Six months after raising $250 million, Papaya Global is making a key acquisition to expand its cloud-based HR and payroll platform globally on the heels of major surge in remote working. The Israeli startup is acquiring Azimo — the London-based money transfer business that Facebook once tried to buy to spearhead its own remittance efforts — a deal that will see Papaya Global moving into more markets, and launching more services such as instant payroll payments.

Terms of the acquisition are not officially being disclosed, but a source close to companies tells me that the deal was between $150 million and $200 million, a figure others appear to have also reported. Papaya is acquiring the full business upon the deal closing, including all of Azimo’s employees, the company said.

For some context, Papaya Global — backed by companies like Insight Partners and Tiger Global — was valued at $3.7 billion in its last funding round in September 2021, after growing revenues 300% each year for the last three years.

Azimo, meanwhile, was backed by investors including Rakuten and Greycroft and competes with the likes of Wise (FKA TransferWise). Both companies were among a shortlist that Facebook tapped several years ago when it first started to weigh up a move into money transfer services (a service it now provides).

The deal will help Papaya Global on two levels.

First, it will help it expand the company expand its geographic footprint: Azimo currently has payment licenses in the U.K., the Netherlands, Canada, Australia and Hong Kong, and it operates a payment network in over 160 countries, while Papaya Global (not to be confused with the other fintech called Papaya) operated services in 140 countries prior to this deal.

Second, it will help Papaya Global expand the services it provides. These include not just faster (instant) payment of payroll, but potentially a much wider selection of remittance services for people who are working in one country but have family or others who they want to pay in another. In the past those individuals might have used other services like Wise (or indeed Azimo) to handle those payments; now Papaya Global can keep them on their own network (and thus capture the commissions and foreign exchange fees) around those transactions.

“Papaya’s customers will benefit hugely from our long experience in building payment technology and operating as a regulated payments business,” Azimo CEO Richard Ambrose said in a statement.

It also plays into a strategy Papaya Global has been pursing for some time now to provide and all-in-one, end-to-end service for its customers — which include not just employers sourcing and eventually hiring people in other markets (be they freelancers or full-time or something in between), but increasingly services for those employees themselves.

“Payroll payments made easy regardless of geography are what set us apart from other technology vendors, and this acquisition will make it possible for companies to make instant payments to their global teams,” said Eynat Guez, Papaya Global CEO and co-founder, in a statement. “Azimo’s global digital payment network, multiple payment licences, and deep fintech expertise will also enable us to build new payroll-related services for our business customers and their employees.”

For Azimo, the company told us in 2019 that it was profitable, and that was the last year that it raised equity funding, too. (A 2020 injection of €20 million/$22 million from the European Investment Bank came in the form of debt.) But that also meant that the company, competing against the likes of Wise, was also potentially not scaling as much as it could have been had it followed a different funding trajectory in particular in these recent pandemic years, which saw strong demand in the remittance market. PitchBook estimates that its valuation was a modest $136 million back in 2019.

Further to that, there’s been a long-term trend of consolidation in the market — one that will continue for years to come, given how fragmented the remittance market is today and how thin the margins are for those players who are not scaling. Tying its star to Papaya Global and a wider service offering spanning HR and payroll is one way of supercharging the business in a way that might have been more challenging on its own for Azimo.

“Combining Azimo’s assets and expertise with an emerging global leader in remote working enablement like Papaya will allow them to deliver even more value for their business customers, especially those increasingly paying and managing remote employees,” said Azimo chairman and founder Michael Kent in a statement.

One of the reasons why the companies are not talking publicly about the sale price is that the deal has not completely closed yet: it will require regulatory approvals in their respective markets, and so they will continue to operate independently until those are reached.

On one hand, we’re heading into Y Combinator Demo Day week, which means that we’re about to sit back and watch a few hundred companies make their pitch to investors and the larger startup world.

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On the other, the event comes just days after well-known Y Combinator graduate Instacart decided it needed to trim its valuation to remain competitive for talent.

