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Wrapping our look at how the venture capital asset class invested in 2020, today we’re taking a peek at Europe’s impressive year, and Asia’s slightly less invigorating set of results. (We’re speaking soon with folks who may have data on African VC activity in 2020; if those bear out, we’ll do a final entry in our series concerning the continent.)
After digging into the United States’ broader venture capital results from last year with an extra eye on fintech and unicorn investing, at least one trend was clear: venture capital is getting later and larger (as expected).
Record dollar amounts were being invested, but across falling deal volume. More money and fewer rounds meant larger rounds, often going to the late and super-late stage startups in the market.
Unicorns are feasting, in other words, while some younger startups struggle to raise capital.
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There have been some encouraging signs of seed activity, mind, but full-year data made it clear that in America, the more mature startups had the best of it.
But what about the rest of the world? After parsing KPMG data concerning both how VCs invested in Europe (here) and Asia (here) last year, there are clear echoes. But not entire reproductions.
Let’s discuss key data points from the two reports. This will be illustrative, brief and painless. Into the data!
European VCs: Rich, but not evenly distributed
Compared to historical investment levels, KPMG’s European VC report describes a venture capital scene at its peak. Q4 2020 saw $14.3 billion invested into EU startups across 1,192 deals, the highest dollar amount charted and a modest besting of the previous record set in Q3 2020.
However, despite impressive investment totals, the number of deals that the money was spread over proved lackluster.
The Q4 2020 deal count was the lowest on record since the continent’s deal peak in Q1 2019. Squinting at the provided chart, it appears that deal volume in Europe has fallen from around 2,200 in that peak quarter, to Q4’s fewer than 1,200 deals.
Source: https://techcrunch.com/2021/01/22/how-vcs-invested-in-asia-and-europe-in-2020/
A month before the COVID-19 pandemic had spread to North America, auto fintech startup MotoRefi — newly armed with nearly $9 million in venture capital — was preparing to bring its refinancing platform to the masses.
CEO Kevin Bennett, and the investors behind the company, saw the opportunity to service Americans who collectively hold $1.2 trillion in auto loans. What they didn’t anticipate was the sudden uptick in demand fueled by COVID-19 and the uncertainty and chaos that the pandemic created.
MotoRefi, which was born out of QED Investors in 2017, developed an auto refinancing platform that handles the entire process, including finding the best rates, paying off the old lender and re-titling the vehicle. The company has benefitted from the convergence of two trends sparked by COVID-19 that has turbocharged its business: an accelerated adoption of fintech across the economy and growing attention towards personal finance.
Now, investors are pouring more money into the startup to help it make the most of the spike in demand for auto refinancing.
MotoRefi said Friday it has raised $10 million in a round led by Moderne Ventures. Liza Benson, a partner at Moderne Venture, will join the board.
“Many people are looking around saying how can they save money?” Bennett said, commenting on the events of the past year. “And while auto refinance historically is in a relatively low awareness category of personal finance, that interest has really grown and accelerated through 2020.”
For instance, Google searches for auto refinance increased about 40% in 2020 over the previous year, he added.
The company said its revenue rose by sixfold, its workforce tripled to more than 150 people and the number of lenders on its platform doubled over the past year. MotoRefi said it refinanced more than $250 million of auto loans in 2020.
“We actually weren’t planning on raising twice in a year,” Bennett said. “But the growth had been pretty noticeable from the investor standpoint in the market.”
That new capital will be used to hire more employees and expand its offerings, according to Bennett, who noted that MotoRefi now operates in 42 states and Washington DC.
MotoRefi has raised more than $24 million to date. The company raised last February $8.6 million in a Series A funding round. That round, which would later grow to $9.4 million, was co-led by Accomplice and Link Ventures. Motley Fool Ventures, CMFG Ventures (part of CUNA Mutual Group) and Gaingels also participated in the round. The Series A round followed $4.7 million in seed funding that MotoRefi announced in March 2019.
Source: https://techcrunch.com/2021/01/22/motorefi-raises-10m-to-keep-pedal-on-auto-refinancing-growth/
Google has threatened to close its search engine in Australia — as it dials up its lobbying against draft legislation that is intended to force it to pay news publishers for reuse of their content.
Facebook would also be subject to the law. And has previously said it would ban news from being shared on its products owing if the law was brought in, as well as claiming it’s reduced its investment in the country as a result of the legislative threat.
