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. Today we had were reeling in the wake of the American football championship, and the fact that is once again snowing where Alex lives. Alas.

But snow or not, the news was fascinating:

• We chewed on the Just Eat delisting situation, which appears to be a cost-cutting move. Delivery Hero is also struggling, and the value of Deliveroo is in the toilet. So it’s not clear that European food delivery will wind up being the business that many expected it to be. What about in America? We get DoorDash earnings in due time, so we’ll learn more but the news doesn’t augur well.
• And shares of Splunk are set to rise sharply this morning in the wake of late Friday news that Cisco is interested in buying Splunk for around $20 billion. Normally such a deal wouldn’t excite us much as Splunk hasn’t been a startup for a long time, but the deal possibility does say that anti-trust concerns aren’t stopping some major firms from pursuing big deals.
• From the startup world, two rounds: $20 million for Gaia, which Alex thinks has a brilliant idea, and TripleDot, which raised $116 million for its causal games. Don’t sleep on the gaming market. It’s just flat huge.

And to close we yammered about crypto ads in the football game, which were expensive, but appear to be having a nice effect for the companies in question. More soon!

The number of startups building buy now, pay later (BNPL) services is long. Just this year we’ve seen French BNPL startup Alma raise a $130 million equity round, BillEase raise $11 million for BNPL in the Philippines, Lipa Later raise $12 million for the same effort in Kenya, and ThankUCash raise $5.3 million for fintech infra in Africa that appears to include BNPL services.

There were other funding events and product launches, but that’s enough of a sample for us to understand that private-market investors around the world are investing in the consumer checkout-and-credit capability, even after industry incumbents Affirm went public and Klarna has grown to massive scale with global reach. The $29 billion Block-Afterpay deal was also good for startup BNPL volume, we reckon.

Until some recent turbulence, there’s been good reason to consider BNPL startup investments sensible bets. After all, public-market investors had pushed Affirm’s stock to over $175 per share in late 2021 from an IPO price of $49 per share. And Klarna raised $639 million at a valuation of nearly $46 billion in mid-2021. With momentum like that, why not power up a host of BNPL services targeted at particular geographies around the world?

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All the warm and fuzzy of the above paragraph comes with a huge caveat, namely that the value of Affirm has eroded sharply in the public markets. After trading to just over $81 per share this week, an early tweet containing earnings data sent shares of Affirm sharply lower yesterday. The company’s full results and earnings call failed to stanch the bleeding. Exclusive of yesterday’s declines of more than 20%, shares of Affirm are off another roughly 15% today as of the time of writing, worth just $49.70 per share.

That’s peanuts more than the company’s IPO price. Sadly, we don’t have Q4 data from Klarna to dredge up in comparison; the company most recently shared its Q3 data. So we’ll have to try to unspool the change in the value of Affirm by itself. What we need to understand is why Affirm’s earnings were so deleterious to its value, and if other companies are at similar risk. More simply: Should the myriad well-funded BNPL startups see Affirm’s descent as a warning concerning their own efforts or something more company-specific to the U.S. fintech?

Affirm’s calendar Q4

Affirm’s corporate calendar is the same as Microsoft’s, it appears, with its calendar Q4 2021 being the second quarter of its fiscal 2022. This means that some of the language below will be slightly tortured as we discuss time periods. Not much we can do about it, frankly; the finance world isn’t really set up for us to enjoy smooth phrasing. Onward.

In its Q2 fiscal 2022, Affirm reported GMV of $4.5 billion (+115% YoY), revenues of $361.0 million (+77% YoY), revenues minus transaction costs of $183.6 million (+93% YoY), an operating loss of $196.2 million (+632% YoY), and an adjusted operating loss of $7.9 million, a few million worse than its $3.1 million adjusted operating loss from its Q2 fiscal 2021.

Helping drive the rapid GMV and revenue gains were Affirm’s new agreements with Amazon and Shopify.

There’s good and bad in there. GMV growth was strong, revenue growth solid, and revenue ex-transaction costs even better. Even more, Affirm crushed revenue expectations, which were $328.8 million for the quarter. So what went wrong?

