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Here’s how fast a few dozen startups grew in Q3 2020

Published October 23, 2020

Earlier this week I asked startups to share their Q3 growth metrics and whether they were performing ahead or behind of their yearly goals.

Lots of companies responded. More than I could have anticipated, frankly. Instead of merely giving me a few data points to learn from, The Exchange wound up collecting sheafs of interesting data from upstart companies with big Q3 performance.

The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.

Naturally, the startups that reached out were the companies doing the best. I did not receive a single reply that described no growth, though a handful of respondents noted that they were behind in their plans.

Regardless, the data set that came together felt worthy of sharing for its specificity and breadth — and so other startup founders can learn from how some of their peer group are performing. (Kidding.)

Let’s get into the data, which has been segmented into buckets covering fintech, software and SaaS, startups focused on developers or security and a final group that includes D2C and fertility startups, among others.

Q3 performance

Obviously, some of the following startups could land in several different groups. Don’t worry about it! The categories are relaxed. We’re here to have fun, not split hairs!

Fintech

  • Numerated: According to Numerated CEO Dan O’Malley, his startup that helps companies more quickly access banking products had a big Q3. “Revenue for the first three quarters of 2020 is 11X our origination 2020 plan, and 18X versus the same period in 2019,” he said in an email. What’s driving growth? Bank digitization, O’Malley says, which has “been forced to happen rapidly and dramatically” in 2020.
  • BlueVine: BlueVine does banking services for SMBs; think things like checking accounts, loans and payments. The company is having a big year, sharing with TechCrunch via email that it has expanded its customer base “by 660% from Q1 2020 to” this week. That’s not a revenue metric, and it’s not Q3-specific, but as both Numerated and BlueVine cited the PPP program as a growth driver, it felt worthy of inclusion.
  • Harvest Platform: A consumer-focused fintech, Harvest helps folks recover fees, track their net worth and bank. In an email, Harvest said it “grew well over 1000%+” in the third quarter and is “ahead of its 2020 plan” thanks to more folks signing up for its service and what a representative described as “economic tailwinds.” The savings and investing boom continues, it appears.

