Drip Capital is raising a $20 million funding round from Accel, Wing VC and Sequoia India. The company is helping small exporters in emerging markets access working capital in order to finance big orders.
The startup also participated in Y Combinator back in 2015. Many small companies in emerging markets have to turn down orders because they can’t finance big orders. Even if you found a client in the U.S. or Europe, chances are companies will end up paying for your order a month or two after signing a contract.
If you’re an importer or an exporter, capital is arguably your most valuable resource. You know where to source your products and how to ship many goods. But you still need to buy goods yourself.
And in many emerging markets, you have to pay right away. It creates a sort of capital gap.
At the same time, local banks are often too slow and reject too many credit applications. Drip Capital thinks there’s an opportunity for a tech platform that finances exporters in no time.
The startup is first focusing on India because it meets many of the criteria I listed. This could be particularly useful for small and medium businesses. Large companies don’t necessarily face the same issues as they can access capital more easily.
So far, Drip Capital has funded over $100 million of trade. After signing up to the platform, you can submit invoices and open a credit line to finance your next orders. Family offices and institutional can also invest some money in Drip Capital’s fund and get returns on investment.
This isn’t the only platform that helps you get paid faster. But larger companies tend to do it all and optimize the supply chain for the biggest companies in the world. Drip Capital is focusing on a specific vertical.
With today’s funding round, the company plans to get more customers and expand to other countries.
This one’s for all the due diligence fiends and competitive landscape mapping mavens out there.
PitchBook, the data and analytics service for private equity and public markets, is rolling out an automated suggestions feature for premium users when they’re doing searches on companies for market intelligence.
The new service is based on machine learning technology that scours PitchBook’s financially focused information and data set. Each word in a description is represented in 300 dimensional space using the global vectors for word representation software lifted from researchers at Google and Stanford, and those vectors are then applied to companies to determine their various relationships.
“The differentiator for why the output of this is going to be high quality. When we look up a company is because we have this proprietary set of financial related news and information,” says Tyler Martinez, the director of software engineering and data science at PitchBook.
During an advanced search, the Suggestions algorithm stores the entire search as a vector ad compares it against a larger word embedding model to find similarities among companies.
Behind the new features is a years-long effort to get more financial data at more scale, according to the company. PitchBook invested in web mining tools and an automated news collection technology that can process 30 billion words.
And the amount of material that PitchBook and its competitors have to track has expanded exponentially since the company was initially launched years ago. There was $28 billion invested into 1,700 deals across the globe in the first quarter of 2018, and the geographic expansion of the private equity business and the explosion of interest in private markets has created a new demand among investors who don’t know what they don’t know, according to PitchBook.
“We built suggestions because it’s really hard to keep tabs on what is a big challenge in the market,” says Jenna Bono, a product manager for the company.
I first wrote about SmartAsset nearly six years ago, when it launched its first product, a tool allowing prospective homebuyers to analyze the rent vs. buy decision and to see what kind of home they could actually afford.
According to co-founder and CEO Michael Carvin, “On the consumer side, our strategy has never really changed. Our mission is to help people make the best personal finance decisions and to build the web’s best resource for personal finance decision-making.”
Of course, some aspects of the company have evolved. For one thing, SmartAsset now offers tools, calculators and content in a number of categories, including taxes, retirement and banking.
For another, it’s announcing today that it has raised $28 million in Series C funding, bringing its total raised to more than $51 million. The new round comes from Focus Financial Partners (a firm backed by Stone Point Capital and KKR), Javelin Venture Partners, TTV Capital, IA Capital, Contour Venture Partners, Citi Ventures, Fabrice Grinda and others.
Carvin said SmartAsset reached more than 45 million uniques last month, nearly doubling its traffic year-over-year. And 25 percent of that traffic comes from repeat visitors.
As for how SmartAsset makes money from those visitors, it does so partly by promoting financial products like mortgages. But Carvin said the biggest piece is the SmartAdvisor platform, which connects financial advisors with potential investors.
