These unprecedented times paved the way for a start-up boom in some states, reversing a decades-long decline in new businesses.
SoftBank Ventures Asia and Demi Lovato led the funding round on September 22 that helped proptech startup June Homes raise $50 million and emerge from stealth mode.
Silicon Valley startup, Gatik, secured $85 million in its latest funding round. The investment cycle was led by Koch Industries, and this cash infusion will play a vital role in the startup's expansion. The money will go towards expanding its operations, hiring new staff, and increasing its truck fleet. Since its founding in 2017, Gatik has raised $114.5 million. The startup already has well-developed robotic truck operations for hauling consumer goods and groceries for Walmart in Arkansas and Louisiana and Loblaw supermarkets in Toronto. The company suggested that it will be spreading its network to include Texas. Gautam Narang, CEO and co-founder of Gatik, says that the new financing enables better scaling for the company: “The way we look at the business, the technology, the companies we work with, we have all the key components in place.” The funding will be giving this company “a runway of at least two and a half, three years," Narang added. Gatik's revenue is also on the rise, so it seems like there is no pressure on the team to pursue any alternative investment sources, bigger rounds, or to go public. “We have meaningful revenue coming in. Last year we did revenue in the millions, and this year, we are projecting to increase that by 400% year over year,” Narang disclosed. Koch Disruptive Technologies - the venture branch of Koch Industries - was accompanied in the funding round by existing investors, such as Innovation Endeavors, FM Capital, Dynamo Ventures, and Intact Ventures. Trucking and delivery services, one of the fastest-developing areas of the autonomous driving industry, are on track to generate their highest revenue in the next couple of years. Gatik's delivery method relies on repetitive routes, and minimizing variables allows for its success. Other companies, such as TuSimple, that focus on longer routes, still have ways to go in terms of testing and further improvement. Since the company has already made some of its trucks in Arkansas fully driverless, Gatik plans to expand its fleet five times by 2023. “These are not one-off demos or one-time runs. We are doing these runs repeatedly on public roads,” Narang said. “On the technology front, we are at a point where we have validated the technology in one market, and now the focus is to scale from here.”
Payments startup Marqeta Inc. is eyeing a valuation of more than $12 billion in its US initial public offering, capitalizing on a surge in online shopping and food delivery payments processed through its platform during the coronavirus pandemic. The California-based company plans to sell approximately 45.4 million shares priced at $20 and $24 apiece, thus raising $1 billion at the top end of the range. Well known for enabling companies to issue debit and credit cards to their staff, Marqeta was launched with the aim to digitize commercial payment transactions between businesses and their clients via its open API. Headed by its founder and CEO, Jason Gardner, the payments startup previously announced that its revenue doubled to $290.3 million in 2020 as homebound customers made more online purchases. Marqeta’s primary offerings include issuing physical, virtual, and tokenized cards, transaction processing, and applications for development, administration, anti-fraud, and chargebacks. Additionally, one of the startup’s most popular features is the Just-In-Time (JIT) Funding functionality that overcomes the need to maintain sufficient balances for each cardholder transaction. Essentially, JIT Funding is a method of funding an account automatically - in real-time - during the transaction process. The company has been operational since 2010, and its growing list of customers now includes Uber, Square, Klarna, and DoorDash. It doubled its valuation to $4.3 billion in May 2020 when it raised $150 million in funding. With about 530.2 million Class A and Class B shares outstanding, Marqeta could be valued at over $12 billion this year. The paperwork for Marqeta’s listing was confidentially submitted in February. The stock is expected to trade on the Nasdaq under the symbol MQ with JP Morgan Goldman Sachs as lead underwriters of the offering.
Belvo, a Mexico City-based fintech startup known for building an open-source finance API platform, raised $43 million in a Series A round of funding. According to the company’s announcement published on Tuesday, June 1, Belvo will use the funds to accelerate the expansion of its Open Finance platform across Latin America. The financing round was joined by a mix of Latin American- and Silicon Valley-based venture capital firms such as Kibo Ventures, Future Positive, FJ Labs, Kaszek, Venture Friends, MAYA Capital, along with well-known business angel investors including Sebastián Mejía, co-founder and president of Rappi, David Vélez, Nubank CEO and founder, and Wise’s CTO Harsh Sinha. According to Belvo, this funding round was the largest Series A a Latin American fintech has ever raised. In May 2020, less than a month after its launch, Belvo raised $10 million in a seed round co-led by two of the biggest names in South and North American venture capital - Argentina’s Kaszek and Silicon Valley’s Founders Fund. The new round of funding has resulted from Belvo’s rapid growth supported by the continued expansion of fintech in Latin America over the past year and a half. The startup aims to use the newly raised funds to scale and enhance its developer-first API platform and to continue expanding its geographic footprint by collaborating with other leading fintech startups in Latin America. Credit providers, neobank app developers, and finance tools already use Belvo’s API to connect their clients’ personal and business bank accounts to their apps, thus unlocking the power and convenience of open banking. Determined to continue developing category-defining API tools and the essential infrastructure to power the next generation of financial services, Belvo already has a customer base of more than 60 companies located in Brazil, Mexico, and Colombia and handles millions of API calls each month. During its first year of operation, the fintech startup managed to expand its API coverage to gig economy platforms, including Rappi and Uber, tax authorities like SAT in Mexico, and more than 40 financial institutions, now letting companies connect to more than 90% of business and personal bank accounts in Latin America.