Software/SaaS

  • Uniphore: Uniphore provides AI-based conversational software products to other companies used for chatting to customers and security purposes. According to Uniphore CEO Umesh Sachdev, the company grew “320% [year-over-year] in our Q2 FY21 (July-sept 2020),” or a period that matches the calendar Q3 2020. Per the executive, that result was “on par with [its] plan.” Given that growth rate, is Uniphore a seed-stage upstart? Er, no, it raised a $51 million Series C in 2019. That makes its growth metrics rather impressive as its implied revenue base from which it grew so quickly this year is larger than we’d expect from younger companies.
  • Text Request: An SMS service for SMBs, Text Request grew loads in Q3, telling TechCrunch that it “billed 6x more than we did in 2019’s Q3,” far ahead of its target for doubling billings. A company director said that while “customer acquisition was roughly on par with expectations,” the value of those customers greatly expanded. I dug into the numbers and was told that the 6x figure is for total dollars billed in Q3 2020 inclusive of recurring and non-recurring incomes. For just the company’s recurring software product, growth was a healthy 56% in Q3.
  • Notarize: Digital notarization startup Notarize — Boston-based, which most recently raised a $35 million Series C — is way ahead of where it expected to be, with a VP at the company telling TechCrunch that during “the first week of lockdowns, Notarize’s sales team got 3,000+ inquiries,” which it managed to turn into revenues. The same person added that the startup is “probably 5x ahead of [its] original 2020 plan,” with the substance measured being annual recurring revenue, or ARR. We’d love some hard numbers as well, but that growth pace is spicy. (Notarize also announced it grew 400% from March to July, earlier this year.)
  • BurnRate.io: Acceleprise-backed Burnrate.io hasn’t raised a lot of money, but that hasn’t stopped it from growing quickly. According to co-founder and CEO Robert McLaws, BurnRate “started selling in Q4 of last year” so it did not have a pure Q3 2019 versus Q3 2020 metric to share. But the company managed to grow 3.3x from Q4 2019 to Q3 2020 per the executive, which is still great. BurnRate provides software that helps startups plan and forecast, with the company telling TechCrunch with yearly planning season coming up, it expects sales to keep growing.
  • Gravy Analytics: Location data as a service! That’s what Gravy Analytics appears to do, and apparently it’s been a good run thus far in 2020. The company told TechCrunch that it has seen sales rise 80% year-to-date over 2019. This is a bit outside our Q3 scope as it’s more 2020 data, but we can be generous and still include it.
  • ChartHop: TechCrunch covered ChartHop earlier this year when it raised $5 million in a round led by Andreessen Horowitz. A number of other investors took part, including Cowboy Ventures and Flybridge Capital. Per our coverage, ChartHop is a “new type of HR software that brings all the different people data together in one place.” The model is working well, with the startup reporting that since its February seed round — that $5 million event — it has grown 10x. The company recently raised a Series A. Per a rep via email, ChartHop is “on-target” for its pre-pandemic business plan, but “far ahead” of what it expected at the start of the pandemic.
  • Credo: Credo is a marketplace for digital marketing talent. It’s actually a company I’ve known for a long-time, thanks to founder John Doherty. According to Doherty, Credo has “grown revenue 50% since June, while only minimally increasing burn.” Very good.
  • Canva: Breaking my own rules about only including financial data, I’m including Canva because it sent over strong product data that implies strong revenue growth. Per the company, Canva’s online design service has seen “increased growth over both Q2 and Q3, with an increase of 10 million users in Q3 alone (up from 30 million users in June).” Thirty-three percent user growth, from 30 to 40 million, is impressive. And, the company added that it saw more team-based usage since the start of the pandemic, which we presume implies the buying of more expensive, group subscriptions. Next time real revenue, please, but this was still interesting.

Developer/Security

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Nordic challenger bank Lunar raises €40M Series C, plans to enter the ‘buy now, pay later’ space

Published October 23, 2020

Lunar, the Nordic challenger bank that started out life as a personal finance manager app (PFM) but acquired a full banking license in 2019, has raised €40 million in Series C funding from existing investors.

The injection of capital follows a €20 million Series B disclosed in April this year and comes on the back of Lunar rolling out Pro paid-for subscriptions — similar to a number of other challenger banks in Europe — personal consumer loans, and the launch of business bank accounts in August.

The latter appears to have been an instant success, perhaps proof there is — like in the U.K. — pent up demand for more accessible banking for sole traders. Just months since launching in Denmark, Lunar Business claims to have signed up more than 50% of all newly founded sole trader businesses in the country.

I’m also told that Lunar has seen “best-in-class” user engagement with users spending €1,100 per month versus what the bank says is a €212 EU average for card transactions. Overall, the bank has 5,000 business users and 200,000 private users across Denmark, Sweden and Norway.

Meanwhile — and most noteworthy — after launching its first consumer lending products on its own balance sheet, Lunar has set its sights on the “buy now, pay later” market, therefore theoretically encroaching on $10.65 billion valued Klarna, and Affirm in the U.S., which just filed to go public. Other giants in the BNPL space also include PayPal.

Lunar founder and CEO Ken Villum Klausen says the “schizophrenic” Nordic banking market is the reason why the challenger is launching BNPL. “It’s the most profitable banking landscape in the world, but also the most defensive, with least competition from the outside,” he says. “This means that the traditional banking customer is buying all their financial products from their bank”.

It is within this context that Lunar’s BNPL products are built as “post-purchase,” where Lunar will prompt its users after they have bought something (not dissimilar to Curve’s planned credit offering). For example, if you were to buy a new television, the app will ask if you want to split the purchase into instalments. “This does not require merchant agreements etc, and will work on all transactions both retail and e-commerce,” explains Klausen.