But the late-stage angst that we’ve explored recently is merely a facet of the total startup market, which includes both early fundings — angel, seed, etc. — and rounds like Series As and Bs. We can’t just say that late-stage startups are waking up to a changed market and call it a day. We need to understand the full picture.

PitchBook dropped a report this morning looking at the market trends that helped drive the 2021 venture capital boom. Recall that last year was a record for venture activity in a host of geographies, with private-market capital flowing into startups at a pace that we might not see for years to come.

The PitchBook report hints that there is a slowdown afoot in total venture capital activity, with an included chart showing monthly activity in the United States slipping from its late-2021 highs. But we wanted to know more, so we dug into the data.

Based on our look at the raw figures and what we’re hearing, we’re in what could be the early stages of a venture slowdown. Just how material the period of reduced investor activity will prove to be is the real question of the day.

Party on

Not that you would really guess that things are changing, looking at early-stage valuations. This piece of information from startup founder and investor Ryan Hoover caught our eye over the weekend:

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 and Kell scour the news and record notes on what’s going on to kick off the week.

This week had a theme. Which was startups. Lots and lots of startups. Here’s the rundown:

• Markets are mixed this morning, with strong crypto trading results and big news from Tesla.
• The weekend’s leading conversation in the tech and startup world was about this analysis regarding crypto upstarts not giving out board seats to investors. Call it peak founder-friendliness? It’s also a huge risk, as investors have taken board seats for a reason, historically. All the same, you gotta win those deals.
• Y Combinator Demo Day is this week: We are going to see hundreds of startups make their pitch in rapid-fire fashion. Sure, many will have already raised capital, but the capitalist confab is still worth watching. I am looking for API-led startups and any hints about where DAOs are heading, personally.
•  Zepto raised, which TechCrunch covered here, and I had a few thoughts about.

The big tech landscape is quiet this week thus far, which means we can focus in on startups. See you at demo day tomorrow!

It’s consolidation time in the freelancer marketplace industry. French startup Malt is acquiring Comatch, a competing marketplace focused on consultants and industry experts. Comatch originally started in Germany, which means that Malt is also doubling down on the German market with this acquisition. Terms of the deal are undisclosed but it involves a mix of equity and cash.

Malt started as a marketplace that matches freelance developers, designers and other technical workers with companies looking for talent. The startup has raised quite a lot of money and has managed to attract 340,000 freelancers across multiple European countries.

Originally limited to the French market, Malt has expanded to Germany, Spain, Belgium, the Netherlands and Switzerland over the past few years. 40,000 companies have turned to Malt to find a freelancer or several freelancers.

Clients include Unilever, Lufthansa, Bosch, BlaBlaCar, L’Oréal and Allianz. As you can see, a lot of large-sized companies have used Malt at some point.

Malt focuses exclusively on high-skilled freelancing jobs that can fill a gap when a new project comes up. In addition to developers, Malt now also offers opportunities for marketing and communications professionals, graphic designers and more.

Using a platform like Malt can be particularly useful when you’re getting started as a freelancer and you don’t have a big network of potential clients. Malt also helps you take care of the administrative paperwork. Freelancers can charge their clients from Malt directly and, of course, Malt takes a small cut.

As for Comatch, the company roughly follows the same model, but with a specific focus on management consultants and industry experts. Malt hasn’t specifically targeted business consultants so far. So the company is entering a new vertical.

“Comatch is a champion in the field of business consulting marketplaces. As a fellow company that shares Malt’s ‘community first’ approach, placing our talents at the core of the product and business to our vision for the future of work, we are eager and excited to bring our two worlds of high-skilled freelancers together,” Malt co-founder and CEO Vincent Huguet said in a statement.

Malt also wants to become the go-to freelancer marketplace in Europe. Comatch has attracted 15,000 freelancers across nine markets and the two companies work with 80% of publicly traded companies on the CAC 40 and DAX 40. Comatch represents an interesting external growth opportunity.

