Square Peg Capital, one of Australia’s largest venture capital firms with current assets under management of about $3 billion USD, is digging deeper into Southeast Asia. The firm is currently raising $550 million in new funding, and if its recent investment history is anything to go by, a good chunk of that will be invested into Southeast Asian startups.

Tushar Roy, partner at Square Capital, told TechCrunch that Southeast Asia has been the firm’s fastest-growing geographical footprint (it is also known for investments in Israel). Half of the firm’s last $275 million fund, called Fund 3, was invested in Southeast Asia. Across all its funds, Square Peg has now invested a total of about $250 million in Southeast Asia. It now has 18 companies in its portfolio from the region.

The ones that have been made public are: Cialfo; Chope; DoctorAnywhere; FinAccel; Kaodim; Neuron; OnLoop; Pluang; PropertyGuru; StashAway; Timo; and Wego.

The $550 million in new funding, which Roy said is set to close by in the next quarter, will be spread across two funds. One is an early-stage venture fund that will invest in seed through Series B stage tech companies across Southeast Asia, Australia and Israel. The second, called Opportunities Fund 2, will be for later-stage follow-on investments in Square Peg’s best-performing companies from its earlier funds.

Over the firm’s history, it has deployed $900 million and has a net IRR of 37%.

Square Peg’s first investment in Southeast Asia was about eight years ago, in WeGo. Since then, its interest in the region has ramped up considerably, especially in the last two years.

“I joined Square Peg seven years ago and almost from day one, I focused on Southeast Asia region. Roy said. “The first five years were us going from the region being a bit of a curiosity to us, essentially looking more deeply at the region to now doubling down, and it’s a key driver of strategy for our firm.” In 2000, just as COVID was ramping up, he moved to Singapore to establish Square Peg’s office there.

The pandemic accelerated investment in the region because deals were being done over Zoom, opening it up to investors without traveling. “It’s really through the period of COVID 2020, 2021 that you saw a massive acceleration in some of the international funds’ interest in this region, as more international funds set up offices in the region,” Piruze Sabuncu, partner and another member of Square Peg’s Singapore office said.

COVID and remote work also opened up new workers to help companies scale up. For example, Indonesian companies started working with employees in Vietnam, Singapore or India. “This really brought in the right level of talent to get to the next stage as well,” said Sabuncu.

As for the first-quarter slowdown in funding, Roy said “I think in founders’ expectations on valuations are a bit more muted then they were at the end of last year,” but there is still a small number of companies “that everyone wants to invest in and so the valuations are holding up, it’s continuing to go up in those cases.”

Square Peg’s next funds will focus on software as a service, consumer internet, fintech, health, education and the future of work, as well as a growing focus on Web3 or crypto-enabled business models.

Roy said Square Peg is interested in working with the founders for 5 to 10 years or more years to help them build “iconic companies.”

“You might see many funds around that have 30, 40 to 50 investments. In our funds, it’s much more typical to have 15 to 20 and that’s across three geographies,” said Roy. “What that leads to is a much more concentrated portfolio, not in terms of just capital, but also in terms of relationships. We really invest a lot of energy on a smaller set of people.”

The value of later-stage startups is in decline, data indicate.

This particular market movement isn’t a surprise, but the scale of the contraction is worth noting. Forge Global, a secondary market for private-company shares, “said the prices of companies on its platform had fallen 19.9 per cent in February and March compared with the fourth quarter of last year,” the Financial Times reports.

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Other data confirms the general price movement for late-stage unicorns — it’s trending down and to the right.

Secondary data should be viewed as directionally useful for determining market sentiment, not for setting companies’ public market prices. Recall that Coinbase was valued at more than $100 billion on secondary markets before it direct listed last year. Today, according to Yahoo Finance data, the company is worth about $38.6 billion, a sharp discount from the lofty 12 figures it once commanded.