“We do not view Klarna as a direct competitor as they are not in the Nordic clearing system,” he adds. “Hence, you cannot pay your bills, get your salary and use it for daily banking. Klarna is enormous in Sweden, but relatively small in Denmark, Norway and Finland”.

In total, Lunar has raised €104 million from investors including Seed Capital, Greyhound Capital, Socii Capital and Chr. Augustinus Fabrikker. The challenger has offices in Aarhus, Copenhagen, Stockholm and Oslo, with a headcount of more than 180 employees. It plans to launch its banking app in Finland in the first half of 2021.

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Extra Crunch Partner Perk: Get 6 months free of Zendesk Support and Sales CRM

Published October 22, 2020

We’re excited to announce an update to the Extra Crunch Partner Perk from Zendesk. Starting today, annual and two-year Extra Crunch members that are new to Zendesk, and meet their startup qualifications, can now receive six months of free access to Zendesk’s Sales CRM, in addition to Zendesk Support Suite, Zendesk Explore and Zendesk Sunshine.

Here is an overview of the program.

Zendesk is a service-first CRM company with support, sales and customer engagement products designed to improve customer relationships. This offer is only available for startups that are new to Zendesk, have fewer than 100 employees and are funded but have not raised beyond a Series B.

The Zendesk Partner Perk from Extra Crunch is inclusive of subscription fees, free for six months, after which you will be responsible for payment. Any downgrades to your Zendesk subscription will result in the forfeiture of the promotion, so please check with Zendesk first regarding any changes (startups@zendesk.com). Some add-ons such as Zendesk Talk and Zendesk Sell minutes are not included. Complete details of what’s included can be found here.

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Quibi’s shortform life

Published October 22, 2020

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.

Myself, along with Danny and Natasha had a lot to get through, and more to say than expected. A big thanks to Chris for cutting the show down to size.

Now, what did we get to? Aside from a little of everything, we ran through:

Whew! It was a lot, but also very good fun. Look for clips on YouTube if you’d like, and we’ll chat you all next Monday.

Equity drops every Monday at 7:00 a.m. PDT and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.

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Respect the hustle, not the stupidity

Published October 22, 2020

Yes, the media f’ing gorged on the Quibi story yesterday. We did, they did, everyone did. And really, truly, how could anyone not? Nearly $2 billion came in (with $350 million heading back), a star-studded lineup of executives and production teams, an absolutely massive advertising campaign, and a PR strategy that all but begged the sun to melt Icarus’ wings.

Our collective exhalation on the complete clusterfuck that was Quibi though leads to a legitimate and interesting question: Are we obnoxiously attacking a good-faith failure? Wasn’t Quibi a bet just like every other startup, a bet that just happened to fail? A16Z’s general partner Andrew Chen put it vividly on Twitter, saying “It’s gross” and lauding the entrepreneurial challenge of building a startup:

all the people rushing to their keyboards to type in their “i told you so” hot takes on Quibi:

It’s gross. Building a company is hard, why celebrate a fail?

Go build something instead of using your energy to let twitter know how smart you are the say the consensus thing.

— Andrew Chen 🇺🇸 (@andrewchen) October 22, 2020

I understand this view, deeply. In fact, all of us at TechCrunch understand this. One of the things that we pride ourselves on here is respecting the hustle. We know how hard it is to launch a startup. As a team, we collectively talk to thousands of founders every year, and we hear the heartbreaking stories and the downright trauma at times that comes with building a company. Occasionally (and yes, we focus most of our reporting here), we hear about the wins and successes too.

Let’s be honest: Most startups fail. Most ideas turn out wrong. Most entrepreneurs are never going to make it. That doesn’t mean no one should build a startup, or pursue their passions and dreams. When success happens, we like to talk about it, report on it and try to explain why it happens — because ultimately, more entrepreneurial success is good for all of us and helps to drive progress in our world.

But let’s also be clear that there are bad ideas, and then there are flagrantly bad ideas with billions in funding from smart people who otherwise should know better. Quibi wasn’t the spark of the proverbial college dropout with a passion for entertainment trying to invent a new format for mobile phones with ramen money from friends and family. Quibi was run by two of the most powerful and influential executives in the United States today, who raised more money for their project than other female founders have raised collectively this year.

