User blogs

Workflow automation has been one of the key trends this year so far, and Zoho, a company known for its suite of affordable business tools has joined the parade with a new low code workflow product called Qntrl (pronounced control).

Zoho’s Rodrigo Vaca, who is in charge of Qntrl’s marketing says that most of the solutions we’ve been seeing are built for larger enterprise customers. Zoho is aiming for the mid-market with a product that requires less technical expertise than traditional business process management tools.

“We enable customers to design their workflows visually without the need for any particular kind of prior knowledge of business process management notation or any kind of that esoteric modeling or discipline,” Vaca told me.

While Vaca says, Qntrl could require some technical help to connect a workflow to more complex backend systems like CRM or ERP, it allows a less technical end user to drag and drop the components and then get help to finish the rest.

“We certainly expect that when you need to connect to NetSuite or SAP you’re going to need a developer. If nothing else, the IT guys are going to ask questions, and they will need to provide access,” Vaca said.

He believes this product is putting this kind of tooling in reach of companies that may have been left out of workflow automation for the most part, or which have been using spreadsheets or other tools to create crude workflows. With Qntrl, you drag and drop components, and then select each component and configure what happens before, during and after each step.

What’s more, Qntrl provides a central place for processing and understanding what’s happening within each workflow at any given time, and who is responsible for completing it.

We’ve seen bigger companies like Microsoft, SAP, ServiceNow and others offering this type of functionality over the last year as low code workflow automation has taken center stage in business.

This has become a more pronounced need during the pandemic when so many workers could not be in the office. It made moving work in a more automated workflow more imperative, and we have seen companies moving to add more of this kind of functionality as a result.

Brent Leary, principal analyst at CRM Essentials, says that Zoho is attempting to remove some the complexity from this kind of tool.

“It handles the security pieces to make sure the right people have access to the data and processes used in the workflows in the background, so regular users can drag and drop to build their flows and processes without having to worry about that stuff,” Leary told me.

Zoho Qntrl is available starting today starting at just $7 per user month.

Ride-hailing and delivery company Grab has announced plans to go public in the U.S. Based in Singapore, the company has evolved from a ride-hailing app to a Southeast Asian super app that offers several consumer services, including food delivery, financial services, such as an e-wallet so that you can send and receive money.

It operates in Singapore, Malaysia, Cambodia, Indonesia, Myanmar, Philippines, Thailand and Vietnam. According to Crunchbase, the company has raised over $10 billion, including from SoftBank’s Vision Fund.

In order to go public, Grab has chosen to merge with a SPAC named Altimeter Growth Corp. A SPAC is a publicly-traded blank-check company based in the U.S. Going public through this process should be much easier for Grab — especially because it’s a foreign company.

If the deal goes through, it would be the world’s largest SPAC merger. Grab would be listed on NASDAQ under the symbol ‘GRAB’.

A part of the announcement, Grab has shared some metrics and some big numbers. In 2020, the company managed to generate around $12.5 billion in gross merchandise value (GMV). The merger would value Grab at $39.6 billion and the company would keep $4.5 billion in cash.

The company thinks there’s still a lot of room to grow when it comes to food delivery and on-demand mobility in Southeast Asia. It expects to see the total addressable market jump from $52 billion to $180 billion by 2025.

“This is a milestone in our journey to open up access for everyone to benefit from the digital economy. This is even more critical as our region recovers from COVID-19. It was very challenging for us too, but it taught us immensely about the resiliency of our business,” Grab co-founder and CEO Anthony Tan said in the announcement.

“Our diversified superapp strategy helped our driver-partners pivot to deliveries, and enabled us to deliver growth while improving profitability. As we become a publicly-traded company, we’ll work even harder to create economic empowerment for our communities, because when Southeast Asia succeeds, Grab succeeds,” he added.

Altimeter has agreed to a three-year lockup period for its sponsor shares, which means that Altimeter should remain committed to the company for a while.

“You wanted me to record this?” asks Saul Klein, LocalGlobe founding partner.

“Just in case you say anything interesting,” I quip back.

“I won’t be doing most of the talking, so maybe someone will say something interesting,” Klein replies poker-faced, before grinning.

