Seoul-based early-stage arm of the global investment behemoth.

In December, SoftBank Ventures Asia led the financing round for another Chinese robotics startup called KeenOn, which focuses on delivery and service robots.

Youibot’s previous investors BlueRun Ventures and SIG also participated in the round. The startup, based in Shenzhen where it went through SOSV’s HAX hardware accelerator program, secured three financing rounds during 2020 as businesses and investors embraced industrial automation to minimize human contact. Youibot has raised more than 200 million yuan to date.

Founded by a group of PhDs from China’s prestigious Xi’an Jiaotong University, Youibot develops solutions for factory automation and logistics management, as well as inspection and maintenance for various industries. For example, its robots can navigate around a yard of buses, inspect every tire of the vehicles and provide a detailed report for maintenance, a feature that helped it rack up Michelin’s contract.

Youibot’s “strongest suits” are in electronics manufacturing and electric power patrol, the company’s spokesperson told TechCrunch.

The startup is also seeing high growth in its semiconductor business, with customers coming from several prominent front-end wafer fabs, which use the firm’s robots for chip packaging, testing and wafer production. Youibot declined to disclose their names due to confidentiality.

Chinese clients that it named include CRRC Zhuzhou, a state-owned locomotive manufacturer; Huaneng Group, a state-owned electricity generation giant; Huawei and more. China currently comprises 80% of Youibot’s total revenues, while overseas markets are rapidly catching up. The firm’s revenues tripled last year from 2020.

Youibot plans to spend the fresh proceeds on research and development in its mobile robots and proprietary software, team building and market expansion.

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As expected, Bill.com is buying Divvy, the Utah-based corporate spend management startup that competes with Brex, Ramp and Airbase. The total purchase price of around $2.5 billion is substantially above the company’s roughly $1.6 billion post-money valuation that Divvy set during its $165 million, January 2021 funding round.

Per Bill.com, the transaction includes $625 million in cash, with the rest of the consideration coming in the form of stock in Divvy’s new parent company.

Bill.com also reported its quarterly results today: Its Q1 included revenues of $59.7 million, above expectations of $54.63 million. The company’s adjusted loss per share of $0.02 also exceeded expectations, with the street expecting a sharper $0.07 per share deficit.

The better-than-anticipated results and the acquisition news combined to boost the value of Bill.com by more than 13% in after-hours trading.

Luckily for us, Bill.com released a deck that provides a number of financial metrics relating to its purchase of Divvy. This will not only allow us to better understand the value of the unicorn at exit, but also its competitors, against which we now have a set of metrics to bring to bear. So, this afternoon, let’s unpack the deal to gain a better understanding of the huge exit and the value of Divvy’s richly funded competitors.

Divvy by the numbers

The following numbers come from the Bill.com deck on the deal, which you can read here. Here are the core figures we care about:

“~$100 million annualized revenue,” calculated using the company’s March results multiplied by 12. That puts Divvy’s March, 2021 revenues at around $8.3 million.“>100% revenue growth YoY,” again calculated by leaning on the company’s March results. So, we can’t be sure that its full Q1 2021 growth was over the 100% mark. Still having its most recent Q1 month generate a three-figure growth rate is good. It also lets us know that the company did no more than $4 million or so in March 2020 revenue.“~$4 billion annualized TPV,” or total payment volume. Again, this is a March number annualized.

This lets us price the company somewhat. Divvy sold for around 25x its current revenue rate. That’s a software-level multiple, implying that the company has either incredibly strong gross margins, or Bill.com had to pay a multiples-premium to buy the company’s future growth today. I suspect the latter more than the former, but we’ll have to scout for more data when Divvy shows up in Bill.com results after the deal closes; that data is a few quarters away.

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TechCrunch’s Startup Battlefield is one of the most popular parts of our annual TechCrunch Disrupt conference which is happening on September 21-23 this year. Now we’re very excited to reveal one of the fine people who will be judging Startup Battlefield at this year’s all-virtual event in September: Shauntel Garvey, a general partner at Reach Capital, a VC specializing in the world of education technology.