That caveat aside, a decline of a fifth is material, and provides more evidence that what Instacart went through earlier this year could prove to be more harbinger of what’s to come than a one-off datapoint.

How big is a 20% haircut?

In March, TechCrunch looked into data from Carta, which helps startups with cap table management and other legal matters regarding ownership. The company has a bevy of data from startups actively fundraising, giving it a fascinating insight into private-market investor sentiment. Its data showed shrinking round sizes and valuations for Series C startups.

In numerical terms, the average deal size at the Series C mark in January and February 2022 was off 23% compared to the last two months of 2021, and valuations fell 47% on average. (We’ll get updated data from Carta this week, if possible, to provide a clearer picture of Q1.)

Hello and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines. Every Monday, Grace and Alex scour the news and record notes on what’s going on to kick off the week.

We are sitting on the precipice of a very busy few weeks, so let’s get right to work!

• Stocks are mixed around the world to start the day, cryptos are off a little more, but nothing too scary.
• Didi will vote on leaving the U.S. public markets this May, and has promised to not list anywhere else in the interim. This saga is nearly behind us, but what a mess it will leave in its wake.
• The Beanstalk exploit was bad news this weekend, but my hunch is that so long as votes are tied to economic might, many neat ideas in crypto-land will remain open to exploit.
• Zambian fintech startup Union54 raised a $12 million seed extension, led by Tiger, that caught our eye. And over in India, food-delivery rivals Swiggy and Zomato are both backing UrbanPiper.
• Finally, it seems that some private-market investors are not stoked about poison pills, a defensive setup by public companies to prevent a hostile takeover. Which makes me laugh, as dual-class shares that many VCs either back, or at least help fund amongst hot startups, are similar in that they are also designed to prevent changes of control.

To close, we have a live show this week! Yes, a live show. So come hang out with us on Thursday as we record our Friday episode!

Obtaining raw materials is a major pain point for Pakistan’s manufacturers, who need to have multiple phone calls with suppliers while waiting for rates, say the founders of Zayare. The startup, which runs a platform that connects manufacturers directly with suppliers, announced today it has raised $2.1 million in pre-seed funding from Tiger Global and Zayn Capital. This marks the first time Tiger Global has made a pre-seed investment in a Pakistani startup. Other investors include +92 Ventures, Alan Rutledge, Jack Rizvi and current and former employees of Careem.

The startup was founded in late 2021 by Taha Iqbal Teli, Hashair Junair Ahmedani and Ahshan Ali Khan, who went to school together. Zaraye also provides manufacturing businesses with working capital, in addition to raw materials. It currently serves the textile and construction industries, with more than 300 partners and suppliers in about 20 cities.

Teli and Khan worked together at Careem, Swvl and other companies, while Ahmedani’s family worked in the conventional manufacturing business. “The manufacturing sector in Pakistan has been operating with very marginal innovations since decades, WhatsApp being the only notable change in how processes have evolved. Zaraye intends to change that,” said Khan.

Zaraye’s app

Materials on the platform include cotton yarn, which CEO Khan told TechCrunch is the single biggest raw material used for creating end-use fabric in the textile industry. For the construction industry, Zaraye provides cement, sand, gravel and crushed stone. The company is focused on smaller manufacturers, whose annualized revenue varies between $250,000 up to $2 million USD.

Typically, manufacturers connect with intermediaries or directly with suppliers and wait for them to furnish rates. Zaraye, on the other hand, gives more autonomy to manufacturers by allowing them to post their requirements and wait for quotes from suppliers. For suppliers, this means they can see consolidated demand from Zaraye’s network of buyers.

Based on data aggregated by Zaraye from the Pakistan Credit Rating Agency, Pakistan’s industrial manufacturing sector contributes to 20% of the country’s economy with $35 billion raw material annually, with raw material contributing 60% to 65% of total costs for manufacturers, who need to deal with small net margins.