Once again, I’ve agreed to an ensemble-style interview with multiple members of the LocalGlobe investment team: Klein, George Henry, Suzanne Ashman, Julia Hawkins, Mish Mashkautsan and Remus Brett. Unlike in 2015, however, when I visited the early-stage VC’s then offices in Tileyard Studios, the interview is taking place over Zoom, rather than the firm’s new Phoenix Court premises in the King’s Cross area of London.

Also in contrast to last time, when I wanted to scoop LocalGlobe’s latest fundraise and Klein rather I didn’t, this time it’s the other way round: I’ve been invited to write a piece partly anchored on news of two new funds that were quietly raised last year.

LocalGlobe, the entity that invests at seed stage, has an additional $150 million of capital to deploy in the U.K. and Europe (and further afield). Running alongside is Latitude, a growth-stage fund now with $220 million more to invest, which allows the LocalGlobe team to take a fresh look at breakout portfolio companies that have proven their growth potential or to back other scale-ups, which, for myriad reasons, didn’t take or weren’t offered LocalGlobe’s cash earlier.

“Latitude was born out of the idea of building continuity,” says LocalGlobe general partner George Henry. “When it comes to existing LocalGlobe companies, Latitude is very much building on top of what we’ve done. It’s giving us the capital to continue to invest more into those companies”.

However, the firm doesn’t think of Latitude as follow-on funding, in the classic sense. Not only is it able to back companies that LocalGlobe hasn’t previously invested in, but even for those it has, the LocalGlobe team, including Julian Rowe, who heads up Latitude, uses the opportunity to take a fresh look before writing a Latitude cheque.

“I think 80% of Latitude companies have at least one LocalGlobe partner fully engaged,” says Klein.

Internally, whichever fund the firm is investing from and at what stage, LocalGlobe frames its strategy as “insights and access”. Though no one explicitly explains what this means, I interpret it as having the expertise in the team (and wider LocalGlobe network) to understand a problem space and its addressable market, and having the access to see and then get in on a deal, should it want to.

“Of course, it’s easier to have insight and access when you’ve already been inside the company from pre-seed or seed,” explains Henry. “But we’ve [also] seen opportunities where we feel we had the insight and access because we know the founders already, we know the theme, we know the market [and] we know the investors really well. And then it puts us in a position where we feel confident to participate at Series B or beyond”.

LocalGlobe isn’t the only European early-stage VC firm to launch a separate later-stage fund, either to avoid too much dilution for the most promising portfolio companies or to opportunistically back companies later when there’s arguably less risk. Yet I can’t help wonder what the conversation is like when Latitude wants to invest in a company that LocalGlobe previously turned down.

One example is Monzo, the popular U.K.-based bank with its instantly recognisable hot coral pink-coloured debit card. “We were very aware of Monzo from the earliest days,” says Klein. “We weren’t big believers at the time in consumer neobanks. We thought the neobank was something that would work for SMEs or for business banking, where the incumbents were really not focused… but also it’s kind of typically a better business than consumer retail banking. And we took the view that consumer neobanks weren’t going to be a thing”.

Instead, LocalGlobe invested in Cleo, a financial assistant chatbot and app that runs on top of consumer bank accounts, and Tide, a business bank account for SMEs.

“And it turns out, you know, we were wrong,” admits Klein, before revealing that LocalGlobe general partner Suzanne Ashman was the outlier in the team. After becoming an early customer of Monzo, she backed the challenger bank’s equity crowd fund in a personal capacity.

“When we had an opportunity later on through Latitude to get involved with Monzo, we felt it’s an exceptional company,” continues Klein. “We love the investors, we work very closely with General Catalyst, and they were getting involved with the business at the time, and with Accel. And we thought it was a great opportunity to enter”.

Another example of missing out first time around is Cazoo, the used car retailer founded by Alex Chesterman. Klein and Chesterman go way back to their time at Lovefilm, and LocalGlobe was an early investor in Zoopla, the proptech company Chesterman took all the way to IPO. Access, therefore, wasn’t a problem. Instead, a perceived conflict of interest was.

LocalGlobe had invested in Motorway (curiously, as had Chesterman), which at the time looked like a potential Cazoo competitor. No longer deemed as such, Latitude would go on to write a later-stage (and more expensive) check. Then, last month, Cazoo announced plans to SPAC its way to going public with a valuation of $7 billion, proving that conflicts of interest can be costly.