Guidance, take-rate

For its Q3 fiscal 2022, or calendar Q1 2022 by our reckoning, Affirm anticipates $325 million to $335 million worth of revenues. Barrons has Wall Street expectations at $335.5 million for the current quarter, so the company’s guidance is a miss by that benchmark.

There were other data points that were less than investor-exciting. Observe the following chart, from Affirm’s set of investor materials:

Meet Insify, an insurtech startup that raised a $17 million (€15 million) Series A round led by Accel. The company wants to modernize the insurance market. Instead of focusing on the consumer market like many insurtech startups, Insify has picked a different path. It’s a pure B2B play as Insify focuses on Europe’s small and medium companies.

Originally started in the Netherlands, Insify founder and CEO Koen Thijssen previously worked on Bloomon, a flower e-commerce startup. After selling this company to Bloom & Wild, he wanted to fix a pain point that he encountered while building Bloomon — business insurance hasn’t changed much and can slow you down.

With Insify, companies that are just getting started can get a property and casualty insurance without much effort. The company currently mostly relies on direct subscriptions on its website. More recently, it has started embedding its insurance products in other products, such as Bol.com.

Insify tries to price its insurance contracts thanks to several data sources so that you don’t have to fill out complicated forms. Its insurance products are backed by Munich Re. So far, 1,500 companies have become Insify clients.

The startup focuses on small companies because it’s an underserved markets. Freelancers or teams of 2, 5 or 10 people don’t have a ton of options. Insurers mostly serve this market through brokers. And those brokers sometimes aren’t very responsive.

“Legacy insurers and brokers find it more complex to service small businesses than consumers, yet premiums are much lower than with medium-size or large businesses. Hence, the segment of freelancers and small businesses has long been neglected,” Koen Thijssen said.

If you want to get started as a freelancer and you already have found your first client, chances are you’ll need to share your insurance contract before you can close the deal. With Insify, you don’t have to wait several days to receive your insurance document.

“Overall, we see a very large opportunity in Embedded Insurance, especially in the segment of small businesses, and have made this one of our strategic priorities,” Koen Thijssen said.

So it sounds like Insify has found a way to address an underserved market with a good distribution strategy. In the future, Insify plans to expand to other products, such as life insurance, and other markets around Europe.

Image Credits: Insify

Inflation in the United States came in a little over expectations: The consumer price index rose 7.5% last year, the largest figure in some decades. In response, expectations for monetary tightening in America are also running hot.

And as interest rates rise, there’s an expectation that safer assets will become more attractive, and more speculative assets less so. Closer to home, it’s a common perspective that rising rates will lead to a generally bearish climate for public tech valuations. Backing the theory is the fact that in light of the hot inflation print this morning, stocks are down sharply in pre-market trading, with tech stocks leading the flop.

The Exchange explores startups, markets and money.

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Not everyone shares the anticipation that rates will ding tech valuations, it’s worth noting, but it’s a sufficiently standard view that it’s nice that the market has set up a natural experiment for us.

Whether it’s five rate hikes in 2022 — or four, or six — the price of money is going to go up this year sharply, at least in the United States. Around the world, we’re seeing a more mixed bag, with monetary policy loosening in China and Europe seeming set to hold course at present rates.

But the U.S. market for tech listings, major technology companies, and startup investment is sufficiently critical to the global markets that what happens here will impact the rest of the world. The expectation of rapid-fire monetary tightening is pretty damn important.

What’s ahead

Briefly, here’s how we got to today’s tech prices and ebullient market: In the wake of the 2008 financial crisis, governments lowered the cost of money through rock-bottom interest rates, among other monetary mechanisms for giving economies a boost. The low cost of money meant that traditionally safer assets like bonds became less attractive than before, as yields were very low — even negative in some cases.

French startup Alma is trying to build a new “buy now, pay later” giant in Europe. The company has closed a $130 million Series C round (€115 million). It has also raised $109 million (€95 million) in debt financing.

