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

This Monday show actually felt a bit old-school, in that the weekend controversy in tech has spilled over into the working morning, meaning that we need to talk about it. But first, markets:

• After the somewhat punishing start to last week, today’s trading is somewhat more staid. Global equities are moving, but nothing suicidal, and cryptos are off a bit in the last 24 hours, but up in the last seven days. Naturally, given what has happened in recent trading sessions, all that could change in a moment but at least we’re starting in un-choppy waters.
• The Joe Rogan furor continued. After several musicians decided to take their music off the service in protest of Spotify’s decision to pay for material that those artists viewed as undercutting public health, Spotify made some of its rules public and said that it will append COVID-19 notes to podcasts that discuss the pandemic. We talk about why.
• In startup-land, FTX has raised another huge round, TCV is putting more late-stage money into early-stage rounds, and Bamboo raised.
• Closing out, changes are afoot in China’s venture capital market.

So yes, there’s going to be a lot of Twitter drama this week. But don’t worry! You can compensate for that by hating on people posting Wordle scores, as that appears to be the latest way to lose friends online.

French startup Pennylane has raised a $57 million Series B round (€50 million) from existing investors, such as Sequoia Capital, Global Founders Capital and Partech. The startup wants to replace legacy accounting solutions in France — and in Europe.

If you’re an accountant, you might be familiar with tools like Cegid and Sage. Essentially, Pennylane wants to overhaul these tools and modernize the tech stack of accounting firms.

Pennylane connects directly with third-party services that hold valuable information. For instance, you can get banking statements in the Pennylane interface, import receipts from Dropbox and get billing information from Stripe.

And because it’s an online platform, accounting firms can use Pennylane collaboratively. Clients can also access the platform to centralize receipts, create invoices and automate some tasks. Instead of sending information back and forth with spreadsheets and photo attachments, both clients and accounting firms can interact directly on the platform.

Right now, there are 300 accounting firms that are using Pennylane. Some of them have started using the product with a few clients, others have completely switched to the new tool. Interestingly, Pennylane clients want to use the platform more and more, which means that they bring new clients to the platform.

“Nine months ago, 90% of our clients reached out to us directly and 10% of them became clients through accounting firms. Nine months later, that trend has changed. 81% of our clients come from accounting firms,” co-founder and CEO Arthur Waller told me.

While the startup didn’t want to share revenue numbers, Waller told me that the startup has been growing by 20% month over month since this summer. Since 2020, Pennylane has raised $96 million.

If you take a step back, Pennylane has a significant market opportunity ahead. In the U.K., the U.S. and other more mature markets, companies have been using QuickBooks, Xero and other software-as-a-service solutions. But accounting is a fragmented industry with each country using their own software solution. In some countries, such as France, there’s no definitive SaaS solution for accounting.

“In France, there are roughly 12,000 accounting firms. Today we work with 300,” Waller said. “Our goal is that in 4 or 5 years we work with 1.5 million small and medium companies,” he added.

There are some geographic expansion opportunities ahead, but also some product opportunities. Pennylane could become the central hub for everything related to financial management.

For instance, the company has started beta-testing corporate cards with Swan to facilitate payments. You could imagine a sort of revenue-sharing deal with accounting firms for the interchange fees generated by those corporate cards. With today’s fundraising, the company thinks it can iterate on its product as there are still a lot of things to do just for the French market.

The company plans to reach 500 employees by the end of the year. As Pennylane thinks tech and product remain the most important areas for the startup, most hires will be in these categories. Essentially, Pennylanes wants to create a product that is a no-brainer for new accountants getting started.

The 2020-2021 trading and investing boom lifted a number of companies’ revenue growth, fundraising and narrative strength. Some of the best-known even went public on the back of a global trend that made their businesses shine. Now that shine is fading, and the value of select fintech concerns is in free-fall.