These near misses are the exception, says Klein, underlining that Latitude’s core thesis is to be able to support LocalGlobe portfolio breakouts. “LocalGlobe is about that startup phase of pre-seed and seed. Latitude is the breakout phase where things are really starting to hit an inflection point,” he says.

That is, of course, true, but it can also be argued that having a later stage fund does provide additional optionality and I posit that this could make LocalGlobe less risk-taking. With Latitude potentially able to mop up deals that didn’t happen at seed, LocalGlobe can take a wait and see approach for investments where early insights are less forthcoming.

Henry shakes his head ferociously, prompting Klein to suggest he takes this question.

“You want to get in as early as possible, because that’s the way you build the relationship… There’s nothing that gives you more credit than to be the first believer in a team,” says Henry.

“Also, in the market we’re in, you don’t want to make a bet on something that looks exciting, but you’re not sure and say, ‘it’s okay, we’ll get into Series B’. Because the reality is, the more you wait, the harder it gets to get into a great company”.

In LocalGlobe’s own (interesting) words…

On capital going into private markets

“The amount of capital that is now in the private markets looking to invest in tech, it’s not just extraordinary, but, arguably, it’s necessary and important, because this is where growth comes from and this is where innovation comes from. I’ve been doing this for 20-25 years, and it took 20 years to get to the starting line. Now it gets interesting.” — Saul Klein.

On investing in regulated industries

“Opportunities in the highly regulated industries are just massive. And they were largely untouched by wave one of VC, and even five years ago, we tended not to see that many founders building in heavily regulated spaces. So it feels to me that, yes, while the base of capital has gotten much larger, the opportunity in all of these segments is now much larger.” — Suzanne Ashman

On healthcare opportunities

“We think overall, obviously, healthcare is one of the largest markets, and we are very, very bullish on that, on the opportunity at large. We’ve doubled down on specific themes within healthcare. So, for example, developing communication rails for healthcare, improving how patients get connected with hospital systems… Mental health is another enormous market and opportunity, not just in terms of market, but in terms of impact.” — Julia Hawkins

On successful exits

“You’re just the supporting cast, and obviously, you are delighted for them. But you’re never the main show. What’s lovely about being a seed investor, and then supporting with Latitude, is it is not a quick journey, and you get to know people over time, you get to know their friends, their partners. And honestly, it’s just a privilege to sit on the sidelines.” — Suzanne Ashman

On fintech’s longevity

“Over the next five years, on all dimensions, from payments to core banking to insurance, you know, we’re going to see many more interesting companies. Just when you think the market map is pretty clear, and the winners are emerging, you’ll still see these companies that emerge and completely destroy the market.” — Remus Brett

On frontier tech need for more capital

“Proper frontier tech, and foundational tech, requires even more patience and focus on what’s beyond the horizon… The available capital for proper frontier tech startups is much more limited than startups in general. And that’s something we all know and feel daily.” — Mish Mashkautsan

The crypto industry as a whole has seen a momentous year of growth, heavily spurred on by the entrance of institutional investors adopting bitcoin due to its store of value properties. The 2020 spike bitcoin experienced was also accelerated by its global adoption as the number of global cryptocurrency users surpassed 100 million in Q3 2020.

For Luno, a U.K.-based crypto company founded by Marcus Swanepoel and Timothy Stranex in 2013, it grew to 6 million customers from January 2020 to January 2021. However, that number has since gone up to 7 million. Today the company, headquartered in London, has nearly 400 employees across London, South Africa, Malaysia, Indonesia, Nigeria and Singapore, with customers in 40 countries globally. 

According to CEO Swanepoel, Luno’s numbers have been increasing month-on-month over the last seven years. However, this is the first time it is observing an acceleration of this magnitude.

There are a couple of reasons for Luno’s surge in numbers (like any other crypto exchange startup). Generally, despite talks of bitcoin being used in everyday life by crypto enthusiasts and interests from institutional entrants like BNY Mellon, Mastercard and Tesla, it is a long shot before becoming mainstream.

For now, crypto mainly serves investment purposes. This singular factor has particularly made it very popular with Africans — a demographic that has been a major part of Luno’s growth and the huge traction it is witnessing.