Tencent, GR Capital and Roosh Ventures are investing in the startup for the first time. Some of the startup’s existing investors are investing once again, such as Cathay Innovation, Eurazeo, Bpifrance’s Large Venture fund, Seaya Ventures and Picus Capital. Overall, it has raised $211 million (€185 million) in traditional equity funding rounds.

The company has partnered with 6,000 merchants so that they offer more flexibility for expensive purchases. The main payment product is the option to pay in 2, 3 or 4 installments.

But the company also offers different plans. For instance, Alma offers 10-month or 12-month plans. Those options are particularly popular with some specific purchases, such as consumer electronics devices or furniture.

Finally, Alma has a payment option that lets you buy something and pay 15 or 30 days later. This could be particularly useful for clothing items and other goods that you think you might like, but you might end up returning.

Overall, Alma processes more than €1 billion annually with its current run rate. It doesn’t charge late payment fees as the company thinks it isn’t aligned with the consumers’ interests. Some companies, such as PayPal, have dropped late fees on BNPL installments. Others generate some revenue from those late interests.

Instead, Alma charges payment processing fees. Some merchants choose to pay those fees directly, hoping that it’ll increase sales. Other merchants share those fees with the end customers. It’s up to the merchant.

Alma is following in Klarna’s footsteps and has launched a mobile app for consumers. For now, the app only lets you manage your payments. At some point during the first half of 2022, the company will let you generate virtual cards to pay in multiple installments everywhere.

In addition to online payments, consumers can pay with Alma in retail stores. The payment option can be integrated in the payment terminals, or merchants can generate a payment link and share it with customers. In-store payments represent 30% of payment volume.

The startup works with Alain Afflelou, Etam, Galeries Lafayette, Printemps and Ankorstore. The company recently expanded to other markets. It is now available in Spain, Italy, Germany and Belgium. And Alma now plans to expand to the Netherlands, Luxembourg, Portugal, Ireland and Austria. In other words, Alma has refined its product — it’s now time to expand more widely.

Financial apps are proliferating across Southeast Asia, making things like bookkeeping or securing an online loan easier. But this means fintechs need access to large amounts of data that they can use to verify customer identity, creditworthiness or aggregate information from online accounts. Brick wants to simplify the process with a suite of APIs that connects financial apps to “hyper-local” sources of data, including banks, mobile wallets and telecoms.

The company announced today it has closed a $8.5 million seed round led by Flourish Ventures and Antler. This amount includes Brick’s previously undisclosed seed funding, which TechCrunch reported in May 2021, but the majority of it is fresh capital, said co-founder and CEO Gavin Tan. Brick currently operates primarily in Indonesia, but is planning to expand into Singapore and the Philippines before eventually covering all markets in Southeast Asia.

Other participants include Trihill Capital and returning investors Better Tomorrow Ventures and Rally Cap Ventures, along with individual investors like Creative Juice co-founder and CEO and Plaid’s former head of business development and strategy Sima Gandhi; Bond Financial Technologies co-founder Yan Wu; Brian Ma, founder of Divvy Homes; Iterative co-founder and managing partner Ooi Hsu Ken; Pine Labs CEO Amrish Rau; and Aspire co-founder and CEO Andrea Baronchelli.

Founded in in 2020 by Tan and CTO Deepak Malhotra, Brick now has more than 50 paying clients and supports more than 13 million API calls and almost one million consumers a month. Tan was an early employee at Aspire, the neobank, while Malhotra was co-founder and CTO of Indian neobank Slice.

Brick’s 25 data partners include some of Indonesia’s largest banks, but Tan says that over the past year, “we actually moved away a bit from the focus on just banking because of the local landscape and huge unbanked/underbanked population in Indonesia and Southeast Asia. Only 25% of adults regularly use a bank account in Indonesia, so we’ve expanded to covering mobile wallets, e-commerce, telcos, government social security data, which has proven to be very popular.”

Brick’s APIs include Brick Data, Brick Verification and Brick Payments, which can enable an end-to-end process for online loans, including verifying user identity, underwriting and making sure that funds are disbursed into the right bank account.