Carvin described it as “the web’s first digital lead generation platform for financial advisors,” and compared the SmartAsset business model to Zillow’s, saying both companies have built big audiences that they can then match up with real estate or finance professionals.
In SmartAsset’s case, users fill out a questionaire and then work with a SmartAsset concierge to help them find an advisor who’s a good fit. Carvin added that the advisors on the platform have been screened by the company, for example to ensure that they haven’t had any criminal violations and that FCC hasn’t upheld any complaints against them for the past decade.
Asked whether this focus on financial advisors has led SmartAsset to change the way it designs its consumer products Carvin said, “We believe the better the user experience, the better our business will work. And so when we’re building a retirement tool, a home affordability tool, a tax tool, we’re building that only with the consumer interest in mind.”
Looking ahead, Carvin said he plans to continue following this strategy.
“We’re going to build out the web’s premiere personal finance resources and then leverage that on advisor side,” he said.
The largest payment app in South Korea, Toss, has pulled in $40 million in fresh investment from Singapore sovereign wealth fund GIC and Sequoia China.
The deal for Viva Republica, Toss’s parent company, comes just over a year after it raised $48 million from payment giant PayPal and others. There’s no valuation for this newest round, but we do know that it is a ‘bridge’ intended to bring new investors in and help accelerate the business for a large raise further down the line. (It is also the first Korean investment for both GIC and Sequoia China.)
Not that the business seems to need much more impetus for acceleration, growth is already strong. Viva Republica says that Toss’s registered user base has doubled over the past year to each eight million consumers, while it claims the app is processing $10 billion in transaction volume per month. The company forecasts that its annual transaction run rate will surpass $18 billion.
Back in 2016 when we reported on the PayPal -backed round, founder and CEO SG Lee — a dentist until he saw the potential for a mobile payment service — told us that Toss had begun to introduce additional services beyond peer-to-peer payments. That’s included consumer financing products, like loans, micro-insurance and cross-border payments.
Toss doesn’t have Korea to itself, its main rival is Kakao, the country’s most popular messaging app. In recent times Kakao, a $7 billion company, had opened business units in a range of industries including ride-hailing, content and payment. Its Kakao Pay business is backed by Alibaba, and it plugs into Kakao the chat app to allow peer-to-peer transfers with other consumer finance services.
Lee, the Viva Republica CEO, previously said he doesn’t fear Kakao since in his mind it is creating a b2b business while Toss is focused wholly on the consumer experience. Now it has a couple more seasoned backers in its corner too, courtesy of this new investment.
PayPal-owned, peer-to-peer payments app Venmo is ending web support for its service, the company announced in an email to users. The changes, which are beginning to roll out now, will see the Venmo .com website phasing out support for making payments and charging users. In time, users will see even less functionality on the website, the company says.
The message to users was quietly shared in the body of Venmo’s monthly transaction history email. It reads as follows:
NOTICE: Venmo has decided to phase out some of the functionality on the Venmo.com website over the coming months. We are beginning to discontinue the ability to pay and charge someone on the Venmo.com website, and over time, you may see less functionality on the website – this is just the start. We therefore have updated our user agreement to reflect that the use of Venmo on the Venmo.com website may be limited.
The decision represents a notable shift in product direction for Venmo. Though best known as a mobile payments app, the service has also been available online, similar to PayPal, for many years.
The Venmo website today allows users to sign in and view their various transaction feeds, including public transactions, those from friends, and personal transactions. You can also charge friends and submit payments from the website, send payment reminders, like and comment on transactions, add friends, edit your profile, and more.
Some users may already be impacted by the changes, and will now see a message alerting them to the fact that charging friends and making payments can only be done in the Venmo app from the App Store or Google Play.
It’s not entirely surprising to see Venmo drop web support. As a PayPal-owned property after its acquisition by Braintree which later brought it to PayPal, there’s always been a lot of overlap between Venmo and its parent company, in terms of peer-to-peer payments.