The Manchester-based fintech startup Hydr has partnered with global business platform Xero to reform and improve cash flow for small companies. Launched on May 24, Hydr’s new finance program is meant to speed up invoicing, ensuring payments within 24 hours for a fixed fee. Hydr’s role in the partnership will be digital onboarding for small businesses, while Xero will focus on seamless integration. Hydr was founded to avoid late payments in businesses whose model relies on invoice financing. Nicola Weedall, one of the company’s founders, says that the powerful effect of good cash flow has inspired the company to focus on making the invoicing process as transparent and straightforward as possible. Hector Macandrew, Hydr’s other co-founder, has stated they created Hydr to change how late payments are accepted as a given in our economy. Weedall and Macandrew think that the success of a business should not depend on its capacity to wait for payment. One of the best ways to automate and improve cash flow is to use payroll software, but another would be to automate invoice enforcement, and that’s what Hydr now does. Many small businesses in the UK struggle with invoicing in regular circumstances, but even more so during the pandemic; 62% of them have had to deal with late or frozen payments. Hydr hopes to change this by connecting with Xero and therefore enabling funding decisions in real-time. Businesses create invoices, a fixed fee is applied to them, and Hydr handles the invoice payment within the next business day. The startup is located in the technology hub at Department, a bonded warehouse in Manchester operated by Enterprise City’s Exchange program. Hydr’s success is due in no small part to crowdfunding. In fact, this company is just one testament to the growing power of publicly sourced funding for companies and projects, particularly as crowdfunding sites become more and more popular.
Tesla’s $3 purchase of patent applications from Canadian battery startup Springpower International will help push Tesla’s car closer to a price of $25,000. Tesla purchased these patent applications just two days before Battery Day, during which it announced that the company is actively working on reducing the expense of creating lithium-ion batteries. Elon Musk and senior vice-president of engineering Drew Baglino explained the details around the new technology for producing batteries. If successful, the adoption of this technology could drive Tesla’s electric vehicle price closer to the $25,000 price range, effectively turning Tesla cars into an affordable and much more sustainable option. Since the purchase of the patent applications, several Springpower researchers have updated their LinkedIn profiles to say that they are now working at Tesla. Since Tesla has been recruiting promising battery-focused startups for some time now, this could indicate that Springpower became yet another such acquisition. In 2015, Tesla signed a five-year exclusive partnership with a leading battery researcher Jeff Dahn and renewed the contract for another five years this January. The company purchased another Canadian battery company, Hibar, in 2019. This years-long endeavor is all about bringing battery production in-house to eliminate the reliance on current battery suppliers, such as Panasonic. Still, Musk warned not to expect results too soon, as it will take Tesla anywhere from a year to 18 months to turn these advantages into reality. This announcement pushed a deadline Musk set in August 2018, when he estimated that the company would reach the desired price point in three years. Still, Tesla seems to be battling on one-too-many fronts, and that it should, just like any other company, adopt a better task management system on a much larger scale. Namely, as Tesla pushes on the battery front, it struggles to open its gigafactory in Europe, located near Berlin. The gigafactory is meant to be the European version of its gigafactory in Texas. However, as even the Texas one still hunts for workers, with job posts regularly published on job posting sites, it might be a while before Musk cuts Berlin factory’s red tape. It is yet to be seen whether Tesla can meet the new deadline for its vehicles becoming affordable and what role the Springpower team will play in accomplishing it.