When TechCrunch first spoke to Brick last year, many of its customers were online lending providers, but it has since expanded into new verticals. Its second most popular vertical are personal financial management apps, where its APIs powers the budgeting function. Its third-largest vertical are bookkeeping and accounting apps used by businesses. Other customers include investment firms, banks and some of Indonesia’s largest conglomerates, including Sinarmas Group and Astra Financial.

The funding fill be used to double down on Brick’s presence in Indonesia and regional expansion. The Philippines was chosen as one of Brick’s next markets because of “the development in open banking,” Tan said. “There are already draft regulations out in the Philippines by regulators, a lot of open banking and open finance-friendly banks,” said Tan.

Singapore was chosen because “regulators have always been a leader in terms of open finance thinking, so that’s helpful, but another big factor is that there are a lot of modern fintech startups there, meaning they are already aware of open finance solutions.”

Other open finance API startups in Southeast Asia include Finverse, Brankas and Finantier.

Tan says Brick’s advantage is “we are by far the market leader in terms of coverage with 25-plus discrete different data connections” in Indonesia.

In an email to TechCrunch, Flourish Ventures global investments advisor Smita Aggarwal said, “Brick plays an important role as a digital conduit that bridges financial institutions, businesses and customers. It allows platforms, apps and fintechs to integrate identity and financial data through simple automated processes. This investment strongly aligns with our greater commitment to a support financial ecosystem that is inclusive and serves everybody.”

Meal deliveries in Vietnamese cities typically take less than half an hour, but grocery deliveries are lagging behind, sometimes taking up to two to three hours, says Rino founder Trung Thanh Nguyen. By creating a vertically-integrated logistics infrastructure centered around “dark stores,” or stores set up for order fulfillment only, Nguyen says Rino can cut grocery delivery times down to just 10 minutes. The startup, which will launch this month in Ho Chi Minh City, announced today it has raised a $3 million pre-seed round from Global Founders Capital (GFC), Sequoia Capital India, Venturra Discovery and Saison Capital.

After a wider public launch in March 2022, Rino (which stands for “right now”) plans to expand quickly, first in Ho Chi Minh City’s most densely-populated areas, then in Hanoi. 

Before starting Rino, Nguyen was co-founder and chief operating officer of Baemin Vietnam, one of the country’s largest food delivery apps. Before that, he served as Grab Vietnam’s head of GrabBike and GrabExpress.

Rino’s grocery delivery app

When asked why he wanted to focus on grocery deliveries after Baemin, Nguyen told TechCrunch that the rapid adoption of food deliveries in Vietnam “created a clear roadmap for the groceries segment.”

“Four years ago, food delivery in Vietnam was slow. Meals took up to an hour to reach customers, which meant that individuals had to get used to planning meals in advance,” he said. “Once the platforms reduced it to under 30 minutes, consumer behavior changed quickly and the sector as a whole had an opportunity to grow more than 10-fold within a very short time.” 

Nguyen believes grocery deliveries will follow the same pace. Adoption of grocery deliveries increased during COVID-19 lockdowns in Vietnam last year, and have become a regular part of consumer purchasing habits, he said. “Customers are ready, but existing delivery options including retail chains or third-party platforms who deliver on behalf of retailers are either too slow or unreliable.” 

Rino plans to cut that time down by owning its inventory, purchased directly from suppliers, and integrating its own dark stores into its logistics infrastructure. In order to make deliveries in such a short time, Nguyen said Rino will divide each of its cities into service zones with a radius of one to three kilometers. Each zone will have  a dedicated dark store owned and operated by Rino, with last-mile deliveries performed in batches by its own fleet of riders.

In a prepared statement about the investment, Saison Capital partner Chris Sirise said, “The quick commerce landscape has benefitted from permanent gains as consumers of all demographics continue to rely on e-commerce options even after COVID-19 lockdowns taper off. What we’ve seen from the founding team leading up to the launch reaffirms what we’ve seen from Trung throughout his time spearheading growth at Baemin Vietnam and Grab—high caliber industry leaders who not only have the insights required to lead the market but also the local know-how needed to truly cater to local needs.”