Venmo had grown in popularity for its simple, social network-inspired design and its less burdensome fee structure among a younger crowd. This made it an appealing way for PayPal to gain market share with a different demographic.
It’s also cheaper, which people like. PayPal doesn’t charge for money transfers from a bank account or PayPal balance, but does charge 2.9 percent plus a $0.30 fixed fee on payments from a credit or debit card in the U.S. Venmo, meanwhile, charges a fee of 3 percent for credit card payments, but makes debit card payments free. That’s appealing to millennials in particular, many of whom have ditched credit cards entirely, and are careful about their spending.
Plus, as a mobile-first application, Venmo was offering a more modern solution for mobile payments, at a time when PayPal’s app was looking a bit long in the tooth. (PayPal has since redesigned its mobile app experience to catch up.)
Another factor in Venmo’s decision could be that, more recently, it began facing competition from newcomer Zelle, the bank-backed mobile payments here in the U.S. which is forecast to outpace Venmo on users sometime this year, with 27.4 million users to Venmo’s 22.9 million. In light of that threat, Venmo may have wanted to consolidate its resources on its primary product – the mobile app.
Not everyone is happy about Venmo’s changes, of course. After all, even if the Venmo website wasn’t heavily used, it was used by some who will certainly miss it.
@venmo i only use the website to send/receive payments so in guess you're cancelled!
Venmo email: “We are beginning to discontinue the ability to pay and charge someone on the https://t.co/iAFTbn3EY0 website, and over time, you may see less functionality on the website – this is just the start.”
Reached for comment, Venmo explained the decision to phase out the website functionality stems from how it sees its product being used.
A Venmo spokesperson told TechCrunch:
Venmo continuously evaluates our products and services to ensure we are delivering our users the best experience. We have decided to begin to discontinue the ability to pay and charge someone on the Venmo.com website. Most of our users pay and request money using the Venmo app, so we’re focusing our efforts there. Users can continue to use the mobile app for their pay and charge transactions and can still use the website for cashing out Venmo balances, settings and statements.
The company declined to clarify what other functionality may be removed from the website over time, but noted that using Venmo to pay authorized merchants is unaffected.
Despite some concerns over its adoption by scammers, new payment service Zelle is shaping up to overtake rival Venmo this year, according to a new forecast from eMarketer. The firm expects Zelle to grow more than 73 percent in 2018, to reach 27.4 million users in the U.S., ahead of Venmo’s 22.9 million. Square Cash will trail with 9.5 million users.
This growth isn’t necessarily chalked up to user preference, but rather, ubiquity.
Zelle is backed by a network of over 30 U.S. banks, as their means of winning over users from other payment apps including Venmo, PayPal, and Square Cash. The banks had wanted to develop their own alternative these apps for several years, but only recently had those efforts gained momentum. The Zelle website now claims participation from over 100 financial institutions, as well as processor partners CO-OP Financial Services, FIS, Fiserv and Jack Henry, and network partners VISA and Mastercard.
The participating banks are now integrating Zelle into their own websites and mobile apps – meaning, users are finding Zelle as they use their existing banking applications. They’re not seeking it out directly, in many cases.
“One of the main hurdles new apps face is building trust and a sizable audience,” explained eMarketer forecasting analyst Cindy Liu. “But Zelle has leapfrogged the early stages of adoption by having the benefit of being embedded into the already existing apps of participating banks,” she said.
Emarketer’s forecast estimates the total number of U.S. p2p mobile payment users will grow 30 percent in 2018 to reach 82.5 million people, or 40.5 percent of U.S. smartphone users. It also expects the total transaction volume of p2p mobile payments to grow 37 percent this year to reach $167.08 billion. By 2021, that figure will reach over $300 billion.
That leaves room for all services to carve out their piece of the market, even if Zelle ends up in the lead.
“In cases where there is no… central enterprise being invested in or where the digital asset is sold only to be used to purchase a good or service available through the network on which it was created,” that digital asset is “out of the purview of U.S. securities laws”, according to William Hinman, the director of the division of corporation finance at the U.S. Securities and Exchange Commission.