Following this acquisition, Malt has some ambitious goal. By 2024, the company expects to generate €1 billion in business volume. And Malt plans to hire another 150 employees by the end of 2022.

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Welcome to the weekend! We have a lot of ground to cover today, so pour some coffee, settle in, and roll with me.

The great selloff?

Remember when Amplitude direct listed, started to trade, and then ran into a wall when it reported Q4 2021 earnings? It was hardly alone amongst public tech companies in taking a haircut in early 2022, but the scale of its repricing stood. Now, Instacart is undergoing something similar-ish, albeit on the private markets.

Should we expect more private companies to also shake up how they value their share price to better incent new hires to join and current employees to stay? Maybe. GGV’s Jeff Richards had some food for thought Friday:

Yep. There’s no avoiding the market. You can put off reality by raising venture capital and not seeing a repricing until you raise again. Sure. But if you are a late-stage unicorn that has ample cash, how do you figure out your market worth if you don’t raise new funds?

If Instacart is the start of a trend, flat really could be — once again — the new up when it comes to startup valuations.

Technori finds a new home

A small fact about me is that I went to school in Chicago, and thus I was in and around the city’s tech scene as a baby journalist. This meant that I went to community events, working to better understand what was going on. I met Justyn Howard when Sprout Social was a startup (it’s now public) and I got to go to Uber’s launch dinner in the city back when it was all black cars. (That’s where I met my first TechCrunch reporter, who later helped me get hired at the publication, the first time.)

Back then there was a community effort taking off called Technori, which hosted events that showed off local tech efforts. It was good fun.

Since then, Technori evolved into a media play of sorts, with a podcast and pitch events, helping startups raise capital via equity crowdfunding. I got back into sync with the company when its CEO, Scott Kitun, had me on the podcast. And now Technori is back in our lens because it’s being sold to KingsCrowd, a service that vets and rates startups raising on online platforms. Given that Technori evolved into a platform to help folks raise, the tie-up seems reasonable.

The transaction was all-stock, Kitun said. KingsCrowd also has a media strategy, so the two firms have more than a little overlap.

Kitun told The Exchange in an interview that he’s excited about the Technori-KingsCrowd deal because it will make vetting startups looking for equity crowdfunding more data-driven, instead of based on his instincts. We’ll have wait to see whether, in time, the pair of companies can drive more total capital into the startup market via the fundraising mechanism, and how much of that lands in Chicago.

Widening our lens somewhat, recall that Public recently bought Otis, looking to add more investment variety to its platform. We can somewhat put the Technori and KingsCrowd deal under a similar umbrella, in that the duo want to make one for of newer investment into the hands of the regular person.

This is likely not the last we’ll hear of Kitun, as he’s a co-founder at SongFinch, a separate company.

Changes to the experts program

This week I changed roles at TechCrunch, swapping my full-time reporter hat for the editor in chief gig at TechCrunch+. Long-time readers of The Exchange’s on-site posts and newsletter will know that much of my work in the past few years has been on the paid site. I am not stopping my writing entirely, but we are aggressively expanding the TechCrunch+ team. So, strap in if you are not yet a member. (For U.S.-based folks, apply the discount code EICEXCHANGE at checkout for 25% off.) It’s going to be one hell of a year.

We are making some changes, including a winding-down of the Experts program that has run for a few years. An effort to create a database of startup servicing companies by activity — SEO, say — was part of our general vibe of helping founders build. But from here on out we’re going to evolve the effort into pieces that are more targeted at squeezing insights from different operators in the market, more than creating a list of possible vendors.

This means that we’re leaving a little fruit on the vine, however, so one last note from Experts land about a participant. Growthcurve is the final company we’re including in the old format. As per that old structure, folks wrote in endorsing the group. Mariam Danielova of ANNA Money says that they are reliable, results-oriented, [and] data-driven,” which is about all that you can hope for from a growth-marketing team.