Good morning! I am writing to you in the minutes before I have to pack up my writing and podcasting setups so that I can catch a few planes to San Francisco for Early Stage. (I’m moderating two sessions, including one on scaling ARR, so come hang!) My colleague and frequent collaborator Anna Heim wrote the real Exchange today and it’s a banger. Consider this some sort of bonus.

The SaaS selloff may be behind us.

Declines in the value of technology stocks have subsided, with public cloud companies appearing to have found a new trading level that they can somewhat comfortably hover around. This is at once good and bad news for technology companies more generally, and tech startups in particular.

It’s good that the rapid, kind of terrifying valuation declines we saw among modern software companies in the final months of 2021 and the opening months of 2022 have halted. And it’s somewhat unfortunate that the market repricing of the value of software appears ready to stick.

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More simply, the decline in the value of annual recurring revenue, or ARR, may be slowing, but there’s also scant indication that we’re about to see a rebound.

Bessemer’s Janelle Teng recently posted a useful analysis that digs into a few macro factors that have been pushing the value of tech stocks around. The key is the inverse relationship between interest rates and tech stocks: The higher interest rates go, the lower software stocks go, more or less. (The mechanics behind the dynamic are somewhat immaterial for our purposes today; it’s the relationship that matters.)

Ironically, interest rates may be the best reason to expect that most of the selloff in software stocks is behind us.

If you rewind the clock to February of this year, Deel, a startup that helps customers hire in other countries, announced that it had built the ability to pay workers in crypto. Regardless of your view on the financial intelligence of such a move, TechCrunch covered the news because we’re keeping tabs on Deel.

Why? Because the former startup has posted rapid historical growth, with CEO Alex Bouaziz sharing in December 2021 that it had scaled to $50 million in self-described annual recurring revenue, or ARR. The executive’s tweet indicated that Deel had started the year with around $4 million worth of ARR.

Recall that the company raised $425 million at a $5.5 billion valuation last October.

Flash forward to today: Deel shared that it crossed the $100 million ARR threshold, a key moment for any technology upstart as it implies that it has reached public-market scale — and is therefore no longer a startup by any meaning of the word.

Deel’s data point regarding its historical growth comes on the heels of Firstbase, a startup that helps companies procure and provide hardware and other remote-work needs to far-flung employees, raising $50 million after posting something like 16x revenue growth since last April.

Supporting remote workers is big business, it appears.

To dive into the Deel news, TechCrunch took a scratch at the company’s pricing page to better understand its revenue milestone and asked the company a few clarifying questions. Answers were a bit vague, but we can get a little work done. Let’s talk the deal with Deel.

Deel’s revenue growth

One way that startups like to brag is to take the Bessemer chart showing historical examples of startups rapidly scaling to $100 million in ARR over a short time frame. Here’s how Deel shared its own  new milestone:

Image Credits: Deel Twitter

That got us curious.

Back in March 2021, online payment processing giant Stripe announced that it had raised $600 million at a $95 billion valuation. The numbers made a splash when they were made public months after the deal leaked.

That Stripe raised in early 2021 is notable. Some private companies that raised large sums of capital last year have struggled to hold onto their valuation — or even their business — in the ensuing quarters. This raises an interesting question about Stripe: Did the company raise at a price that it cannot defend, as many other startups and unicorns did last year?

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Until recently I wasn’t sure, even if I did think about the question from time to time. Happily, Stripe put out a mostly data-free 2021 update letter this month that includes just enough information for us to get dangerous with. With some creative math and, I hope, fair extrapolation, we can derive valuation calculations for Stripe that should help us better understand how well the payments juggernaut busy masquerading as a private company priced its last equity round.

All our math today will become dated the moment that Stripe drops an S-1 filing, but given the dearth of recent rumors to that end, either the company is running a quiet process or really isn’t that close.

More context for our question regarding Stripe’s worth comes from news a few weeks back: Fidelity cut its internal valuation of its Stripe stock by 9% from its 2021 level. Was that too much, too fast?