Last year, the company surveyed the markets in which it currently operates. It featured 15,000 respondents from South Africa, U.K., France, Italy, Indonesia, Malaysia and Nigeria; the answers helped Luno understand how the pandemic influenced attitudes towards the current financial system. According to the survey, 54% of Africans were ready to adopt a single global digital currency, compared to 41% for Asia and 35% for Europe. 

Africa’s dominance also shows in its numbers. Out of the 7 million customers it has globally, 4.7 million people are in Africa. This number was 2.3 million in January 2020. Luno’s app installs across the continent have increased by 271% within this time frame, and trading volumes skyrocketed 12x, from $555 million to $7 billion. For context, Luno did $8.3 billion in total trading volume.  

But a large part of this growth is down to Luno’s early play in the market. Over the last few years, infrastructure in parts of the world that could not previously support the crypto market has improved substantially. Luno has played a vital role as one of the first platforms to improve the crypto marketplace experience by including local currencies. It also helped to lay the groundwork for educating people on digital currencies.  

“The last time bitcoin went up as it did during the past year was in 2017 and 2018, and it was mostly driven by retail, but it was still very difficult to buy crypto. There were trust issues; it would take days to get your account verified and even set up a wallet,” Swanepoel told TechCrunch. “Now, over the last three years, companies like ours, especially in Africa, have built up this infrastructure, KYCs, new payment methods, customer experience and support. The experience is much better and education levels are a lot higher. To me, I think that’s played a large role in crypto adoption in the continent.”

In September last year, Luno got acquired by Digital Currency Group (DCG), an investment firm that builds, buys and invests in blockchain companies. Some of its portfolio companies include Coindesk, Genesis and Grayscale Investments. Before acquiring Luno, BCG first invested in the company’s seed round in 2014. Then last year, Swanepoel said he saw the opportunity to take Luno to a larger scale after noticing the immense growth and adoption on its platform.

“The first five to six years for us was on a small scale and now, we want to go big. So it helps to have a global platform like DCG to do it from because they have large amounts of capital and are committed to investing in Africa as well as outside the continent,” he remarked. 

The CEO adds that DCG has more visibility on the crypto industry and trends. The acquisition was simply for Luno to leverage DCG’s insights and stay ahead of the curve, which looks to have paid off. Since the acquisition, Luno has seen the number of active users increase by 167%. As of January, the average user held more than $7,000 in their wallet, up 56% from December 2020.

Nothing lasts forever, but if the crypto market bull run is anything to go by, crypto isn’t the fad people once thought it was. In Q1 2021, companies like Coinbase (going public Wednesday) and Robinhood experienced monster numbers showing strong growth projections. For Luno, it expects to continue growing exponentially, a trajectory that sets the company on track to reach 1 billion customers by 2030.

The race is on for companies building e-commerce empires by rolling up smaller, promising businesses that sell via Amazon and other marketplaces and growing by using some economies of scale to operate them as one. In the latest development, Berlin Brands Group has raised $240 million that it says it will be using to acquire smaller but promising enterprises in Europe and North America — specifically the U.S. — that are already making between $1 million and $100 million in sales via marketplaces like Amazon.

The funding is coming in the form of debt, not equity, and it is coming specifically from UniCredit, Deutsche Bank and Commerzbank, BBG founder and CEO Peter Chaljawski said in an interview. BBG is profitable and earlier this year it committed more than $300 million off its balance sheet for buying up and operating companies, and so with this debt round, it now has $540 million for that purpose.

“We’re in a wonderful situation with a proven business model, and this is the cheapest money you could get,” he said of the decision to go for debt, a choice often made by startups that are in capital-intensive modes but either reluctant or do not need to give up equity to raise capital to scale if they are generating cash. In the case of BBG it’s the latter, since the company is profitable. “This is better than equity. BBG does not have any debt as of 2020, and we had cash on hand for our first acquisitions, 20 brands that we bought in cash from our balance sheet. Now we want to accelerate that even more.”

BBG has to date mostly built its business around starting up and scaling its own in-house brands that sell on Amazon and elsewhere — starting first with home audio equipment, coming out of Chaljawski’s own interests in sound technology from a previous life as a budding dance music DJ. Its brands include Klarstein (kitchen appliances), auna (home electronics and music equipment), Capital Sports (home fitness) and blumfeldt (garden).