Something I learned while clearing the TechCrunch+ decks of prior efforts, and thus spending time reading through older interview files and the like, was the lingering importance of SEO. It came up in Growthcurve founder Mulenga Agley’s notes that I parsed, and I wonder if in the new iOS 14 world that we live in it will become all the more important? If so, bully for Google I suppose.

Regardless, The Exchange’s own Anna Heim will still be taking on some how-tos that feature external operating experts. It will just look a little different this year. Thanks to everyone who took part in the past and to Growthcurve for being the final entrant in the ledger.

Onward!

Hello and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines.

It was a live recording this week, which was good fun. Our co-host Natasha was off, so Mary Ann and Alex teamed up with Grace to hammer our way through the news of the week live, with friends on Hopin, Twitter Spaces, and other locations on deck to hang out and ask questions.

Down a co-host or not, we tackled a whole slew of topics, including:

• Katie Haun’s new mega crypto fund and why the blockchain world seems to be so capital-hungry.
• The simply bonkers pace at which Jeeves, a fintech startup, has accreted value in successive funding rounds.
• Ramp’s latest round brought up the question of fintech versus the world and how startup commentary can at times miss the mark slightly.
• From there, we pivoted to CEO changes at Kickstarter (here) and Cityblock Health (here). The changes were a jumping-off point to the never-ending question of when startups should think about replacing their founders as CEOs.
• And we closed with a look at Forge’s neat SPAC launch and what its positive debut could mean for unicorns more generally.

French startup Bigblue has raised a $15 million Series A funding round. The company operates an order fulfillment platform for direct-to-consumer (D2C) brands. In other words, a D2C brand can outsource all things related to logistics to Bigblue so that they can focus on product and marketing.

Runa Capital is leading the round with LPV acting as the ‘secondary lead investor’. Existing investor Samaipata is also participating once again.

The startup currently operates in three countries — France, Spain and the U.K. It has signed partnerships with five different warehouses representing over 60,000 square meters of storage space. Bigblue customers can ship their products directly to these warehouses so that they are stored and managed by Bigblue’s warehouses.

After that, every time a customer order something from a Bigblue client, the product is shipped to the end customer using Bigblue’s carrier network. The startup has integrations with more than 20 different carriers and can ship all across Europe — and even globally but finding different D2C fulfillment partners in other markets might be a smarter move.

Bigblue lets you customize your packaging and add flyers in the package to personalize the experience for end customers. And if there’s something wrong, customers are invited to file a return request on a branded return portal. It supports store credit as well as refunds.

“With this new round we will support scaling service offerings for Bigblue’s growing base of online merchants, fuel hiring efforts, and continue to position the company as the leader in the D2C fulfillment space,” co-founder and CEO Tim Dumain said in a statement.

The result is quite simple. Bigblue wants to offer an Amazon-like experience, but with a third-party logistics stack. Bigblue integrates with many different sales channels, such as Shopify, WooCommerce, PrestaShop, Wix, Magento as well as various marketplaces on Cdiscount, Fnac and, yes, Amazon.

It means that you can promise free 1-day or 2-day deliveries across various marketplaces. And this is key when it comes to getting picked as the main seller on a product page on an online marketplace. Customers also get branded tracking emails.

The startup competes with other D2C e-commerce logistics companies, such as Cubyn, Hive and Huboo. Overall, Bigblue has managed to attract 300 customers, such as From Future, Unbottled and We Are Jolies. The company plans to ship 4 million parcels this year. Over the next 12 months, the startup plans to hire another 100 employees and expand across Western Europe.

French startup Weglot has closed a $50 million Series A funding round (€45 million) from Partech. The company has built a translation solution for websites. It helps you add more languages to your site without a lot of tweaking and without having to switch to a different CMS or e-commerce platform.

And this is key to understanding Weglot’s positioning. Translation plugins for WordPress of Shopify have been around for a while. But Weglot wants to build a universal product that works for all sorts of web experiences.