Hinman’s comments were certainly a positive signal to the market. They sent the price of Ether spiking from $469 to $516 over the course of the past hour.
While the markets may view this as an unadulterated victory for cryptocurrencies of all stripes, the Securities and Exchange Commission simply looks to be expanding on the fairly nuanced position it’s established with coin offerings and token sales.
For the SEC, while cryptocurrencies like bitcoin and ether are not securities, token offerings for stakes in companies that are built off of those blockchains can be, depending on the extent to which third parties are involved in the creation or exchange of value around the assets.
The key for the SEC is whether the token in question is being used simply for the exchange of a good or service through a distributed ledger platform, or whether the value of the cryptocurrency is dependent on the actions of a third party for it to rise in value.
“Promoters, in order to raise money to develop networks on which digital assets will operate, often sell the tokens or coins rather than sell shares, issue notes or obtain bank financing. But, in many cases, the economic substance is the same as a conventional securities offering. Funds are raised with the expectation that the promoters will build their system and investors can earn a return on the instrument — usually by selling their tokens in the secondary market once the promoters create something of value with the proceeds and the value of the digital enterprise increases,” Hinman said.
This was at the core of a 1946 case which was decided by the Supreme Court and set a standard for the SEC’s authority to oversee certain types of securities issues. That case, SEC v. Howey involved the sale of interests in orange groves to guests of a hotel. The guests could have cultivated their plots of land but instead relied on a service managed by the hotel to create value from the oranges (this is a very rough paraphrase of the facts of the case).
“Just as in the Howey case, tokens and coins are often touted as assets that have a use in their own right, coupled with a promise that the assets will be cultivated in a way that will cause them to grow in value, to be sold later at a profit. And, as in Howey — where interests in the groves were sold to hotel guests, not farmers — tokens and coins typically are sold to a wide audience rather than to persons who are likely to use them on the network,” said Hinman.
Before a network is actually created and as the tokens are marketed to investors rather than users of the token, they’re going to look an awful lot like securities to the SEC.
“The token — or coin or whatever the digital information packet is called — all by itself is not a security, just as the orange groves in Howey were not. Central to determining whether a security is being sold is how it is being sold and the reasonable expectations of purchasers,” Hinman continued.
“The digital asset itself is simply code. But the way it is sold — as part of an investment; to non-users; by promoters to develop the enterprise — can be, and, in that context, most often is, a security — because it evidences an investment contract. And regulating these transactions as securities transactions makes sense.”
Ultimately if the coin offering is successful, and the operations of the network become wholly decentralized, then the SEC will cease to regulate the entity as a security, says Hinman.
“If the network on which the token or coin is to function is sufficiently decentralized — where purchasers would no longer reasonably expect a person or group to carry out essential managerial or entrepreneurial efforts — the assets may not represent an investment contract. Moreover, when the efforts of the third party are no longer a key factor for determining the enterprise’s success, material information asymmetries recede. As a network becomes truly decentralized, the ability to identify an issuer or promoter to make the requisite disclosures becomes difficult, and less meaningful.”
For Hinman, Bitcoin and Ethereum have both hit that tipping point. Other coin offerings haven’t.
“Promoters and other market participants need to understand whether transactions in a particular digital asset involve the sale of a security. We are happy to help promoters and their counsel work through these issues. We stand prepared to provide more formal interpretive or no-action guidance about the proper characterization of a digital asset in a proposed use,” said Hinman.
Below are a list of queries that the SEC regulator enumerated to help determine whether an offering is a security or a utility token.
Is there a person or group that has sponsored or promoted the creation and sale of the digital asset, the efforts of whom play a significant role in the development and maintenance of the asset and its potential increase in value?
Has this person or group retained a stake or other interest in the digital asset such that it would be motivated to expend efforts to cause an increase in value in the digital asset? Would purchasers reasonably believe such efforts will be undertaken and may result in a return on their investment in the digital asset?