Hearts Radiant, a Spanish startup that’s building a “longevity coach” for seniors — with the goal of extending quality of life through app-based personalized coaching designed to combat and even prevent frailty — has closed a seed round of funding as it gears up to launch in the US, eyeing Florida’s 4M+ over 65s.

We covered the startup as it came out of stealth to announce pre-seed funding for its digital coach, aka Rosita Longevity, back in October 2020. It followed that by launching out of beta in Spain at the end of 2020 — and went on to amass around 2,000 “very active” users, with an average DAU/MAU of 30%.

The app is offered as both paid or a lighter, freemium version.

“Over the first months we worked on creating adherence and medical plans and by September 2021 we came out of beta and launched our first paying cohort,” says co-founder Juan Cartagena. “The cohort was capped to 40 users paying an average $60/quarter because it involved many manual processes.

“Over the last five months we have been working on automatizing those processes while delivering the service to those users (aside the other ones on the free version). To this day we have had just one person churning and an average DAU/MAU of about 80%, which is incredible for a non-chat product.”

The idea for a personalized digital coach to motivate seniors to make lifestyle improvements to raise their quality of life and even, potentially the number of healthy years they can live — grew out of an in-person spa/retreat for seniors run by the wife-husband founder team.

Digitizing programs developed at the spa — and proving that digital coaching and other remotely delivered technologies can be as effective as in-person therapies is a key part of Hearts Radiants’ mission, as it works to scale a business that sells ‘longevity as a service’.

A clinical trial on its approach is still ongoing, with progress having been delayed somewhat by COVID-19. But the startup tells TechCrunch it plans to publish research on its methodology soon, possibly this summer.

The app-based coaching program packaged as Rosita Longevity focuses on encouraging (gentle) exercise as a way to boost seniors’ mobility and decrease frailty, as well as increasing their social connections (via cohort-based group classes) for an age group that can suffer especially from loneliness and associated mental health issues.

The app organizes seniors into different cohorts depending on their physical condition and muskulo-eskeletical symptoms in order to tailor support — with AI used to help develop a personalized plan per user, based on information they provide about their mobility and any illnesses/conditions etc.

But core to the program is “motivational” coaching — which is provided by (human) healthcare professionals who, while they are dispensing advice/classes digitally, are certainly not made of pixels.

The app-delivered program also provides seniors with other information on how to live better for longer, such as advice on diet, or provides support to manage chronic pain, such as through targeted physiotherapy, in addition to serving up info on relevant emerging research around ageing and longevity.

“When you download the app you go through an evaluation process where Rosita learns where you are today and relevant issues of your past health, helps you set the goals for your next months and proposes an action plan to achieve them. The plan combines live and recorded sessions, follow up tests and group chats with our specialists that will cover all the questions and issues our seniors have,” explains Cartagena.

“We have found these group sessions very relevant in the senior community because as you age, most of the pathologies affect them in a very similar way (comorbidities are very similar and close in symptoms) so it feels very productive to group them in terms of learnings and follow ups.”

“Users inside of a cohort get a personalized plan but are coached in teams per cohort, leveraging social health and peer dynamics. So we are connecting the human part with the automated part for most impact, keeping a healthy trainer ratio,” he adds.

The €2.4 million ($2.8M) seed round was led by Barcelona-based impact fund, Ship2B ventures. Other investors include JME Ventures, KFund, Seedcamp, Bankinter, Seedlink Health, Telefonica Wayra, the University of Chicago, and a number of business angels — including Cristobal Viedma (founder of Lingokids) and Poonam Sharma (a “health veteran” at Oscar Health).

As well as the seed funding the planned expansion into the US — where Cartagena says it will (at least initially) opt for the same b2c model, charging seniors to access a “Prime” version of the app that unlocks access to more classes/therapies — the startup wants to spend on R&D with the goal of developing what he describes as “longevity biomarkers with biomechanics and artificial vision”.