The best example of this reversion is Robinhood, a company that became synonymous with consumer trading and investing activity, and the meme stock craze in particular. That Robinhood added crypto trading in recent years, adding to its torrid ascent, merely makes its recent results all the more pertinent to the ways public and private markets have changed in late 2021 and so far in 2022.

Robinhood’s stock fell sharply yesterday and dropped further after the company reported its Q4 2021 results. As of this morning, Robinhood stock was worth around $10.85 per share, 71.5% off its IPO price and 87.2% off its all-time highs. What happened? Let’s find out.

What makes Robinhood valuable

The simplest way to consider Robinhood’s business is to multiply active users by average revenue per user. Users — monthly active users, or MAUs — help the company generate payment for order flow and other incomes. Average revenue per user — or ARPU, if you are into truly awful acronyms — is just that, allowing us to consider the company’s general health as MAU*ARPU = results.

More of either is good, less of either is bad. More of both in any quarter is great, less of both in any quarter is probably a disaster. Got it? OK, let’s talk numbers.

Meet Rise, a new startup working on a calendar app that is specifically designed for team work. Rise helps you see what you have planned, check what you team is doing right now and, more importantly, schedule meetings that are as convenient as possible for the whole team.

Currently in private beta, Rise raised $3 million from Lachy Groom, Stewart Buttlefield, Adriaan Mol and a long, long list of business angels.

Based on the screenshot above, Rise looks like most calendar apps. But the main differentiating feature is a scheduling engine so that you don’t have to think about the best possible time for your next meeting — no Calendly link needed.

When you create an account, Rise asks you to configure the perfect week — a sort of blueprint for your week. For instance, you may not like meetings in the morning. Conversely, you can create blocks of time that work well for meetings. Rise divides your week into meeting time and focus time.

Once your team is on Rise, you can create a new meeting by opening the command bar and entering information, such as “Meet next week with Sam and Sarah”. The app automatically parses your query and understands that you want to schedule a new meeting with two other team members.

Rise checks availabilities, time blocks and preferences across all attendees. Behind the scenes, there’s a ranking algorithm for each time slot — Rise picks the best ranked result. The consequence is that team members all get back some much needed time to focus.

The startup wants to use a software-as-a-service approach with monthly subscriptions. Before teams start using Rise, they can connect their accounts with Rise to see how much time they could have saved if they had been using Rise all along.

If Rise manages to convince enough companies to use its calendar, you could imagine some interesting network effects for meetings with people outside of your organization. For instance, Rise could automatically schedule a meeting between two companies that are using Rise at the right time for everyone involved.

As for scheduling meetings with people who aren’t using Rise, there’s no obvious solution here. Calendly is a popular option for busy people who want to share a link with availabilities — Rise is aware that there’s some existing competition on this front.

“There are a couple really obvious things we could add that are also in comparable products, like quickly copying-pasting availability, landing pages for your calendar, etc. But there are also already some brilliant products that offer features just like that where it’s harder to make a truly 10x leap,” Rise co-founder Rick Pastoor told me.

Pastoor also wrote a productivity book called GRIP that has been working well in the Netherlands. He has sold over 75,000 copies of his book. Rise is part of a new wave of calendar startups that have been popping up lately. It’ll compete with Cron, Hera, Amie and others.

Rise thinks it can stand out from the competition with its opinionated approach with time management. “We don’t want to create a cockpit full of knobs and options. We want to help our users and teams to get to what matters most. For that we need some initial input, but actually we’d love to move those out of the way as soon as we can reliably figure that out without having to specify it,” Pastoor said.

New data from Kruze Consulting shows just how much the venture capital fundraising market has changed for startups in the last few quarters.

Kruze, which provides accounting, tax and venture capital-related services to private tech companies, has access to hard data regarding startup performance. Healy Jones, vice president of financial planning and analysis at Kruze and a former venture capitalist, put some of that information to work, using aggregated, anonymized data from startup funding rounds to detail how much revenue startups are reporting at various fundraising benchmarks over time.

We took a look at how rapidly revenue averages have declined for startups approaching early-stage fundraising events in the last nine months compared to the preceding few years.