“The principle of unrestricted linking between websites is fundamental to Search. Coupled with the unmanageable financial and operational risk if this version of the Code were to become law it would give us no real choice but to stop making Google Search available in Australia,” Google warned today.
Last August the tech giant took another pot-shot at the proposal, warning that the quality of its products in the country could suffer and might stop being free if the government proceeded with a push to make the tech giants share ad revenue with media businesses.
Since last summer Google appears to have changed lobbying tack — apparently giving up its attempt to derail the law entirely in favor of trying to reshape it to minimize the financial impact.
Its latest bit of lobbying is focused on trying to eject the most harmful elements (as it sees it) of the draft legislation — while also pushing its News Showcase program, which it hastily spun up last year, as an alternative model for payments to publishers that it would prefer becomes the vehicle for remittances under the Code.
The draft legislation for Australia’s digital news Code which is currently before the parliament includes a controversial requirement that tech giants, Google and Facebook, pay publishers for linking to their content — not merely for displaying snippets of text.
Yet Google has warned Australia that making it pay for “links and snippets” would break how the Internet works.
In a statement to the Senate Economics Committee today, its VP for Australia and New Zealand, Mel Silva, said: “This provision in the Code would set an untenable precedent for our business, and the digital economy. It’s not compatible with how search engines work, or how the internet works, and this is not just Google’s view — it has been cited in many of the submissions received by this Inquiry.
“The principle of unrestricted linking between websites is fundamental to Search. Coupled with the unmanageable financial and operational risk if this version of the Code were to become law it would give us no real choice but to stop making Google Search available in Australia.”
Google is certainly not alone in crying foul over a proposal to require payments for links.
Sir Tim Berners-Lee, inventor of the world wide web, has warned that the draft legislation “risks breaching a fundamental principle of the web by requiring payment for linking between certain content online”, among other alarmed submissions to the committee.
In written testimony he goes on:
“Before search engines were effective on the web, following links from one page to another was the only way of finding material. Search engines make that process far more effective, but they can only do so by using the link structure of the web as their principal input. So links are fundamental to the web.
“As I understand it, the proposed code seeks to require selected digital platforms to have to negotiate and possibly pay to make links to news content from a particular group of news providers.
“Requiring a charge for a link on the web blocks an important aspect of the value of web content. To my knowledge, there is no current example of legally requiring payments for links to other content. The ability to link freely — meaning without limitations regarding the content of the linked site and without monetary fees — is fundamental to how the web operates, how it has flourished till present, and how it will continue to grow in decades to come.”
However it’s notable that Berners-Lee’s submission does not mention snippets. Not once. It’s all about links.
Meanwhile Google has just reached an agreement with publishers in France — which they say covers payment for snippets of content.
In the EU, the tech giant is subject to an already reformed copyright directive that extended a neighbouring right for news content to cover reuse of snippets of text. Although the directive does not cover links or “very short extracts”.
In France, Google says it’s only paying for content “beyond links and very short extracts”. But it hasn’t said anything about snippets in that context.
French publishers argue the EU law clearly does cover the not-so-short text snippets that Google typically shows in its News aggregator — pointing out that the directive states the exception should not be interpreted in a way that impacts the effectiveness of neighboring rights. So Google looks like it would have a big French fight on its hands if it tried to deny payments for snippets.
But there’s still everything to play for in Australia. Hence, down under, Google is trying to conflate what are really two separate and distinct issues (payment for links vs payment for snippets) — in the hopes of reducing the financial impact vs what’s already baked into EU law. (Although it’s only been actively enforced in France so far, which is ahead of other EU countries in transposing the directive into national law).
In Australia, Google is also heavily pushing for the Code to “designate News Showcase” (aka the program it launched once the legal writing was on the wall about paying publishers) — lobbying for that to be the vehicle whereby it can reach “commercial agreements to pay Australian news publishers for value”.
Of course a commercial negotiation process is preferable (and familiar) to the tech giant vs being bound by the Code’s proposed “final offer arbitration model” — which Google attacks as having “biased criteria”, and claims subjects it to “unmanageable financial and operational risk”.
“If this is replaced with standard commercial arbitration based on comparable deals, this would incentivise good faith negotiations and ensure we’re held accountable by robust dispute resolution,” Silva also argues.