Revo Foods, the startup that developed a method for 3D printing veggie-based salmon, raised more than €1.5 million in its first funding round. The first 3D printed products, salmon stripes and salmon spreads, are now entering new European markets after debuting in Austria in 2020.Some of the company’s key investors include Hazelpond Capital, MKO Holdings, and friends2grow. Money also came from national funds such as the Vienna Business Agency and the FFG Austrian Research Promotion Agency.The Vienna-based Revo Foods has been developing seafood alternatives since 2020. The goal is to fully recreate the salmon, but only by using 100% plant-based ingredients. The company is currently working on matching the required texture, structure, and taste of salmon and tuna out of pea proteins, algae extracts, and dietary fibers. Apart from being a healthier version of salmon, the process creates less waste and retains more nutritional aspects.It’s also a good thing for the planet. It helps with reducing the need for industrial fishing, which is very damaging to the environment. At the moment, 90% of global fish stocks are either overfished or at capacity, and this is another effort to reduce these numbers while at the same time creating something delicious.The first products that hit the market at the end of 2020 were The Smokey One (smoked salmon stripes) and The Creamy One (salmon spreads). The company is actively working on developing salmon further and coming up with tuna sashimi.Revo Foods representatives said they are “enthusiastic to work with fantastic strategic investors that will really accelerate our 3D printed plant-based seafood market entry.”Last month, Revo Foods hosted the world’s first tasting for 3D-printed plant-based salmon, allowing interested food lovers to taste the new salmon and provide them with much-needed feedback.Even though Revo Foods is the first to use 3D printing for seafood, the 3D printing trend has already brought some excellent results for meat. Novameat, a firm from Spain, already developed a 3D printed vegan steak, and Redefine Meat, a startup from Israel that raised an astonishing $29 million, will soon be launching its 3D printed, plant-based meat products.Despite the pandemic, 2020 was a record year for startup investments, and from looks of it 2021 has a chance to beat this record.
Due to the ongoing pandemic and companies increasingly relying on cloud services and work from home, cybersecurity investments in 2020 resulted in a record $7.8 billion and 665 international deals. The US cybersecurity investments increased by 22% last year compared to 2019. Businesses are turning to small business insurance companies for an added layer of protection. The entire US venture market has risen a mere 15% during the same period. Of the total venture capital funds, 39% went into cybersecurity startups in seed or early stages. On a global scale, the funding reached 45%. The trend continues this year as cybersecurity worldwide has already seen more than $3.7 billion worth of investments - $1.4 billion more than in the first quarter last year. Despite a 10% increase in cybersecurity spending, Canalys believes that companies are not investing in cybersecurity enough. The tech market analyst company reports more breaches in 2020 alone than in the last 15 years combined. The main reason are the ever more dangerous ransomware attacks, disrupting or even shutting companies down. Therefore, having a cloud backup should be considered mandatory by now. The US and Israel had a 90% presence on cybersecurity venture funding last year. US companies earned $5.9 billion or 76%, while the Israeli companies got $1 billion of the entire cybersecurity funding. UK companies secured $262 million or 3% of the fundings, thanks to the Series C funding of the data privacy company Privitar equaling $80 million. The majority of the funded companies are from San Francisco. New York businesses gathered $874 million or 15% of last year’s funding. Massachusetts came in third with 12%, followed by Texas companies, which claimed 7%. Thanks to the record investments in 2020, six new cybersecurity unicorn startups (worth more than $1 billion) saw the light of day. It is the highest number of unicorn companies on an annual basis so far. Five are from the US, while the sixth, called Cato Networks, is Israel-based. The record is clearly to be beaten this year, as nine cybersecurity unicorns have emerged thus far. Furthermore, cloud infrastructure investments increased by 33% in 2020, cloud software by 20%, notebook PC sales by 17%, and wi-fi router sales by 40%. One of the first steps for increasing security could also be employing remote desktop software within companies to improve internal IT support services.
Amazon announced another round of investing in Indian startups and digitizing small and medium-sized businesses (SMBs). The investment is meant to help Indian SMBs debut on the online marketplace, ultimately expanding their customer base into a global one. The Amazon Smbhav Venture Fund focuses on agriculture and healthcare, but startups from other niches might get funding, depending on how much they intersect with SMBs. The agri-tech investment section aims to provide farming solutions, such as making agro-inputs more accessible to farmers, providing credit and insurance, and ensuring better produce quality. Healthcare-oriented startups working on telemedicine, e-diagnosis, and AI-powered treatment recommendations are also eligible for the money. The Amazon Smbhav annual event also served as announcement time for the “Spotlight North East” initiative: Through this venture, Amazon plans to bring over 50,000 artisans and small businesses from India’s North East region online by 2025. The effort should bring about an availability boost for tea, spices, and honey from the area. The two ventures represent Amazon’s latest attempt to tackle the India market, after already investing $6.5 billion in it: First, $2 billion in July 2014, an additional $3 billion in June 2016, and finally another $1 billion in January 2020, all with the same goal - digitizing SMBs. Amazon claimed to have created 300,000 jobs in India since the beginning of 2020: 250,000 new sellers, plus another 50,000 local retailers. However, this level of aggressive investment garnered a lot of backlash for Amazon, both from the SMBs it’s focusing on and the Indian government. Tens of thousands of protestors marched on the street after last year’s announcement, and a similar scene unfolded this year. There is an overall concern among Indian trader groups about Amazon’s circumventing of the country’s rules. Amazon has been struggling since its opening in India to adhere to India’s eCommerce rules. Amazon is greatly constricted by these laws: For one, eCommerce firms cannot hold inventory or sell items directly to consumers. Instead, eCommerce businesses have been operating through a web of joint ventures with local companies serving as inventory holders. India fixed this loophole in 2018, forcing Amazon to unlist thousands of items and make their investments in affiliated firms more indirect. Indian retailers have long been raising their concerns about Amazon’s alleged flout of Indian regulations. The Confederation of All India Traders (CAIT) said on the topic: “For years, CAIT has been maintaining that Amazon has been circumventing FDI laws of India to conduct unfair and unethical trade.” India imposed several additional regulations in recent years that extensively hurt US firms operating in India, Amazon being just one of them. Last year, for example, New Delhi started to enforce a 2% tax on all foreign billings for digital services provided in the country. The US Trade Representative estimates that the aggregate annual bill for US companies in India will probably exceed $30 million. Earlier this year, the USTR said that the categories India was taxing are “not leviable under other digital services taxes adopted around the world.” As Amazon has yet to turn a profit in India, it remains to be seen whether its venture there will be a success or a defeat similar to the one it experienced in China.
Israeli-Singaporian company Trax secured a $640 million Series E funding round. The primary investors during this round were led by SoftBank Vision Fund 2, along with tech-oriented funds under BlackRock. More prominent investors included OMERS, one of Canada’s largest defined benefit pension plans, and Sony Innovation Fund. The company focuses on helping retailers improve the shopping experience by applying digital technologies, accelerating thus these businesses’ digital transformation. Trax is a pioneer in AI-driven, autonomous shelf-monitoring solutions that provide merchandising services at an enterprise level. The tech is used to help retailers keep products stocked by using an on-demand crowd marketplace. Trex technology effectively digitalizes department stores by using AI and collected data to automate inventory management. In the words of the company’s CEO, Justin Behar, “Trax has been building its sophisticated, AI-powered, retail cloud platform for more than a decade. We began our journey by creating novel computer vision solutions for retail and have since broadened our capabilities to serve the evolving needs of the modern retail ecosystem.” Despite the potential IPO (initial public offering) and substantial funding, the company fired dozens of employees in 2020 and is supposedly planning more layoffs this year. According to local sources, the company already fired about 120 of its workers in Israel shortly after the onset of the COVID-19 pandemic. Trax currently employs around 1,000 workers, operates in more than 50 countries, and has about 175 clients. “We are witnessing the retail industry adopt digital technologies at an unprecedented pace and scale. Despite the turbulence of 2020, we made tremendous strides in our business because of the hard work, dedication, and team spirit at Trax,” stated Joel Bar-El, Trax co-founder and executive chairman. In preparation for the IPO at the New York Stock Exchange (NYSE), the company hopes for a $2 billion valuation and going public in the first half of 2021.
With IPOs turning into a fragile investment method and SPACs taking over, a change in crowdfunding rules is set to boost investment in diverse startups. The changes allow investors and founders to raise up to $5 million from crowdfunding, marking a significant increase from $1.07 million in 2020. This opens the door to new opportunities for startups that have so far struggled with raising funds the traditional way. Startups that have capped under previous rules can reopen their campaigns and test the waters with investment interests before filing the mandatory paperwork with the SEC. According to some forecasts, the new rules could pave the way for $1 billion in crowdfunding offerings in 2021. That’s a significant jump from the $250 million in the past year. Ever-rising interest in potential startup unicorns proved that $1.07 million was not enough to cover the needs of smaller companies. Regulation Crowdfunding has traditionally been the standard route for small businesses and under-represented founders in Europe to raise money. It allows entrepreneurs to set what they would like to offer instead of just equity - some of them offer interest-bearing notes or revenue-sharing agreements. Crowdfunding also allows regular people to get involved. The pandemic accelerated its evolution as it provides a simple route to funding. Several platforms offer people a chance to participate in the success of young companies struggling to get financing through traditional means. The popularity of Regulation Crowdfunding has increased from last year and is bound to skyrocket in 2021. Throughout 2020, startups have been using this method to raise funds, and Wefunder, a crowdfunding platform, reported a four-fold investment volume throughout the year. Namely, in February 2020, $2.8 million was invested in startups ranging from self-driving cars to next-door coffee shops, and in February 2021, it reported an $11.4 million volume. These are considerable amounts coming from both regular people investing $100 to angel investors “paying it forward.”