The results are simple: Software startups are generally raising early-stage rounds (through Series B) with lower revenue totals in recent quarters than in prior years. Data from several hundred early-stage software (SaaS) fundraises indicates that startup growth rates are not accelerating — though there is a key exception that we’ll discuss.

I don’t want the data behind the paywall, so before we get into what’s happening and why, here’s the raw information from Jones and Kruze. Note that the percentage changes to ARR levels were recalculated by The Exchange from shared data to allow a few more decimal points:

Data via Kruze. Numbers are averages. Data from more than 200 SaaS fundraises.

What does all that mean? Let’s talk about it.

Slimmer revenues and evolving growth rates

The data indicates that seed, Series A and Series B rounds have seen a recent and rapid decline in revenue reported by the SaaS startups raising. It also shows that seed and Series A software companies raised with slower growth rates from 2019 through Q1 2021.

Berlin-based Mayd, a startup that’s building an on-demand medicine delivery platform in Europe, has fast followed a chunky seed raise last fall — with a €30 million (~$34M) Series A funding round led by US investor Lightspeed Venture Partners.

Previous investors Target Global, 468 Capital and Earlybird Venture Capital also chipped into the Series A.

The round brings Mayd’s total raised to date, since the business was founded at the beginning of 2021, to €43M.

This early funding velocity looks akin to the pace investor cash has been flying into European on-demand grocery delivery platforms since the pandemic supercharged app-based delivery.

Grocery delivery startups have gone on to pull in some very beefy B and C raises in recent years, such as the almost $1BN Series C for Berlin’s Gorillas in October. So it’ll be interesting to see whether investors feel moved to plough similarly heady sums into more specialist on-demand startups, as founders work to slice and dice opportunities around app-based ordering and speedy local delivery. (See also, for example, the $20M Series A raise earlier this month for another German ‘instant delivery’ startup which is focused on premium, branded goods.)

For now, though, Mayd is keeping schtum on its valuation.

Demand for medicines and/or non-prescription products sold in pharmacies — all of which Mayd’s platform is being designed to deliver at speed — is fairly universal, if not quite up there with the daily human need to eat. So investors are likely attracted by the prospect of solid demand — assuming execution is strong.

That said, grocery as a category isn’t purely food; there are overlapping products vs what you can find in a pharmacy — so there is some direct inventory competition here, even as prescription medicines (which will be coming to Mayd) are a specialist type of order that isn’t typically possible via an ‘instant grocery’ delivery.

Plus, the convenience of in-app ordering and to-the-door delivery for meds may offer more of a pull vs general food delivery — given pharmacy shoppers are disproportionately likely to be feeling unwell or caring for someone who’s sick so may be especially keen to avoid leaving home to make an essential purchase.

Mayd’s delivery pledge in the cities where it operates is to get the order to your door within 30 minutes — for orders made between the hours of 8am and midnight (next day delivery thereafter).

It’s scaled out quickly from its first city, Berlin, also launching into Hamburg, Munich, Frankfurt am Main, Cologne and Düsseldorf. Across this footprint it currently offers access to 2,000+ prescription-free medicines and other pharmacy products, ahead of changes to the e-prescription system due this month which will enable it to also take orders for prescription drugs in Germany.

This pace of expansion means the startup has already grown to 100+ employees, as well as 350+ delivery riders — who it says are “permanently employed” (this means “directly contracted” with Mayd, i.e. not employed via subcontractors).

The Series A funds will be used to further step on the growth gas — with Mayd eyeing expanding into two more European markets over the new few months and scores more cities.

“We will use the new funds to invest in the company’s expansion in Germany and Europe, hiring key positions with a focus on technology, as well as in the further ramp up operations,” it tells TechCrunch. “Until the end of Q2 we plan to launch in two other markets in Europe and currently are looking at our best options.”

The startup says typical customers for its pharmacy order delivery service so far skew more female than male, and tend to fall into the 35-45 age range — having a focus on “convenience first”. (Aka: “Our customer base is urban, digital and appreciates our 24/7 service a lot.”)