Chen makes an important point that many obvious ideas in tech started as dumb ideas. That’s true! In fact, the history of technology is littered with examples of ideas that investors and the press thought were either dumb or impossible to build (which is a more polite way to say “dumb”).

for everyone who “obviously” knows when they see a bad idea in tech – everyone citing Quibi today – here’s a thread for you. https://t.co/QpXXKG16Vm

— Andrew Chen 🇺🇸 (@andrewchen) October 22, 2020

Why do supposedly dumb ideas turn out to be smart? Part of the reason is that what starts out as dumb slowly iterates into something that is very smart. Facebook was just a “facebook” for checking out your classmates on college campuses. If it had ended there and withered away like many other social networks before it, we might well have put it in the waste bin of history. But Zuckerberg and his crew iterated — adding features like photos, a feed, messaging and more with an extreme focus on growth that made the product so much more than when it started.

We’ve seen this pattern again and again throughout time. Founders get feedback from users, they iterate, they pivot, they try new things and slowly but surely they start to migrate from what might have been a very raw concept to something much more ready to compete in the ferocious marketplace of business and consumer attention today.

This was never the story with Quibi. There was never an iteration of the product, or a long-range plan to assiduously cultivate users and talent as the company found traction while carefully husbanding its capital for the inevitable tough moments in the growth of any company.

Yes, we in the commentariat do make mistakes, but analysts weren’t dumb in pointing out all of Quibi’s glaring, red-alert flaws. Those analysts were smart. They were right. They might not be right next time, of course — no analyst should get too overconfident in their predictions. But at the same time, we shouldn’t just collectively throw up our hands and declare every idea that comes our way a brilliant gift from the heavens. Most ideas are dumb, and we and everyone else have every right to point that out.

So respect the hustle. Don’t kick a hardworking entrepreneur down who is just trying to get their project out there and show it the world. But that doesn’t mean you can’t call out stupid when you see it. The best entrepreneurs know that — even at its most vituperative — critical feedback is the necessary ingredient to startup success. Lauding everyone lauds no one.

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Customer experience and digital transformation concepts are merging during the pandemic

Published October 22, 2020

Customer experience and digital transformation are two terms we’ve been hearing about for years, but have often remained nebulous in many organizations — something to aspire to perhaps, but not take completely seriously. Yet the pandemic has been a forcing event for both concepts, thrusting the ideas front and center.

Suddenly startups that help with either of these concepts are seeing rising demand, even in a year with an overall difficult economic climate. If you are fortunate enough to be helping companies digitize a process or improve how customers interact with companies, you may be seeing increased interest from customers and potential acquirers (and this was true even before this year). A case in point is Twilio acquiring Segment for $3.2 billion recently to help build data-fueled applications to interact with customers.

Even though building a positive customer experience has never been completely about digital, at a time where it’s difficult to interact with customers in person, the digital side of it has taken new urgency. As COVID-19 took hold this year, businesses, large and small, suddenly realized the only way to connect to their customers was digitally. At that point, digital transformation became customer experience’s buddy when other ways of contacting one another have been severely limited.

Pandemic brings changes

Just about every startup founder I talk to these days, along with bigger, more established companies, talk about how the pandemic has pushed companies to digitally transform much faster than they would have without COVID.

Brent Leary, founder at CRM Essentials, says that the pandemic has certainly expedited the need to bring these two big ideas together and created opportunities as that happens. “The coronavirus, as terrible as it has been in so many ways to so many people, has created opportunities for companies to build direct-to-consumer (D2C) digital pipelines that can make them stronger companies despite the current hardships,” Leary told TechCrunch.

The cloud plays a big role in the digital transformation process, and for the last decade, we have seen companies make a slow but steady shift to the cloud. When you have a situation like we’ve had with the coronavirus, it speeds everything up. As it turns out, being in the cloud helps you move faster because you don’t have to worry about all of the overhead of running a business critical application as the SaaS vendors take care of all that for you.