Let’s have some fun with numbers this morning. We’ll start with the company’s newly released processing volume and then get wild. Into the breach!

Is Stripe overvalued?

Stripe’s 2021 update — which you can read in its entirety here —  includes the following verbiage about its historical and future growth:

Collectively, businesses on Stripe processed more than $640 billion in payments in 2021, up 60% from the prior year. (Since a lot of this came from one-time behavioral adjustments caused by the pandemic, 2022 won’t match the same level of growth.)

Real, a mental health app, has raised a $37 million oversubscribed Series B. The round was led by Owl Ventures, with participation from former Cityblock CEO Iyah Romm and chief health officer Dr. Sylvia Romm. Returning investors include Lightspeed Venture Partners, Female Founders Fund, Forerunner Ventures and BBG Ventures.

This brings Real’s total funding to $53 million since it was founded in 2019 by CEO Ariela Safira. TechCrunch last covered Real when it raised its Series A earlier this year.

Safira told TechCrunch that the new funding round will enable Real to expand its platform and add more resources, therapists and Pathways, or the comprehensive therapist-created programs about mental health issues that are the app’s core feature. User subscriptions start from $13 a month.

The company also creates diverse content for different communities, including LGBTQIA+, immigrants and people of color. Safira said Real is using its funding to continue building a culturally diverse therapist base. For example, Real hosts Events which can be viewed live or as recordings, and have included topics like “Opting Out of Explaining Oppression to the Oppressor.”

Pathways, which address issues like relationships, anxiety, careers, stress, body image and depression, are Real’s main feature. Each consists of multiple sessions, with educational information (for example, the Pathway about depression describes how it can present both emotionally and physically). At the end of each session, users are prompted to complete exercises from Real’s toolkit. For example, in its depression Pathway, this includes journaling questions and breathing exercises.

One of Real’s unique features is that it takes two days to unlock each Pathway session. Safira said that one of the most requested features is to reduce the wait time between Pathway sessions, which was previously seven days.

“From a clinical standpoint, we believe that an unlock speed of two days allows for time and space to practice behavior change we aim for, while also ensuring the clinical safety of our members,” she explained.

Safira said that Real’s clinical team and learning and design production team spent the past 15 months building, testing and iterating its Pathways to enhance clinical efficacy and user retention. Each therapist is vetted through a hiring process with a 4.7% acceptance rate.

Real also has one of the most comprehensive mood trackers I’ve seen in a mental health app. Called Real Pulse, it logs how you feel about your motivation, anxiety, mood, energy, optimism, self-esteem, purpose, gratitude, belonging, relationships and productivity. Users are prompted to use Real Pulse once a month to see changes over time.

“This type of tracking empowers members to engage more deeply with their mental health,” Safira said. “We know this because we built the Real Pulse with our members, reading feedback, conducting user interviews, all to learn what people want, how people feel, and how to build the best mental health tracking experience for them.”

In a prepared statement, Lightspeed Venture Partners partner Nicole Quinn said, “As an early believer in Ariela and Real’s success, we’re proud to expand our investment in Real’s Series B fundraise. As a board member for the last year, I can say Real is one of the few companies in this space building their foundation on clinical research and using that to inform building a truly innovative care model.””

Meet Montonio, an e-commerce checkout solution created by a small startup based in Tallinn, Estonia. The company just raised a $12 million Series A funding round (€11 million) led by Index Ventures. It wants to become the only tech partner you need to run a small and medium e-commerce shop.

Montonio is a multi-faceted product that has been specifically designed for its home market and its neighbor countries — but the startup thinks it could work all around Europe. The company facilitates payments, integrates with several ‘buy now, pay later’ financing options, and handles deliveries and refunds.

On the payment side, when it’s time to buy something online, Montonio takes over and handles payments directly. The startup supports card payments through integrations with partners. While debit and credit cards have become the default payment solution for many people around the world, many people are already paying with different methods.