There are two ways to take advantage of Weglot. You can either add it to your existing website with a plugin — this is how Weglot works with WordPress, Shopify, Wix and WooCommerce. If you run a small company and don’t have a dedicated web developer, you could install Weglot without writing any line of code.

The other way is that you can add a few lines of Javascript to the <head> tag of your website. Weglot uses this approach for Webflow, Squarespace and BigCommerce. You also need to tweak your DNS records to create subdomains or subdirectories for new languages.

On Weglot’s servers, the company automatically detects and pulls content from the site. Weglot customers can use automatic translation to get started with new languages.

The company also offers a dashboard so that you can dive in your content and create better translations. You can grant access to professional translators and manage translations from that interface.

After that, you have a multilingual site. Whenever a visitor loads your site, the website will load in their favorite language by default. You can also add a language switcher in the corner of your website if you want to offer multiple options.

Even though translations are stored on Weglot’s servers, Weglot creates dedicated subdirectories or subdomains for each language. This way, Google and other search engines can index each language variant of your website. Metadata and keywords can also be translated with Weglot.

The startup charges a monthly subscription depending on the number of languages and words that you need. Last year, Weglot has reached $11 million (€10 million) in annual recurring revenue. Not bad for a startup that hasn’t raised any outside capital since its seed round in 2017.

The Yuga Labs investor deck from February is a fascinating document, bringing together gaming, a new currency, and an ever-growing pool of digital assets that can be bought and sold by fans of Yuga’s well-known NFT project Bored Ape Yacht Club.

I ran through the deck last night and again this morning to get a better grip on the company’s financials, expectations, and business promise. But we can’t really get into those matters until we talk about what the company has in mind — recall that Yuga raised $450 million at a $4 billion valuation, a deal that it announced earlier this week.

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No one is having more fun than the web3 folks today as they find themselves in the nearly unique position of seeing their current fascination (blockchain-based assets and related applications) also become the object of ample investor interest and consumer demand. That doesn’t happen too often.

With popular NFT projects under its belt, and some evidence of ability to use one collection of digital assets to grow another, Yuga has ambitious plans for the coming years. It also has a fresh half-billion in capital to help power its vision. This morning, let’s talk about what it wants to build, and how the economics shake out.

If things go according to plan, Yuga is about to make a lot of money.

Universe of the Bored Apes

Yuga wants to build something that “expands the universe” of Bored Ape Yacht Club, but “invites the larger NFT community” at the same time. More simply, the company wants to build atop its early success while making room for wider participation. That’s pretty reasonable.

Yuga is not big on present-day efforts to build metaverses. Missing in today’s metaverse efforts, per the company, are things like “purpose,” “shared goals,” and “real stakes,” along with “connections,” “decisions,” and a “story.” It sums up its view by noting that a simple social hub set in a virtual world is not enough to command consumer attention over a longer time horizon.

Hello and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines.

We had an illness on the team, so instead of recording our usual Wednesday deep-dive, we reached into our recent archives and pulled the audio from a Twitter space we did the other week. In short, it’s a Friday-style episode covering a host of topics, but just a little bit late, and on a different day.

The Equity team — Natasha, Mary Ann, Maggie, Grace, and Alex — were not about to cut back on feeding you the latest and greatest from the startup world. (Oh, and we have a live show on Thursday, see you there!)

What did we talk about? The following:

• Venture capital rounds for WorkWhile ($13 million) and Alloy Automation ($20 million).
• Mary Ann’s reporting on Forage, focused around where its founders worked before building the fintech startup. Hint: Grocery delivery.
• Then we dug into the changes at Clearco, and what happens when founder dynamics shift. And we used the story to chat a bit about how the growth focus amongst young tech companies is changing.

It was a very good time. Back soon, so chat then!

Harness, the developer-focused startup from Jyoti Bansal, has been working hard to build a more complete modern tooling platform for developers while taking a distinct shift into open source more recently. That started with the acquisition of Drone.io in 2020.