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Render raises $4.5M for its DevOps platform

Published October 22, 2020

Render, the winner of our Disrupt SF 2019 Startup Battlefield, today announced that it has added another $4.5 million onto its existing seed funding round, bringing total investment into the company to $6.75 million.

The round was led by General Catalyst, with participation from previous investors South Park Commons Fund and a group of angels that includes Lee Fixel, Elad Gil and GitHub CTO (and former VP of Engineering at Heroku) Jason Warner.

The company, which describes itself as a “Zero DevOps alternative to AWS, Azure and Google Cloud,” originally raised a $2.25 million seed round in April 2019, but it got a lot of inbound interest after winning the Disrupt Battlefield. In the end, though, the team decided to simply raise more money from its existing investors.

Current Render users include Cypress.io, Mux, Bloomscape, Zelos, 99designs and Stripe.

“We spoke to a bunch of people after Disrupt, including Ashton Kutcher’s firm, because he was one of the judges,” Render co-founder and CEO Anurag Goel explained. “In the end, we decided that we would just raise more money from our existing investors because we like them and it helped us get a better deal from our existing investors. And they were all super interested in continuing to invest.”

What makes Render stand out is that it fulfills many of the promises of Heroku and maybe Google Cloud’s App Engine. You simply tell it what kind of service you are going to deploy and it handles the deployment and manages the infrastructure for you.

“Our customers are all people who are writing code. And they just want to deploy this code really easily without having to worry about servers, or maintenance, or depending on DevOps teams — or, in many cases, hiring DevOps teams,” Goel said. “DevOps engineers are extremely expensive to hire and extremely hard to find, especially good ones. Our goal is to eliminate all of that work that DevOps people do at every company, because it’s very similar at every company.”

Image Credits: Render

One new feature the company is launching today is preview environments. You can think of them as disposable staging or development environments that developers can spin up to test their code — and Render promises that the testing environment will look the same as your production environment (or you can specify changes, too). Developers can then test their updates collaboratively with QA or their product and sales teams in this environment.

Development teams on Render specify their infrastructure environments in a YAML file and turning on these new preview environments is as easy as setting a flag in that file.

Image Credits: Render

“Once they do that, then for every pull request — because we’re integrated with GitHub and GitLab — we automatically spin up a copy of that environment. That can include anything you have in production, or things like a Redis instance, or managed Postgres database, or Elasticsearch instance, or obviously APIs and web services and static sites,” Goel said. Every time you push a change to that branch or pull request, the environment is automatically updated, too. Once the pull request is closed or merged, Render destroys the environment automatically.

The company will use the new funding to grow its team and build out its service. The plan, Goel tells me, is to raise a larger Series A round next year.

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How unicorns helped venture capital get later, and bigger

Published October 22, 2020

The venture capital industry’s comeback from fear in Q1 and parts of Q2 to Q3 greed is worth understanding. To get our hands around what happened to private capital in 2020, we’ve taken looks into both the United States’ VC scene and the global picture this week.

Catching you up, there was lots of private money available for startups in the third quarter, with the money tilting toward later-stage rounds.

The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.

Late-stage rounds are bigger than early-stage rounds, so they take up more dollars individually. But Q3 2020 was a standout period for how high late-stage money stacked up compared to cash available to younger startups.

For example, according to CB Insights data, 54% of all venture capital money invested in the United States in the third quarter was part of rounds that were $100 million or more. That worked out to 88 rounds — a historical record — worth $19.8 billion.

The other 1,373 venture capital deals in the United States during Q3 had to split the remaining 46% of the money.

While the broader domestic and global venture capital scenes showed signs of life — dollars invested in Europe and Asia rose, American seed deal volume perked back up, that sort of thing — it’s the late-stage data that I can’t shake.

To my non-American friends, the data we have available is focused on the United States, so we’ll have to examine the late-stage dollar boom through a domestic lens. The general points should apply broadly, and we’ll always do our best to keep our perspective broad.