And this is where Montonio becomes interesting. In the Baltics, customers often initiate payments from their bank accounts directly. Montonio has been building out open banking connections so that it can initiate payments at a lower cost.

By developing these integrations in house, the company also has more flexibility and technical control over the process. If customers choose to pay using payment links, Montonio charges €0.05 + VAT per payment. That’s much cheaper than card payments.

Montonio currently supports all major banks in Estonia, Latvia, Lithuania and a few major banks in Finland. The startup is going to focus on Poland next.

Once you build a startup that handles payments, you want to build a startup that handles refunds as well. Montonio customers can process refunds from Montonio’s dashboard.

Similarly, once a payment is processed, you want to automatically generate an order number and initiate deliveries. Montonio automatically queries delivery providers to generate labels. And the product can also be used to generate return labels when necessary.

Eventually, Montonio wants to become a one-stop shop for everything that happens once you click the purchase button. The company calls this process the ‘post-checkout experience’. For instance, Montonio can also act as an aggregator for different financing solutions.

“For each service, we’re building multi-threading in our product. Even when you look at our financing product, we have multiple partners,” Montonio co-founder and CEO Markus Lember (pictured above) told me.

While small and medium e-commerce retailers don’t want to pay too much to process payments, they could pay for additional services and a simple product that replaces a patchwork of payment and e-commerce services. Montonio offers plugins for WooCommerce, Prestashop, Magento 1 & 2, Odoo, Voog, OpenCart and CsCart. There’s also a programming interface for custom integrations.

And it seems to be doing well in Estonia as around half of online shoppers have interacted with Montonio already. It’s going to be interesting to see if the company can reproduce the same numbers in other markets.

“The team is best in class, very technical and very agile. The organic traction is through the roof. There are very compelling market trends that will open up the market and Montonio is just anticipating this shift,” Index Ventures partner Julia Andre told me.

In addition to Julia Andre, Jan Hammer from Index Ventures and Adyen’s former managing director Myles Dawson are joining the board. Previous investors Tera Ventures, ffVC and Superangel also participated in today’s funding round.

Aemi founders Hieu Nguyen and Kim Vu

Social commerce sellers can be as small as one person selling products to their followers on social media platforms like Instagram or Facebook. Many don’t have a web storefront and instead rely on private messages to take orders and payments. This might not seem like enough to move significant amounts of product, but in many Southeast Asian markets, social commerce sellers are making up an increasingly large portion of e-commerce. In fact, according to a recent Bain report, social commerce accounted for 65% of Vietnam’s $22 billion online retail economy last year.

Despite their combined retailing power, many social commerce sellers cannot buy in bulk directly from brands. Instead, they rely on wholesale aggregators, but that means they may not be able to trace the provenance of their products, said Aemi co-founder and CEO Kim Vu. 

Aemi was created with CTO Hieu Nguyen to help solve social commerce seller’s supply chain issues. By working with hundreds of social commerce sellers, it is able to buy directly from brands.  Because Aemi works with hundreds of sellers, it has the purchasing power to negotiate lower wholesale prices than individual sellers, while at the same time guaranteeing the provenance of products. 

Currently focused on beauty and wellness, the startup’s ultimate goal is to expand into more verticals and create a suite of backend software that will help sellers manage inventory, ordering and payment. 

The startup has raised $2 million in funding from Alpha JWC Ventures and January Capital, with participation from Venturra Discovery, FEBE Ventures and angel investors. Funding is being used for hiring, especially for product engineers to build software for Aemi’s micro-merchants. 

The social commerce sellers Aemi works with are typically micro-influencers, with follower counts of about 10,000 to 30,000. Vu told TechCrunch one of the reasons she wanted to start Aemi was because she’s a social commerce enthusiast. 

“I love buying on social commerce, Facebook stores, Instagram shops and the like, because I trust the person, so I trust that they have done a really good job at breaking down the products and reviews from a content perspective,” said Vu. At the same time, when she had questions about a product’s authenticity and source, she found that many sellers could not assure the products were genuine because they didn’t have the selling volume to develop a close relationship with brands and instead relied on wholesale aggregators. 