In a big move to scale and build out what it’s established itself, last year BBG shifted over to the roll-up model: leveraging a more buying power to cut better deals with manufacturers and other suppliers, consolidating some of the other functions like marketing, and providing a more comprehensive set of analytics around what is selling best, who is buying, how best to market an item, and more. It says it has 1.3 million square feet of warehouse space in Europe, Asia and the U.S. and is one of the biggest Amazon sellers in Europe today.

The basic idea of rolling up businesses that sell on the Amazon platform with FBA (Fulfillment by Amazon) has been around for years in fact, but the notable and more recent shift is that it has taken on a startup profile in part because of how some of the latest entrants are leveraging big data analytics, the latest innovations in manufacturing and logistics technology and a founder-led, e-commerce ethos to grow the model.

“Without data, you would go nowhere in this business,” Chaljawski said. “But on top of that, there is something you can’t pull from market data — a toolbox of manufacturing and engineering expertise that we use to evaluate products.” He says that BBG’s data scientists build algorithms that millions of products, and hundreds of thousands of sellers, to produce the data that it uses both to source potential acquisitions and to run the business.

U.S. players like Thrasio — which itself closed a $1.2 billion Series C for the same purposes: rolling up and scaling — have led the charge. But in recent months we’ve seen a number of others also move into the space, buoyed by hundreds of millions of dollars in funding from investors very keen to ride the e-commerce wave and the vision of tapping into some of the economies of scale and the marketplace model that have been such a juggernaut for Amazon.

It’s a two-sided marketplace, and Amazon has focused primarily on earning money from operating the marketplace itself and sales to consumers, so that leaves a huge opportunity on the table for someone else (or as it happens, many others) to tackle the opportunity to address the needs and services of the other side of that marketplace: the sellers.

In addition to BBG and Thrasio, others in the same space include Branded, which launched its own roll-up business on $150 million in funding earlier this year; SellerX, Heyday, Heroes, Perch, among several others. Even removing the very-highly capitalized Thrasio and BBG from the equation, these companies have collectively raised or committed from their own balance sheets hundreds of millions of dollars to buy up small but promising third-party merchants.

If that sounds like a crowded market, well, it probably is. These are also startups, after all, and so the chances that some of these roll-up consolidators will not be that skilled at running multiple companies — with their disparate supply chains, customer bases, replacement cycles and marketing strategies — are as risky as in any other area of e-commerce startup interest.

On the other hand, though, there are a lot of opportunities to play for here.

By one estimate, there are about 5 million third-party sellers on Amazon today, a number that appears to be growing exponentially, with more than 1 million sellers joining the platform in 2020 alone. Out of those, Thrasio estimates that there are probably 50,000 businesses selling on the Amazon platform with FBA (Fulfillment by Amazon) that are making $1 million or more per year in revenues.

We have pointed out before that within that bigger number of merchants, there are a huge amount of clones and companies of questionable quality. What is interesting is that there are distinct companies, built around more originality and flair, swimming in that sea: some of them have broken through and floated, while others that have not.

So for a company like BBG, the opportunity lies in the fact that for many of these smaller but promising merchants, they have not been built with longer-term growth visions in place. The merchants might not be prepared for the kind of scaling, investment or operational commitment that would need to be made to keep their businesses going, or they simply don’t have the appetite for it. BBG’s selling point — as it is with others in this space — is that they do.

And BBG’s added pitch is that they can help open another door, to Europe. In the region, Amazon on average has about a 10% market share of marketplaces, BBG estimates, with regional players accounting for more marketplace activity than in the U.S. BBG not only has the links into selling on these other marketplaces, but the promise is that it can help improve how a brand will sell on Amazon itself in the region, given its traction in the market already. Conversely, it hopes to do the same for European brands by giving them a better window into selling in the U.S.

Looking ahead, BBG may well tap an equity round in the near future to bring on investors to shape its own growth and set a valuation for the company, Chaljawski said. He also is realistic about the profusion of companies like his, and is “sure” there will be some casualties down the road. He also believes that we may start to see some emerge around specific verticals as an alternative.

“Yes, I’m sure consolidation will happen, but I also think that we’ll see some specialization, with roll-ups focusing on one vertical or another. I think it will be a mix,” he said.