What will save crypto?

Cryptocurrency technology has been on a tumultuous journey since its creation in 2009. According to a recent New York Times article, bitcoin enthusiasts in the U.S. wrongly predicted the involvement of Wall Street institutions and investors in cryptocurrency, which would have given it legitimacy. Instead, the opposite effect has taken place: big investors have avoided crypto because of its volatility, as shown by bitcoin’s devastating drop in price last year.

Elsewhere in the world, particularly in the Middle East and among major Muslim communities, there is a growing curiosity surrounding cryptocurrency — and a call for regulation that deals with the stigmas against it. There are about 1.8 billion Muslims worldwide, and the global Islamic economy with the inclusion of crypto tools, services and products could equate to approximately US$3 trillion by 2021. If we are able to work through the challenges and implement crypto for a Muslim audience, the addressable market for crypto could increase exponentially. 

But since its inception, Muslim leaders and communities have debated on whether or not cryptocurrencies should be deemed halal or haram, permissible or forbidden. Shariah-compliant finance is a fundamental part of Islamic tradition, and it’s the primary reason why Islamic countries have been so dubious of the new currency.

The challenge of Shariah compliance

Shariah compliance refers to finances and investments that adhere to Islamic law. This includes prohibiting riba, or charged Read the rest

Wagestream closes $51M Series A to plug the payday gap without putting workers in debt

Getting your work wages on a monthly (not weekly nor biweekly) basis has become a more widespread trend as the price of running payrolls has gone up, and organizations’ cashflow has gone down. That 30-day shift may be a boost to employers, but not employees, who may need access to those wages more immediately and find it a challenge to stretch out their income month to month.

Now, a startup based out of London has raised a large round of funding for service that’s aiming to plug that gap. Wagestream — which works with employers to let employees draw down a percentage of their income in the month for a small, flat fee — today said that it has closed a Series A round of £40 million ($51 million).

The funding is coming in the form of equity and debt, with Balderton and Northzone leading on the equity side, which makes up £15 million of the raise, and savings bank Shawbrook investing £25 million on the debt side to finance employee draw-downs. Other investors in the round include QED, the Rowntree Foundation, the London Co-investment Fund (LCIF) and Village Global, a social venture firm backed by Bill Gates and Jeff Bezos, among others.

The company is not disclosing its valuation, but this brings the total raised to just under £45 million, and “the valuation is definitely higher now,” according to CEO and co-founder Peter Briffett.

The list of investors is proving to be a useful one for Wagestream as it grows. I asked if Bezos’ company, Amazon, was working with Wagestream. Briffett confirmed it is not a customer currently, “but we are talking to them.” It does, however, have a number of other customers already signed up, including pest removal service Rentokil PLC, Camden Town Brewery, the Slug & Lettuce … Read the rest

Ikea invests in Livspace, a one-stop platform for interior design based in India

Fresh from raising $70 million last year via big names including Goldman Sachs and TPG Growth, Livspace, an India-based startup that offers a one-stop-shop for interior design, has lured yet another marquee investor: Ikea.

The startup said today it has taken an undisclosed investment from Ingka Investments, the VC arm of Ikea parent Ingka Group, which operates 90 percent of Ikea’s retail footprint. Livspace CEO and co-founder Anuj Srivastava declined to provide a figure for the deal, but he told TechCrunch that the stake involved is a minor one while there is no plan to bolt a larger round on to this investment. Deal Street Asia first reported news of the deal.

“There is strong strategic and commercial potential,” Srivastava, a former Googler who started Livspace in 2015, said of the new investor. “This is an opportunity to create the best possible omnichannel experience for consumers.”

India is a tough place for international retail companies but Ikea has made progress in recent times.

The company opened its first India-based store in Hyderabad last year and, having gained FDI approval to operate retails store, it is planning a substantial expansion with at least 25 new stores in the offing.

Livspace, for those unaware of it, runs a service that is aimed at taking the hassle out of interior design. The company’s platform connects homeowners with designers and the supply chain to go through ideas, chose a plan and implement it. That includes, among other things, 3D virtual renders of a renovation, offline meetings at a Livspace design center and, in some cases, customized furnishings. By bringing all parties together, Livspace claims to offer cost savings to consumers as well as higher rates and more efficient use of time for designers.

That model resonates with Ikea (Ingka), according to Srivastava, who … Read the rest

Big revenues, huge valuations and major losses: charting the era of the unicorn IPO

We can make charts galore about the tech IPO market. Yet none of them diminish the profound sense that we are in uncharted territory.

Never before have so many companies with such high revenues gone public at such lofty valuations, all while sustaining such massive losses. If you’re a “growth matters most” investor, these are exciting times in IPO-land. If you’re the old-fashioned value type who prefers profits, it may be best to sit out this cycle.

Believers in putting market dominance before profits got their biggest IPO opportunity perhaps ever last week, with Uber’s much-awaited dud of a market debut. With a market cap hovering around $64 billion, Uber is far below the $120 billion it was initially rumored to target. Nonetheless, one could convincingly argue it’s still a rich valuation for a company that just posted a Q1 loss of around $1 billion on $3 billion in revenue.

So how do Uber’s revenues, losses and valuation stack up amidst the recent crop of unicorn IPOs? To put things in context, we assembled a list of 15 tech unicorns that went public over the past three quarters. We compared their valuations, along with revenues and losses for 2018 (in most cases the most recently available data), in the chart below:

 

Put these companies altogether in a pot, and they’d make one enormous, money-losing super-unicorn, with more than $25 billion in annual revenue coupled to more than $6 billion in losses. It’ll be interesting to revisit this list in a few quarters to see if that pattern changes, and profits become more commonplace.

History

It’s … Read the rest

Startups Weekly: There’s an alternative to raising VC and it’s called revenue-based financing

Revenue-based financing is on the rise, at least according to Lighter Capital, a firm that doles out entrepreneur-friendly debt capital.

What exactly is RBF you ask? It’s a relatively new form of funding for tech companies that are posting monthly recurring revenue. Here’s how Lighter Capital, which completed 500 RBF deals in 2018, explains it: “It’s an alternative funding model that mixes some aspects of debt and equity. Most RBF is technically structured as a loan. However, RBF investors’ returns are tied directly to the startup’s performance, which is more like equity.”

Source: Lighter Capital

What’s the appeal? As I said, RBFs are essentially dressed up debt rounds. Founders who opt for RBFs as opposed to venture capital deals hold on to all their equity and they don’t get stuck on the VC hamster wheel, the process in which you are forced to continually accept VC while losing more and more equity as a means of pleasing your investors.

RBFs, however, are better than traditional debt rounds because the investors are more incentivized to help the companies they invest in because they are receiving a certain portion of that business’s monthly revenues, typically 1% to 9%. Eventually, as is explained thoroughly in Lighter Capital’s newest RBF report, monthly payments come to an end, usually 1.3 to 2.5X the amount of the original financing, a multiple referred to as the “cap.” Three to five years down the line, any unpaid amount of said cap is due back to the investor. When all is said in done, ideally, the startup has grown with the support of the capital and hasn’t lost any equity.

At this point, they could opt to raise additional revenue-based capital, they could turn to venture capital or they could tap a tech bank to help them … Read the rest