Which is a condensed way of saying the startup hopes to be able to use computer vision/machine learning technologies to automate the detection and assessment of frailty/prefrailty in seniors to better tailor programs and interventions, even if the only hardware in the room is a relatively old smartphone with a not-so-amazing camera.

Further plans for the seed funding are to expand “longevity plans” to more specific cohorts — “based on a combination of behavioral patterns and health history” — so it can offer increasingly customized programs.

“The holy grail of all of this is preventing frailty before it happens,” adds Cartagena. “Frailty and prefrailty are like being diabetic and prediabetic: It is just a matter of where you set the bar. Neither prefrailty nor prediabetes gets much attention but the impact to society is very large. We want to find the people who have the risk of becoming prefrail much much earlier, in their 60s and early 70s.

“We are initially very focussed on functionality, which includes biomechanics, muskulo-eskeletical changes and other areas related (such as gait strength or patterns) that are proxies to mental health (even stronger than cognitive tests!) and literally life expectancy. As we grow we will combine these tests with other lifestyle data, blood tests, microbiome and epigenetic clocks.”

“Tests for frailty and prefrailty exist, but geriatricians can easily point a frail person by looking at how they walk a couple of steps. Therefore an AI might be able to do the same,” he adds.

Asked about the ongoing clinical trials it intends to demonstrate the effectiveness of its digital programs, he suggests the “key variable” is consistency — noting that the current paying cohort is doing 320 minutes+ of exercise a week (“which even for in person coaching is amazing for the senior community”).

“What I believe we have proven with our pre-seed round, is that you can achieve high adherence and results with virtual coaching,” Cartagena adds. “The WHO recommends 150 minutes of physical activity for seniors per week (the average is less than 50 and most do 0 minutes (walking does not count)), and we are achieving a lot more than that (320 in paying users and 170 in non-paying users), plus people are feeling better so they are also becoming more active outside the App, which we do not measure properly yet. This amount of activity in seniors in really unheard of in geroscience.”

French startup Silvr has raised a $20.6 million (€18 million) Series A funding round and has opened a $128 million (€112 million) debt line for its activities. Silvr wants to offer new credit opportunities for e-commerce and software-as-a-service companies. Essentially, it wants to bring the Pipe and Clearco experience to Europe.

XAnge, Otium, Bpifrance, Eurazeo and ISAI are participating in today’s funding round. Some business angels are also investing, such as Alexandre Prot, Steve Anavi, Raphaël Vullierme, Louis Chatriot and Pierre Dutaret.

Started in 2020, Silvr has already financed 100 companies, such as Cuure, French Bandit, Almé Paris and Emma&Chloé. Unlike VC funds, Silvr offers capital but doesn’t take any equity. And unlike traditional banks, Silvr can finance riskier businesses that don’t have assets.

When a company applies to unlock some credit with Silvr, they grant access to various data sources — the corporate bank account, Google Analytics, an e-commerce platform such as Shopify, the platform that you use for payments such as Stripe, etc.

Silvr has developed its own scoring algorithm to make decision based on this data. The startup mostly focuses on e-commerce companies and SaaS startups for now. This way, it’s easier to predict future revenue based on past sales.

On average, clients increase their revenue by 64% two months after obtaining some financing from Silvr. And Silvr doesn’t necessarily replace VC money as 35% of Silvr’s clients have raised capital from VC funds.

Silvr offers different ways to receive money. In addition to traditional wire transfers, the startup can offer virtual cards or pay partners directly. For instance, if you want to use Silvr for a new ad campaign, Silvr can pay the bill directly.

As for repayments, clients can pay back using a traditional monthly plan, or they can allocate a portion of their revenue to repayments.

Silvr isn’t the only company working on capital-as-a-service in Europe. Karmen and Uncapped are also working on similar products in France and the U.K. respectively.

Retail investment apps in Southeast Asia attracted a lot of funding last year, and the trend looks set to continue with Vietnam-focused Infina announcing that it has added $4 million to its seed funding. Along with the $2 million it announced in June, this brings the round’s total to $6 million.