A third provision the tech giant is really keen gets removed from the current draft requires it to give publishers notification ahead of changes to its algorithms which could affect how their content is discovered.
“The algorithm notification provision could be adjusted to require only reasonable notice about significant actionable changes to Google’s algorithm, to make sure publishers are able to respond to changes that affect them,” it suggests on that.
It’s certainly interesting to consider how, over a few years, Google’s position has moved from ‘we’ll never pay for news’ — pre- any relevant legislation — to ‘please let us pay for licensing news through our proprietary licensing program’ once the EU had passed a directive now being very actively enforced in France (with the help of competition law) and also with Australia moving toward inking a similar law.
Turns out legislation can be a real tech giant mind-changer.
Of course the idea of making anyone pay to link to content online is obviously a terrible idea — and should be dropped.
But if that bit of the draft is a negotiating tactic by Australians lawmakers to get Google to accept that it will have to pay publishers something then it appears to be winning one.
And while Google’s threat to close down its search engine might sound ‘full on’, as Silva suggests, when you consider how many alternative search engines exist it’s hardly the threat it once was.
Especially as plenty of alternative search engines are a lot less abusive toward users’ privacy.
Our reliance on internet-based services is at an all-time high these days, and that’s brought a new focus on how well we are protected when we go online. Today comes some news from one of the bigger companies working in the area of password security, which points how business is shifting for the companies providing these tools.
Emmanuel Schalit, the co-founder of popular password manager Dashlane, is stepping down as CEO of the startup. He is being replaced by JD Sherman, the former COO of Hubspot, as Dashlane makes plans to move more aggressively to court more business users.
“This is about thinking about its next leg of our scaling strategy, more B2B monetization after being strong in B2C,” Sherman said in an interview, praising his predecessor’s growth of the consumer business and noting his realization that “B2B was not his forte.”
Sherman’s career focus, in contrast, has been all about B2B. Before his eight years at Hubspot, he was the CFO of Akamai (which, as a CDN, also had security as a focus, albeit in a completely different way), and before that IBM.
Since accepting the offer, Sherman (pictured right) has been quietly working with Schalit — who will no longer hold any operational role — to get up to speed and will be taking over formally at the start of February.
Sherman is based out of Boston and will eventually commute to Dashlane’s HQ in New York: eventually, because everyone is remote-working at the moment, with Sherman himself getting hired in a virtual process.
The changing of the guard comes at an interesting time for the startup. Dashlane now has 15 million users, up from 10 million+ in 2019. That was the same year that Dashlane announced two significant rounds of funding just six weeks apart from each other: first a $30 million round (which appeared to have some debt as part of it), then a $110 million Series D that valued the company at just over $500 million. Its backers include the likes of Sequoia, Bessemer, FirstMark, Rho Ventures and consumer credit reporting giant TransUnion.
Sherman would not talk about current valuation, nor where the company is currently standing regarding its next financial steps, except to say that it’s in a good place and to provide the smallest of hints of an IPO on the horizon.
“The Series D was a healthy round for a subscription business,” he said. “Right now, cashflow is solid and we have the funding we need for our growth, so there is no urgent plan to raise money. When we do, we’ll see if it is an IPO round” — that is, the last round before an IPO — “or not. To me, it’s all about growing the business.”
My guess: that valuation has gone up, given the boost in user numbers, the growth of its enterprise business and the huge shifts in the market in the last year that have put a spotlight on companies that are making using the internet safer. (Also, note that Logmein, which owns competitor LastPass, was picked up by PE firms for about $4.3 billion in a deal that completed last year.)
Dashlane was founded focused primarily on providing password management tools for consumers. These still account for the majority of its users, but the Series D funding was in part to fuel a bigger push into the business market, and to generally get on the radar of more people.
The expansion into business users was a natural move in more ways than one. First, the consumer service is designed as a freemium offering, while businesses provide a more steady and guaranteed revenue stream. Second, there is a natural progression that comes from being a happy consumer user: you might want to have the same service for your online work life, too. That remains the strategy for Sherman.
“The plan is to have two sides to the business,” he said, using the well-worn consumer-to-business analogy of a flywheel to describe how it will work: “The more who use it, more businesses will start to adopt it and get comfortable with using a password manager.”
That strategy is lately getting a major fillip, in the form of the massive boost in online activity in the past year.
Activities like taking care of all your shopping, entertainment, social and work-related needs have all moved online in the last year, pushed into the virtual sphere by the emergence and persistent presence of the easily contagious and dangerous Covid-19 virus.