Mayd also says its shoppers are ringing up bigger basket sizes than for online groceries.

But, well, medicines and ailment potions tend to be relatively expensive vs general groceries so that’s not too surprising. It is important to making the unit economics stack up for the speedy delivery though.

“Highly in demand are ailments against the common cold, OTC products for acute health problems like dry eyes. Beyond that everything for the needs of Mother & Child is popular amongst our customers,” it adds. 

Mayd says it takes a commission on sales of non-prescription pharmacy products but does not charge for delivery.

For e-prescription orders it has said the model will either entail a delivery fee or listing fee.

Asked about the looming launch of e-prescriptions in Germany, Mayd claims it will be “the first company on the market to integrate the instant delivery service into our system”, adding: “This way we will be able to fully cover all needs in the area of health. Customers will have the chance to order their prescription medicines in an instant, in a convenient and time-saving way.”

Looking ahead, the startup says it expects to pass 100,000 customers over the course of this year as it expands out from (currently) six cities — soon to be seven, as it dials up service in Stuttgart next week — to more than 50 cities across its operational footprint in the first half of 2022.

Applying to colleges is one of the hardest parts of high school, especially for students who want to study abroad. Cialfo wants to make the process easier, with a platform that includes school research, communication tools for counselors and students, and Direct Apply, which helps international students find and apply to hundreds of programs with a single application form.

The Singapore-based edtech announced today it has raised $40 million in Series B funding, led by Square Peg and SEEK Investments.

The round, which also saw participation from returning investors SIG Global, DLF Ventures, January Capital and Lim Teck Lee, brings Cialfo’s total raised so far to to $55 million, including a $15 million Series A announced in February 2021.

The company currently has more than 170 employees in Singapore, India, the United States and China, and is partnered with about 1,000 universities around the world, including Imperial College London, the University of Chicago and IE University in Spain.

Ciaflo was founded in 2017 by Rohan Pasari, Stanley Chia and William Hund. The team told TechCrunch in an email that Pasari was prompted by his own experiences as a student. He grew up in India and his high school didn’t have a career counselor. As a result, students were left to navigate the college application process on their own.

Pasari originally wanted to go to a four-year university in the United States, but his parents could not afford the high international student fees, so he applied to schools in Singapore instead, getting a full scholarship to Nanyang Technological University (NTU). Before graduating, Pasari helped his sister and some of his friends through the college application process, which planted the idea of launching a business in his mind.

Pasari originally started an education consultancy firm with Chia, working with about 200 students at its peak. But the two wanted to use tech to scale up their operations, so they sold their education consultancy in 2017 and used the proceeds to launch Cialfo.

The company operates on a B2B model, selling subscriptions to schools. College counselors then invite students onto the platform, which parents or guardian have access to as well.

“Our mission has always been to help one million students in their journey of getting college ready. We believe there are three pillars required—access to information, personalized assistance and financial resources—and bring all of the three together will enable the democratization of education,” the team told TechCrunch.

The new funding will be used to grow Cialfo’s global user base, add more features and look at potential acquisitions.

Banking giant UBS announced earlier today that it will purchase venture-backed robo-advisor Wealthfront in an all-cash transaction worth $1.4 billion.

Wealthfront, which raised just north of $200 million while private, per Crunchbase data, is one of a few wealth management services that grew on the back of offering automatic investing tools to consumers. Betterment ($435 million in funding, per Crunchbase) and Personal Capital ($265 million in raised capital, according to the same data source) are other related plays.

The $1.4 billion price tag for the UBS-Wealthfront deal matters, then, as it could impact the exit values for not only other startups, but also hundreds of millions of dollars worth of invested venture capital.

It’s hard to say with complete confidence whether the sale price Wealthfront managed to command was a strong win for its backers. PitchBook data estimates that the company was worth $700 million in 2014 and $500 million in late 2017 when it raised its last known round of capital, a $75 million sum.