Today, the company took another open source step with the acquisition of ChaosNative, best known for the open source chaos engineering product LitmusChaos, which has been nurtured by the Cloud Native Computing Foundation (CNCF).

While ChaosNative CEO and co-founder Uma Mukkara, writing in a company blog post announcing the deal, said the project was originally geared to Cloud Native projects built on Kubernetes, it has grown into a broader set of chaos engineering tools over time.

“What started out as an effort to provide out-of-the-box chaos experiments for Kubernetes-based microservices, eventually grew into an end-to-end framework to carry out chaos engineering on a wide variety of application and infrastructure targets, with support for multi-tenancy, SLO validation, and custom workflows, amongst other features,” Mukkara wrote in the post.

With ChaosNative, Harness adds another piece to its developer toolkit, one that allows it to pressure-test its projects against worst-case scenarios. The idea is to try and create a set of conditions that could take down your application in order to understand that and prevent it from happening.

Bansal said that it also enhances the set of testing and reliability tools already on the platform.

“With the acquisition of ChaosNative and the addition of Harness SRM (service reliability management) and Harness STO (security testing orchestration), the Harness platform bridges the chasm of velocity, resiliency, reliability and security, empowering developers to rapidly and reliably deliver on business objectives while providing an unmatched developer experience,” he said in a statement.

As with the Drone purchase a couple of years ago, Mukkara said that as part of Harness, it will continue to nurture the open source project while integrating it into the Harness platform and offering commercial versions of the ChaosNative products.

“As part of Harness, we will continue to help maintain the community-first values of Litmus, while delivering on important roadmap items around integrations, newer fault injections/experiments, and an improved chaos dashboard,” Murkkara wrote.

The companies did not discuss a purchase price, but customers will begin to see ChaosNative’s capabilities later this quarter, according to the company.

Forge Global will begin to trade on the New York Stock Exchange today, having completed its merger with Motive Capital Corp as part of a SPAC combination. TechCrunch covered the blank-check tie-up when it was announced last September. Our first look at the deal’s metrics is here.

To say that the IPO market has changed since last September is an understatement; the pace of public offerings from tech startups has slowed to a crawl in the wake of a sharp repricing of the value of technology stocks since late-2021 highs. Richly valued private companies that might have targeted IPOs have pulled back on plans and the rate of new S-1 filings is de minimis.

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This makes the timing of Forge’s public debut illustrative. The company’s combination and flotation will at once provide a data point regarding market appetite for such deals, and the company’s stock price will also reflect, to some degree, the level of investor optimism in other companies not going public.

Let me explain. Forge operates a market for private shares — equity in unicorn startups, basically. And because the company’s business model is largely transaction-based, the more that folks buy and sell those shares, the more money that Forge earns.

Optimism, therefore, about the company’s future is predicated on its supply staying high; too many IPOs would limit private-market availability of shares in hot companies, constraining Forge’s growth prospects.

The irony is this: The better that Forge fares when it trades today, the more likely it is that other tech companies will get off the bench and start to consider — once again — the public markets. If they do, the act could limit Forge’s market by reducing the number of unicorns that investors want access to, but cannot in normal ways given their private-market status. We’ll talk more about this in a moment.

The tensions between Forge’s public-market success and the pool of companies it wants to list on its private market, however, are modest in comparison to the sentiment impact from the company’s trailing performance and the cash haul from its SPAC deal. So before we get too lost in our market theoreticals, let’s talk hard numbers.

Cash, growth, and guidance

In its SPAC investor deck, Forge said that it would record around $123 million in 2021 revenue and $151 million in 2022 revenue. But as we’ve seen some SPAC combinations miss guidance, we’re going to check Forge’s 2021 actuals to see not only how the company did, but how it performed compared to prior guidance.

Here’s what the company reported for 2021 revenues earlier this year and what it expects for 2022, based on the most recent data: