Daily Crunch: Major Fintech Exit Caps the Week

Daily Crunch Update: Newsletter Format Adjustments

A daily digest of TechCrunch’s most significant and impactful stories can be delivered directly to your inbox each day at 3 p.m. PDT. You can subscribe to this service here.

We appreciate the numerous responses received this week regarding the newsletter’s recent format modifications. The feedback primarily coalesced around two key points: a preference for the enhanced narrative approach, and a desire for a more concise, link-focused presentation.

Changes Implemented Based on Your Feedback

Beginning with today’s edition, company names will be displayed in bold type. This enhancement is designed to facilitate quicker identification of startups featured in the newsletter.

• More bulleted lists will be incorporated into sections to improve readability.
• Additional descriptive information will be provided for companies that may not be widely recognized.

Despite these changes, we remain committed to providing insightful commentary alongside the news. TechCrunch thrives on discussion and analysis.

This iteration represents a synthesis of the Daily Crunch team’s vision and the valuable input received from our readers. We extend our gratitude to everyone who took the time to share their thoughts!

Alex — @alex on Twitter

A Significant Exit in the American Fintech Landscape

The acquisition of Divvy, a Utah-based startup focused on spend management for small and medium-sized businesses, by publicly traded fintech firm Bill.com, represents a major event within the startup ecosystem this week. The $2.5 billion deal, announced late Thursday, had been anticipated for some time. Divvy had previously secured over $400 million in funding from investors including PayPal Ventures, New Enterprise Associates, Insight Partners, and Pelion Venture Partners.

Prior to Bill.com’s Q1 earnings report, TechCrunch reported on the potential sale, with speculation circulating beforehand. The timing of the announcement alongside the earnings release was predictable. This development highlights activity within the expanding corporate payment sector, alongside other startups such as Ramp, Airbase, and Brex.

An analysis of the financial details Bill.com provided concerning Divvy reveals crucial metrics. These metrics are instrumental in assessing the valuation of startups vying for an IPO or a similar acquisition. The collective performance of corporate spend startups is demonstrably strong.

This success is even fostering the creation of new ventures, such as Clara, a company concentrating on the Latin American market, which recently raised $3.5 million in funding.

Generally, the fintech sector experienced a robust first quarter and is on track for a record-breaking year in venture capital investment, mirroring trends observed in the AI startup space and the broader VC landscape.

Startups and Venture Capital Updates

Startup personnel should carefully consider the potential impact of President Biden’s proposed changes to capital gains taxes. Vieje Piauwasdy, a director at Secfi – a firm specializing in equity management for startup employees – provides analysis of the current political landscape within the crucial U.S. startup ecosystem.

Investment Trends and Emerging Markets

Tiger Global is demonstrating confidence in the expanding adoption of income share agreements (ISAs) within higher education. The firm has invested in Blair, a startup focused on facilitating ISAs between universities and their students.

Natasha Mascarenhas provides further insights into this growing trend and Tiger Global’s consistent investment activity.

Global Expansion and Robotics

SoftBank is furthering its investment in the robotics sector with a $15 million investment in Youibot. This Chinese startup specializes in the development of “autonomous mobile robots,” as reported by Rita Huang.

The investment comes from SoftBank’s Asian venture group, highlighting the company’s strategic focus on the Asian market.

Fintech Innovation in Indonesia

GajiGesa, a fintech company serving Indonesian workers, has secured additional strategic investment and launched a new application tailored for micro-SMEs.

This new funding follows a previous venture round in February valued at $2.5 billion, which was supported by Defy.vc and Quest Ventures. GajiGesa provides “earned wage access,” or EWA, to employees in Indonesia.

Key Takeaways

• The evolving tax policies in the United States are a significant consideration for startup employees.
• Income share agreements are gaining traction as an alternative financing model for students.
• Investment in robotics and automation continues to grow, particularly in Asia.
• Fintech solutions focused on financial inclusion are expanding in emerging markets like Indonesia.

The Future Trajectory of RPA: Perspectives from 5 Investors

The realm of robotic process automation (RPA) has been the subject of considerable discussion, especially following UiPath’s initial public offering (IPO) last month.

Despite some viewpoints suggesting the technology is still in its nascent stages, the recent pandemic has undeniably heightened awareness regarding tasks suitable for robotic execution. It’s difficult to dispute the logic of automating repetitive processes like invoice processing, spreadsheet management, and document handling.

As Ron details, “RPA empowers organizations to automate a collection of exceptionally routine tasks, delegating the workload from humans to machines.” Consider the scenario of extracting an invoice total from an email, inputting that value into a spreadsheet, and then notifying the accounts payable department via Slack. This work could be performed by personnel, or it could be completed more rapidly and with greater efficiency by an automated system. These are precisely the types of monotonous tasks ideally suited for automation.

Despite being the fastest-expanding segment within enterprise software, the RPA market remains relatively modest in size. Ron engaged with five investors to explore the sector’s future direction, identify potential opportunities, and assess the most significant challenges facing RPA startups.

The core benefit of RPA lies in its ability to streamline workflows and reduce operational costs.

Investor Insights on RPA Growth and Challenges

The investors highlighted several key areas for future development within the RPA landscape.

• Scalability: A major focus is on enabling RPA solutions to scale effectively across larger organizations.
• Integration: Seamless integration with existing enterprise systems is crucial for widespread adoption.
• AI Enhancement: Combining RPA with artificial intelligence (AI) capabilities will unlock more complex automation possibilities.

Concerns were also raised regarding the potential for market saturation and the need for startups to differentiate themselves through innovation.

The investors emphasized that successful RPA companies will need to demonstrate a clear return on investment (ROI) for their clients.

(Access to Extra Crunch, our membership program designed to support founders and startup teams, is available here.)

Major Technology Companies – A Recent Overview

Activity from the largest technology corporations was relatively subdued today, following a period of significant announcements earlier in the week. This lull allows us to shift focus to other prominent Big Tech firms, those that haven't yet reached the $1 trillion valuation.

Recent Developments in Big Tech

Several noteworthy developments have emerged from companies operating within the broader technology landscape. These updates showcase innovation and adaptation across various sectors.

• Flipkart's Support for Indian Sellers: Walmart, the American retail behemoth, is extending support to its Indian subsidiary, Flipkart. The company is waiving storage and cancellation fees for marketplace sellers and providing insurance coverage. This initiative responds to the recent COVID-19 surge within India.
• Credit Karma's Enhanced Rewards System: Credit Karma, a US-based consumer credit fintech company acquired by Intuit for over $7 billion, is innovating its cash-back reward program. The aim is to offer instant payback options to its debit card users, as detailed in a recent report.
• Bison Trails and Coinbase: Coinbase, the publicly traded cryptocurrency exchange, leverages an internal service called Bison Trails. This acquisition provides crucial infrastructure, functioning similarly to Amazon Web Services (AWS) within the Coinbase ecosystem.
• Twitch UX Analysis: A comprehensive UX teardown of Twitch, the popular streaming platform owned by Amazon, has been conducted by Peter Ramsey of Built For Mars. The analysis focuses on the "Anchor Effect" and how it influences user decision-making.

These updates demonstrate the dynamic nature of the technology industry and the ongoing efforts of companies to adapt to evolving market conditions and user needs. Walmart, Flipkart, Credit Karma, Coinbase, Bison Trails, Twitch, and Amazon all continue to play significant roles in shaping the future of technology.

Community Feedback on Nuzzel's Closure

The recent discontinuation of Nuzzel has prompted discussion within our community. We initiated a conversation to gauge user interest in a potential paid revival of the service.

Exploring Potential Subscription Models

Specifically, we inquired whether individuals would be willing to subscribe to Nuzzel, and more importantly, the reasoning behind their willingness to pay. Your insights are valuable as we assess the feasibility of future iterations.

We encourage all former Nuzzel users to share their perspectives. Understanding the perceived value of the platform is crucial for informed decision-making.

Please contribute your thoughts on whether a subscription model would be viable, and detail the features or benefits that would justify the cost. We are eager to hear from you!

Your feedback will directly influence our understanding of the demand for a service like Nuzzel. We appreciate your participation in this important discussion.