“I see a huge demand from a consumer standpoint, but also from a supply perspective,” said Vu. “Not too much effort has been put into growing supply chain support for this sector.” 

Before founding Aemi, Vu spend six years as a management consultant for Bain, where she specialized in retail. This included working with global brands to grow their distribution in emerging markets. She found that they approached branding and distribution in a very traditional way, missing the growing dominance of social commerce. 

“A lot of effort is being put into high visibility, like physical stores, but people have a growing affinity for buying social commerce, buying items online and getting it delivered to their house,” Vu said. “From a supply chain perspective, not too much has been built in.”

As a result, many social commerce sellers not only have unreliable supply chains but also don’t have the software and marketing support they need to build their businesses. 

Aemi also offers marketing support, which means helping sellers create memorable content. Many have created a niche for themselves recommending certain types of products, like skin care or beauty products, but don’t have the social networking clout to gain brand partnerships. Aemi helps by providing professional product photos, product descriptions and information to sellers. It is also planning to build software, like drag-and-drop storefronts, that will help sellers manage sales and inventory across multiple social media platforms. 

“The people that we are catering towards are what would be classified by brands as long tail distribution,” said Vu, “but they make up the majority of volume on social commerce” in Vietnam. 

Voyager Innovations, the owner of Philippines’ payment and financial services app PayMaya and neobank Maya Bank, announced today it has raised $210 million, bringing its valuation to $1.4 billion.

The round was led by SIG Venture Capital, and included participation from EDBI and First Pacific Company, as well as returning shareholders PLDT, KKR, Tencent, International Finance Corporation and IFC Emerging Asia Fund and IFC Financial Institutions Growth Fund. 

The funds will be used to launch Maya Bank services, including savings and credit products, through PayMaya, which has over 47 million registered users and is one of the most popular financial apps in the Philippines, along with GCash and Coins.

Voyager also plans to add cryptocurrency, micro-investments and insurance products to PayMaya, which already includes a digital wallet, online remittances, bill payments, bank transfers, prepaid cards and an e-commerce feature called PayMaya Mall.  

Voyager’s last round of funding was in July 2021, when it raised $167 million in preparation for launching its neobank.

At the time of that announcement, Voyager said it had applied for a digital bank license with Bangko Sentral ng Pilipinas (BSP), the Philippines’ central bank. According to the BSP, about half of the adult population in the country is unbanked, but it has set a goal of onboarding 70% of Filipino adults to payment or transaction accounts by 2023.

Maya Bank secured one of six digital banking licenses from the BSP in September 2021 and started pilot testing Maya Bank in March 2022. 

Good morning and happy Monday! It’s Early Stage week here at TechCrunch, which means that I have some prep work to do. That in mind, we’re briefly going to dig into SailPoint’s huge private equity buyout to divine what the transaction says about the value of technology companies.

The SailPoint sale comes amid a changing exit market for technology companies more broadly. Per exit data collated by CB Insights, while global M&A activity is stable thus far in 2022 compared to last year’s pace, IPO and SPAC exits fell sharply in the first quarter. That means that M&A is more important than ever for tech exits, making the SailPoint deal worth spending time on.

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From a high level, SailPoint’s exit is not a mercy-killing. Before the deal was announced, the company’s stock price was effectively $50 per share, down only modestly from its 52-week high of a little more than $63 per share; compared to many public technology companies, that’s a very limited valuation haircut from peak levels.

Thoma Bravo will pay $65.25 per share in cash for SailPoint, which sells enterprise security products.

To understand why the company is selling, and why Thoma Bravo is buying, we’ll need to peek into the company’s results. That will bring us to the question of how the company is valued and what its price could mean for unicorns and other high-priced startups. This will be fun, and quick! Let’s go!

Is SailPoint a good business?