Investors include Sequoia Capital India’s Surge program, Y Combinator, Saison Capital, Starling Ventures, Alpha JWC and AppWorks.

Infina was part of Y Combinator’s Summer 2021 cohort and aspires to become the “Robinhood of Vietnam.” It launched in January 2021.

Like other Southeast Asian investment apps that have attracted venture capital over the past year (a partial list include Indonesia’s Pluang, which recently raised a $55 million follow-on to its Series B, Bibit, Ajaib, Pintu and Syfe), Infina is focused on first-time Gen Z and millennial investors.

More Vietnamese people began participating in the stock market last year, driven in part by a jump in the market value of publicly traded companies. Infina says it saw a compound monthly growth rate of 64% in funded accounts in 2021.

The app enables investors to pick from several asset classes, including fixed-income products, mutual funds and stock trading. It also offers fractionalized trading, which means users can invest with lower minimum amounts. Part of the reason for Infina’s growth is its integration in third-party super apps, including e-commerce app Tiki.

Remember Wag? The dog-walking app made huge waves back in 2018 when it raised $300 million from SoftBank’s Vision Fund.

Competing with rival Rover, Wag’s service fell out of our minds in the years since its mega-deal. Today, Wag is back in the news thanks to a recently announced SPAC deal that will take the company public.

The Exchange explores startups, markets and money.

Read it every morning on TechCrunch+ or get The Exchange newsletter every Saturday.

This means we get a look inside the machine.

In basic terms, Wag’s results detail a company that took blows during the pandemic as folks stayed home, meaning that they needed external dog care less than before. But, with its results ramping up, Wag expects to continue its recovery thanks to workers heading back to the office this year. The office-return dynamics make Wag’s forward-looking projections very interesting.

Let’s hammer through the SPAC deal terms and then look at Wag’s historical results and what it expects for the future. After all, the return-to-office question will impact a host of companies beyond Wag. From Uber to DoorDash and beyond, a return to more old-fashioned working conditions would rejigger our economy once again.

The Wag deal

Wag is merging with CHW Acquisition Corporation. The deal calls Wag a “vertically integrated technology platform,” notably. The release also states that capital is being provided as part of the deal by “current Wag! and CHW investors,” including “Battery Ventures, ACME Capital, General Catalyst and Tenaya Capital.” That, in a nutshell, is why we care about this deal; it’s a venture-backed company that is still raising venture capital.

In more boring terms, the “transaction values the combined company at a pro forma enterprise and equity value of approximately $350 million,” which isn’t much. Especially given that private capital into Wag to this point is around the same number. The deal, presuming “no redemptions from the CHW shareholders, [will] deliver approximately $175 million in gross cash proceeds to the combined company.”

Shares of CHW Acquisition Corporation trended lower last week, but recovered to $9.82 per share today, a slight discount to the usual $10 per share SPAC price that we tend to see pre-combination. Still, the market hasn’t thrown up its arms at the deal’s concept since its announcement. Why? In part because Wag’s numbers are pointing in the right direction.

A pandemic recovery

To understand Wag’s return to growth, we have to discuss its declines. In short, when the pandemic hit, demand for Wag’s service — dog walking, pet care, etc. — fell off a cliff.

Observe:

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. Today we had a fun mix of news, and things that made us laugh.

• The Spotify-Rogan situation continued as last week ended, with more episodes of the show coming down. More apologies. And more of Spotify trying to straddle the difference between platform and publisher, while hoping to reap the rewards of both while not fully owning up to the responsibility.
• Wag is going public, and my body is ready.
• From the funding round front, we had quick notes on Swing, which raised a $24 million Series B, and Reliance Health, which raised a $40 million Series B.
• And to close us out, an analogy about Facebook through the lens of Alphabet’s Other Bets line item.

Lots of Equity is coming this week, including our first live show of the year. It’s free and you can come hang out, watch us flub, and ask questions! See you Thursday!