Has the promoter raised an amount of funds in excess of what may be needed to establish a functional network, and, if so, has it indicated how those funds may be used to support the value of the tokens or to increase the value of the enterprise? Does the promoter continue to expend funds from proceeds or operations to enhance the functionality and/or value of the system within which the tokens operate?
Are purchasers “investing,” that is seeking a return? In that regard, is the instrument marketed and sold to the general public instead of to potential users of the network for a price that reasonably correlates with the market value of the good or service in the network?
Does application of the Securities Act protections make sense? Is there a person or entity others are relying on that plays a key role in the profit-making of the enterprise such that disclosure of their activities and plans would be important to investors? Do informational asymmetries exist between the promoters and potential purchasers/investors in the digital asset?
Do persons or entities other than the promoter exercise governance rights or meaningful influence?
And here’s another set of questions that founders and potential coin offerings should consider?
1.Is token creation commensurate with meeting the needs of users or, rather, with feeding speculatio
Are independent actors setting the price or is the promoter supporting the secondary market for the asset or otherwise influencing trading?
Is it clear that the primary motivation for purchasing the digital asset is for personal use or consumption, as compared to investment? Have purchasers made representations as to their consumptive, as opposed to their investment, intent? Are the tokens available in increments that correlate with a consumptive versus investment intent?
Are the tokens distributed in ways to meet users’ needs? For example, can the tokens be held or transferred only in amounts that correspond to a purchaser’s expected use? Are there built-in incentives that compel using the tokens promptly on the network, such as having the tokens degrade in value over time, or can the tokens be held for extended periods for investment?
Is the asset marketed and distributed to potential users or the general public?
Are the assets dispersed across a diverse user base or concentrated in the hands of a few that can exert influence over the application?
Is the application fully functioning or in early stages of development?
In an embarrassing and mystifying about-face, the Seattle City Council has repealed a tax it passed unanimously just a month ago that would require large companies to pay a fixed amount per employee; the money would have been used to combat homelessness. Amazon was the most high-profile opponent of the tax, but not the only one by far, and apparently the Council decided that fighting the business community was “not a winnable battle.”
The situation was in some ways a microcosm for government and grassroots efforts to wrangle with the extremely complex relationship between the growth of tech and various housing crises. I won’t attempt to characterize it here, but Seattle had come to the conclusion that if your company had more than $20 million in receipts, it could afford to pay $275 (down from a proposed $500) per employee per year.
That would have been some $11 million from Amazon alone, so it fussed mightily and halted construction on several of its skyscrapers downtown. But ultimately it and other seemed to reach an unhappy compromise with the reduced per-employee amount.
Not so: after fighting to have the law modified, Amazon, Starbucks, and Paul Allen’s Vulcan immediately lent their weight and cash to a referendum campaign that would put the tax up to a popular vote in November.
This prospect apparently spooked the City Council so much that a special meeting was announced less than a day in advance, violating Washington’s own law requiring 24 hours’ notice. At this meeting the members voted 7-2 to repeal the tax that just a month earlier they had so confidently stood behind. Councilmembers Teresa Mosqueda and Kshama Sawant were the only holdouts, and cried shame on their peers: Sawant, known for her fiery rhetoric (perhaps too much so, as it has invited costly lawsuits), called it a “cowardly betrayal.”
And indeed, the questionable merits of the proposed tax aside, it seems strange to think that the Council could feel itself so right just a month ago, and now, faced with the prospect of having to convince the public that it’s a good idea, completely abandoned that conviction. Inspiring government it isn’t.
As some have said, perhaps it would be more convincing if there was a detailed and justified plan for how to address the homelessness problem in Seattle, and then a fundraising campaign — including taxes on businesses — created to enable it. Putting the latter before the former struck many as exemplary of a spendy local government of taxing first and making policy later.
At any rate it may be remembered, perhaps not entirely accurately, as a moment when Seattle tried to reach out and touch Big Tech and Amazon slapped them down. Though that oversimplifies the situation greatly, there’s an element of truth to it and we may see it referenced as others mount similar attempts.