Some of that shift has worked out better than many thought it would, and now, some believe that even when the pandemic does get under control, a lot of us will still be using the internet to get all of those things done on a regular basis.
But while I’ve heard a lot of industry people describe that situation as “the genie is out of the bottle”, perhaps a more fitting expression might be that Pandora’s box has been opened. That is to say, the increased online usage has created an alarmingly large opportunity for malicious hacking, security breaches and misuse of our online identities.
This consequently has a pretty direct link back to Dashlane.
Password protection is one of the most important elements of keeping yourself and your information safe online, with, weak, stolen and reused passwords some of the biggest causes of security breaches both for consumers and businesses (by some estimates, you can track 80-90% of all security breaches back to password issues).
Beyond that, not least because of all the breaches we’ve now seen, the current market has become much more concerned about privacy and security (a trend manifesting in all kinds of ways), and that has bred a lot more awareness and appetite for the kinds of tools that Dashlane, and other companies that enable better online security, provide.
There will likely continue to be developments in the technology to both suss out bad actors and block them in their tracks when they do try to enter networks, and the technology sold to organizations to keep their and their customers’ information in the cloud in more secure ways will also be improved. But above and beyond all that, password managers are likely to continue to play a role in the mix.
Password managers may not always be a perfect solution — there have been a few cases of breaches over the years, and while they have not been in recent times, security researchers at the University of York in May 2020 identified vulnerabilities that could potentially be exploited — but they remain a relatively easy option for end users themselves to be more proactive in protecting their identities specifically by building a better way to guard their passwords. (Among all that, it’s also worth pointing out that Dashlane has never had a breach in its 10+ years of operations.)
And there are a number of routes to providing password management, including efforts from platform players themselves and more direct Dashlane competitors like 1Password and LastPass. Notably, some of the efforts to bridge some of that together, such as the “OpenYolo” project spearheaded by Google and Dashlane, have stalled over the years, in part because of the complexity of implementing it with other existing managers.
But even within that fragmented, competitive and (still at times) vulnerable market, Dashlane still has a lot of opportunities for growth.
“The business is strong and growing,” Sherman said. “The craziness around Covid and remote networking have raised the profile of password management and security in general. It’s a more difficult environment, but there is a tailwind there.”
Blobr, a Paris-based startup operating in the no-code space with tech to make it easier for companies to expose and monetise their existing APIs, has raised €1.2 million in pre-seed funding.
The round is led by pan-European pre-seed and seed investor Seedcamp, with participation from New Wave, Kima, and various angel investors. Blobr is also the first company to take investment from New Wave — the new European venture capital firm co-founded by Pia d’Iribarne and Jean de la Rochebrochard — since the VC confirmed it had closed $56 million in deployable capital from an all-star lineup of investors, including Iliad’s Xavier Niel, Benchmark’s Peter Fenton, and Tony Fadell of Apple fame.
Blobr, founded by Alexandre Airvault (CEO) and Alexandre Mai (CTO), is aiming to become the default “business and product layer” for APIs. This idea is to enable product and business people to manage and monetize a company’s application programming interfaces without technical knowledge or the need fo use up more internal engineering resources. And by doing so, the startup believes we’ll see much more innovative use of APIs as commercial data and functionality is made accessible by more third parties to build on top.
“We believe companies should stop thinking of APIs as mere pipes and start building them as products to unleash their power,” says Airvault. “This means APIs should be priced, customized and managed with a user-oriented mindset and not only a tech one”.
To make this a reality, Blobr is designed to empower product and business owners to “make data-sharing a profitable model,” while reducing their dependence on tech. “I believe this approach is what will drive the data exchanges to the next level,” he explains.
Blobr’s no code technology offers quite a lot of functionality already. From one existing internal API, you can filter confidential information or GDPR related data; it’s also possible to deliver different API output depending on customer segmentation so you only expose the data that’s needed; and API usage can be linked to usage based business models or a monthly subscription in Stripe.
Airvault says the startup’s main competitors include API management solutions from Google, IBM, Axway, and Mulesoft. “Those platforms are tailored for internal APIs but are not thought of and optimized to manage APIs as products. They are tailored for technical people whereas Blobr as a no code solution is built from scratch for product and business people to avoid technical people to be involved in the equation,” he adds.