At those prices, the company’s exit price is a win in that it represents a 2x or greater multiple on its final private valuations. But its exit value is also parsable from a number of alternative perspectives: AUM, customers and revenue. We’ll explore each briefly to get a better grip on how the company was valued in its sale, and what UBS is getting out of the deal.

AUM, customers, and revenue

In its release, UBS said that Wealthfront has “over $27 billion in assets under management,” or AUM. That means that UBS is paying around 5 cents per dollar in AUM at the company. Is that a lot?

Pimloc, a UK computer vision startup that’s sharpened its business pitch to sell an AI service for quickly anonymizing video — automating the blurring of faces or licence plates, along with a suite of other visual search services — has grabbed another chunk of seed funding: Announcing a raise of $7.5M, led by Zetta Venture Partners, with participation from existing investors Amadeus Capital Partners and Speedinvest.

The startup raised a $1.8M seed, back in October 2020, but says the new funds will be used to scale the business across Europe and the U.S., tracking the spread of data legislation and the evolution of public opinion around the privacy risks of biometrics — pointing, for example, to the privacy backlash around Clearview AI.

As well as building out its sales, marketing and R&D teams, Pimloc says the funding will be used to expand its product roadmap with a focus on video privacy and compliance.

The business need it’s targeting focuses on growing use of visual AI in industries like retail, warehousing and industrial factory settings — for use cases like safety and efficiency.

However the rise of AI-powered workplace surveillance tools create privacy risks for workers which could create legal and reputational risks for companies that deploy remote biometrics.

Pimloc is pitching a third way in which AI is working in service of privacy — saying it’s in talks with companies about “anonymizing visual data used for production efficiency, to help them prioritize worker privacy”.

The startup says its “Secure Redact” product — which it sells as a SaaS or via APIs and Containers to integrate into local video workflows and systems — is already in use by entities that must provide video evidence which complies with data privacy regulations (such as Europe’s General Data Protection Regulation or California’s Consumer Privacy Act).

Pimloc declined to disclose customer numbers — but CEO, Simon Randall, told TechCrunch: “We have a large numbers of users from around Europe and the US; across sectors including transportation, manufacturing, education, health, autonomous vehicles, facilities management and law enforcement. What’s interesting is that they all have the same needs; whether CCTV, dashboard or body-worn camera footage, they all need to anonymise video for data privacy and compliance purposes.”

French startup Resilience announced yesterday that it has raised a $45 million (€40 million) Series A round led by Cathay Innovation. The startup wants to improve the treatment journey when you’re diagnosed with cancer so that you live a healthier and longer life.

In addition to Cathay Innovation, existing investor Singular is also participating. Other funds are joining the round, such as Exor Seeds, Picus Capital and Seaya Ventures. Finally some healthcare investors are rounding up the round — Fondation Santé Service, MACSF, Ramsay Santé and Vivalto Ventures.

I already profiled Resilience in March 2021 so I encourage you to read my previous article to learn more about the company. Co-founded by two serial entrepreneurs, Céline Lazorthes and Jonathan Benhamou, the company wants to help both patients and caregivers when it comes to cancer care.

On the patient side, Resilience helps you measure, understand and deal with the effects and side effects of cancer and cancer treatments. Users can track various data points in the app and find content and information about their illness.

But Resilience isn’t just an app that you use at home. It is also a software-as-a-service solution for hospitals so that they can better personalize their treatments. Resilience has been founded in partnership with Gustave Roussy, one of the leading cancer research institutes in the world.

Practitioners will be able to take advantage of all the data that patients have gathered from the app. This way, cancer treatment facilities understand the patient better and can adapt their care more quickly. Resilience has acquired Betterise to gain a head start when it comes to data-driven cancer care.

The long-term vision is even more ambitious than that. If you talk with a caregiver working for a cancer treatment facility, they’ll tell you they never have enough time.