Startup Battlefield sees startups applying far and wide for a chance to pitch their ideas to a panel, and to all of us in the audience, giving the finalists a lot of exposure and a shot at winning the grand prize of $100,000. Startups: You can apply to be a part of the action here.

Edtech has seen a huge surge of interest in the last year of pandemic living, and that’s led to a pretty notable rise in education startups, more funding for education technology and a lot more attention paid to voices in edtech.

That’s because not only is edtech of huge importance to society and our economy, but those in the field have picked up a lot of learnings that apply well outside of edtech.

They know firsthand about engagement and how to get it; connecting with larger ecosystems of stakeholders; learning to work with public and private bodies; and the ins and outs of tapping into the latest innovations in areas like streaming, artificial intelligence and graphics to get the most out of a concept.

All of this makes Garvey a great person to have as a judge, someone with specific-area knowledge but very aware of how it relates to the wider challenges and opportunities in tech.

Garvey is a co-founder and general partner at Reach Capital, a Silicon Valley VC focused on the wider opportunity within the educational spectrum, backing the likes of ClassDojo, Springboard, Outschool, Handshake, Winnie and many more. Garvey herself currently sits on the boards of Riipen, FourthRev, Holberton School and Ellevation Education.

Her experience in edtech extends back years. Before Reach, she was a partner at the NewSchools Seed Fund and she has invested in more than 40 early-stage edtech companies, including Newsela, Nearpod and SchoolMint. She is also not all about edtech: Before turning to education and startups, Garvey trained and worked as a chemical engineer. We’re really looking forward to her input as a Startup Battlefield judge.

If you haven’t gotten your tickets yet, TechCrunch Disrupt is coming up around the corner, September 21-23. This will be our second year of having the conference in an all-virtual format, and we have a lot of great speakers, networking opportunities and other things planned — free of physical constraints, we can fly! — and we really hope you’ll join us.

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If you ask Nik Bonaddio why he wanted to build a new mobile trivia app, his answer is simple.

“In my life, I’ve got very few true passions: I love trivia and I love sports,” Bonaddio told me. “I’ve already started a sports company, so I’ve got to start a trivia company.”

He isn’t kidding about either part of the equation. Bonaddio actually won $100,000 on “Who Wants To Be A Millionaire?”, which he used to start the sports analytics company numberFire (acquired by FanDuel in 2014).

And today, after a period of beta testing, Bonaddio is launching BigBrain. He’s also announcing that the startup has raised $4.5 million in seed funding from FirstRound Capital, Box Group, Ludlow Ventures, Golden Ventures and others.

Of course, you can’t mention mobile trivia without thinking of HQ Trivia, the trivia app that shut down last year after some high-profile drama and a spectacular final episode.

But Bonaddio said BigBrain is approaching things differently than HQ in a few key ways. For starters, although there will be a handful of free games, the majority will require users to pay to enter, with the cash rewards coming from the entry fees. (From a legal perspective, Bonaddio said this is distinct from gambling because trivia is recognized as a game of skill.)

“The free-to-play model doesn’t really work for trivia,” he argued.

In addition, there will be no live video with a live host — Bonaddio said this would be “very, very difficult from a technical perspective and very cost ineffective.” Instead, he claimed the company has found a middle ground: “We have photos, we have different interactive elements, it’s not just a straight multiple choice quiz. We do try to keep it interactive.”

Plus, the simpler production means that where HQ was only hosting two quizzes a day, BigBrain will be hosting 20, with quizzes every 15 minutes at peak times.

Topics will range from old-school hip hop to college football to ’90s movies, and Bonaddio said different quizzes will have different prize structures — some might be winner take all, while others might award prizes to the top 50% of participants. The average quiz will cost $2 to $3 to enter, but prices will range from free to “$20 or even $50.”

What kind of quiz might cost that much money to enter? As an example, Bonaddio said that in a survey of potential users, he found, “There are no casual ‘Rick and Morty’ fans … They’re almost completely price sensitive, and since they’ve seen every episode, they can’t fathom a world where someone knows more about ‘Rick and Morty’ than they do.”

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