A late-stage takeover

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Harness delivers enterprise continuous integration on heels of Drone.io acquisition

Published October 22, 2020

In August, Harness made its first acquisition when it bought open-source continuous integration startup Drone.io. The company didn’t waste any time building on that purchase, announcing a new enterprise continuous integration tool today to go alongside the open-source project Drone has been building.

The Harness software development platform consists of various modules, and the latest one helps with continuous integration, which is the build and test process that happens before developers start deploying their code changes.

As Brad Rydzewski, co-founder at Drone.io, explained it at the time of the acquisition:

Drone is a continuous integration software. It helps developers to continuously build, test and deploy their code. The project was started in 2012, and it was the first cloud-native, container-native continuous integration solution on the market, and we open sourced it.

Bansal indicated at the time of the acquisition that he wanted to build on that open-source project and provide an enterprise commercial version, while continuing to support the open-source project.

“This is really the first product in the industry that is bringing AI and machine learning into optimizing the build and test process,” Bansal said. That intelligence layer is what separates it from the open-source version of the software, and the idea is to use machine learning to speed up the building and testing process.

The company is also announcing a new module around managing feature flags. These are elements developers leave in the code to limit the rollout of software, allowing them to see how the update is performing before rolling it out to the user base at large. The problem is as these flags proliferate, they become difficult to manage, and the new module is designed to help developers understand and control the flags that exist in their code.

Bansal says his goal for the company has been to put within reach of every developer the kind of automated software delivery pipeline that’s in place at the world’s largest tech companies.

“[Our goal] is that every company in the world can have the same level of software delivery sophistication as a Google or Amazon or Facebook,” Bansal said.

Bansal founded AppDynamics, a company he sold to Cisco in 2017 for $3.7 billion. He launched Harness later that same year. The company has raised almost $80 million on a valuation of $500 million, according to PitchBook data.

Bansal also started the venture capital firm Unusual Ventures in 2018 and, as though he doesn’t have enough to do, he launched his third startup, Traceable, a security company, in July.

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RepTrak partners with Onclusive to combine reputation and PR data

Published October 22, 2020

RepTrak and Onclusive are announcing a partnership that Onclusive CEO Dan Beltramo said will combine corporate reputation tracking and PR analytics for the first time.

RepTrak, founded in 2004, helps businesses measure their reputations (and their competitors’ reputations) through a database of more than 1 million company ratings collected every year. Meanwhile, Onclusive (formerly known as AirPR) offers a variety of tools to analyze the impact of PR and earned media coverage on a company’s bottom line.

Those two areas might not sound dramatically different, but Beltramo said that for PR professionals, they represent two separate goals — and that RepTrak’s reputation data helps to fill in some of the areas that Onclusive was missing.

“We made our name in PR analytics, [measuring] what I would call bottom of the funnel,” he said. “It’s an important objective for PR: Are you driving sales? Are you driving downloads?”

By combining Onclusive’s data with RepTrak’s, Beltramo said they’re giving PR people “a good measure to shoot for at the top of the funnel” — and for some, improving reputation may be more important than driving sales: “At bigger companies with longer cycles and bigger issues, reputation is where the PR person’s psyche was focused.”

Conversely, he said that for a chief communications officer who’d previously paid more attention to high-level reputation, Onclusive’s provides more real-time data and tactical tools.

Beltramo added that there will be multiple stages to the partnership. First, the companies are working to present Onclusive’s media analytics in the RepTrak system. Eventually, information will be flowing in the opposite direction too, with Onclusive’s team figuring out how to incorporate RepTrak as well.

“I am pleased that our partnership with Onclusive will give our clients an even more proactive way to activate their reputation management efforts by using the RepTrak Platform to prioritize and diagnose opportunities and threats, then drill into the details of their media presence to take action,” said RepTrak CEO Kylie Wright-Ford in a statement. “The media and cultural environments are very dynamic right now, so companies need to have a complete set of accurate data to make the right decisions.”

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