And it’s even more difficult to keep track of new treatments that are becoming more and more specialized. Resilience doesn’t want to replace doctors. But it wants to help them overcome blindspots.

The result should be better care for patients, as well as more support through the Resilience app. Cancer care is a long and painful process, so anything that can improve this process is a good thing.

A sari-sari store owner who uses GrowSari

GrowSari, the Manila-based startup that helps small shops grow and digitize, announced today that KKR will lead its Series C round with a $45 million investment. The funds will be used to enter new regions in the Philippines and expand its financial products. The Series C round is still ongoing and the startup says it is already oversubscribed, with the final composition currently being finalized. 

Before its Series C, GrowSari’s total raised was $30 million. TechCrunch last wrote about GrowSari in June 2021, when it announced its Series B. Since then, it has expanded the number of municipalities it serves from 100 to 220, and now has a customer base of 100,000 micro, small and mid-sized enterprise (MSME) store owners. 

Founded in 2016, GrowSari is a B2B platform that offers almost every kind of service that small- to medium-sized retailers, including neighborhood stores that carry daily necessities (called sari-saris), roadside and market shops and pharmacies, need.

For example, it has a wholesale marketplace with products from major fast-moving consumer goods (FMCG) brands like Unilever, P&G and Nestle. It partners with over 200 providers, like telecoms, fintechs and subscription plans, so sari-saris can offer services like top-ups and bill payments to their customers. 

Sari-sari operators can also use GrowSari to launch e-commerce stores and access short-term working capital loans to buy inventory. The startup’s other financial products include digital wallets and cash-in services, and it is looking at adding remittance, insurance and loans in partnership with other providers. 

The new funding will be used to expand into the Visayas and Mindanao, the two other main geographical regions in the Philippines, with the goal of covering all 1.1 million “mom and pop” stores in the Philippines. 

Companies make acquisitions for a host of reasons. Sometimes it’s about filling a hole in a product road map, or expanding market share, or finding good people.

Finding the right company to acquire takes special talent. But once the deal is through, it takes skill and a deft hand to integrate the acquired company smoothly into the mothership without losing key talent or making its staff feel like they have gone from building something great to being cogs in a huge machine.

The acquirer has to decide whether to incorporate their culture into the acquired company or let it maintain its own culture and identity. It can be a difficult line to walk, and the success of the transaction can often hinge on how well the cultural integration is carried out.

Beyond culture and people, though, there is also a critical nuts-and-bolts side to acquisitions. Do you keep the same benefits and compensation packages in place, or do you move people to new plans? That process can be disruptive for employees. Worst of all, do you lay people off?

Then there’s tooling. Each company has its own way of doing things, and has unique tools used by sales and marketing, HR and finance. The acquirer and acquired company have to sit down and decide which tools they will keep or abandon without making the smaller firm feel like it’s a “my way or the highway” situation — unless that’s how you do business.

It’s a balancing act. If you care to make the company you’re acquiring feel part of the team rather than a bolted-on component, the entire exercise will get harder.

In an effort to answer all these questions, we’re examining how good acquisitions work in a two-part series. For this first part, we spoke to executives from three companies that have made many acquisitions to get their take on the process and how they ensure the post-deal integration goes smoothly.

In the next part, we will feature executives from three companies that were acquired by the same organizations.

It’s worth noting that everyone involved here is trying to put their best foot forward, and nobody is going to air any dirty laundry on either side of the acquisition equation. The goal of these articles is to learn what the process is like for each side of the transaction, and just how much of a challenge this whole undertaking can be after the contracts are signed and the checks clear.

Looking for the right company

While there isn’t necessarily a formula for finding good companies, the executives we spoke to all discussed a process that they have developed over time based on their experiences acquiring companies.

Ashley Andersen Zantop, COO at edtech firm Cambium Learning Group, has been involved in a number of acquisitions in her time with the company. She said Cambium has pursued an acquisition strategy over the years to complement the company’s organic growth, and for starters, a good fit would be digital edtech businesses aimed at the K-12 market.