Carta to shut secondary market business / AppDirect raises $100M debt from CDPQ / Flexe lays off 38% of its workforce
Inside Startups
For January 09, 2024
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Here’s a look at today’s Startups briefing.
* 🚫 Carta to shut secondary market business for misusing client’s information.
* 🏦 Canadian pension fund provides $100M debt to AppDirect.
* 🤝 Ant Group to continue expanding into Western markets with MultiSafepay acquisition.
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Karan
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1
Fintech startup Carta Inc. is closing down its secondary share trading division after it received backlash for misusing clients' information. The firm allegedly used confidential cap table data of clients to facilitate trades.
More:
* Software startup Linear Orbit Inc.'s CEO Karri Saarinen accused Carta of using its investors' data to approach them about selling shares on the secondary market.
* Saarinen wrote on LinkedIn, "As a founder, it feels kinda shitty that Carta, who I trust to manage our cap table, is now doing cold outreach to our angel investors about selling Linear shares to their non-disclosed buyers."
* Carta confirmed that there was an internal breach of protocol that also impacted two other customers.
* Carta has raised more than $1B to date from Andreessen Horowitz, Menlo Ventures, and others.
* The firm was last valued at $7.5B.
* Carta's primary business is startups' investor information and cap table management, which account for about $250M in annual revenue.
* The firm generated only $3M from the secondary market trading business.
2
Online app marketplace AppDirect Inc. availed a $100M debt facility from the Canadian pension fund Caisse de Depot et Placement du Quebec (CDPQ).
What the numbers say: The new facility adds to the $80M debt facility already availed by AppDirect from CDPQ in 2021. AppDirect cemented its unicorn status in 2015 and has been backed by JPMorgan Chase & Co., Foundry Group, and Mithril Capital. The firm claims to have five million subscribers to its platform and 1,000 tech providers. AppDirect plans to use the new debt facility to expand the financial options for its AppDirect Capital Invest program and scale the business.
Relevance: U.S. venture debt deployment in the first half of 2023 fell to 2017's levels. Per SVB Capital, U.S. startups raised $12.7B in debt in Q1 and $5.4B in Q2 in 2023.
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Warehousing and logistics startup Flexe laid off 38% of its workforce. A Worker Adjustment and Retraining Notification (WARN) filing shows that the layoffs impacted 99 employees. CTO David Glock stepped down earlier this month, with senior vice president of engineering Anthony Girolamo succeeding him.
More:
* Last September, Flexe laid off 131 employees.
* Flexe has faced numerous challenges in recent times due to industry-wide difficulties resulting from a dip in online shopping after the pandemic and lower freight volumes.
* The startup entered the unicorn club in 2022 after it raised a $119M Series D round led by funds managed by BlackRock.
* Other investors that have backed the firm include Activate Capital, Madrona Venture Group, Prologis Ventures, Redpoint Ventures, T. Rowe Price Associates, and Tiger Global.
Zoom out:
* Flexe's peer Convoy, which reached a $3.8B valuation in 2022, shut down last year.
* This Monday, camper van startup Cabana shut down operations.
4
Chinese financial services giant Ant Group is set to acquire Dutch payments startup MultiSafepay. Ant Group is reportedly paying $200M for MultiSafepay. The acquisition will give Ant Group a stronger foothold in the Western markets.
More:
* MultiSafepay generated $50M in annual revenue and has been bootstrapped to date, per Reuters.
* It reported a $1.43M net profit on $13.02M gross income in 2022.
* The Dutch startup has expanded from its native market into Spain and Germany.
* The startup provides payments and processing services to over 18,000 SMEs.
Zoom out:
* Ant Group started venturing into the Western markets after acquiring British international payments firm WorldFirst for $700M in 2019.
* The firm expanded into Singapore after acquiring 2CP2 in 2022.
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German collaborative presentation software maker Pitch laid off about two-thirds of its workforce, or about 69 employees. CTO Adam Renklint will be promoted to the CEO role vacated by co-founder Christian Reber, who is stepping down from the helm. Reber will retain a board seat with the company.
More:
* Reber wrote in a LinkedIn post, "Instead of pushing harder and harder to turn Pitch into a hyper-growth company with venture funding, we concluded it was better to build a profitable company and grow Pitch organically from here."
* Reber had previously co-founded the productivity app Wunderlist.
* In September 2022, Pitch laid off 30% of its workforce, or 59 employees.
* Reber informed Sifted that it has about two years of runway available and will continue to run the company as a bootstrapped firm and make it profitable.
* Pitch has raised $136M from investors to date, the last of which came in the form of a $85M Series B round in May 2021.
* Sources informed TechCrunch that the firm has returned all unspent cash to investors.
* Notable investors that have backed the firm include Lakestar, Index Ventures, and Tiger Global Management.
6
AI-powered cybersecurity firm SentinelOne acquired cloud security platform PingSafe. Financial details of the transaction were not disclosed. However, sources estimate the deal value to be over $100M.
More:
* The two-year-old Indian startup remained in stealth mode until last year.
* To date, it has raised $3.3M in total funding, all of which came through seed funding led by Sequoia Capital and PeakXV's Surge in mid-2023.
* PingSafe claims to have over 50 customers and less than 100 employees.
* SentinelOne aims to bolster its cloud workload security and cloud data security capabilities of its Singularity Platform by integrating it with PingSafe's cloud native application protection platform.
* SentinelOne's chief product and technology officer Ric Smith said, "This new approach to cloud security will eliminate the need for companies to navigate the complexity of multiple-point solutions, triage and investigate with incomplete context, or pipe data between disparate data silos."
7
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* Khosla Ventures is reportedly leading a $30M funding round into a new AI startup launched by former Twitter CEO Parag Agrawal, per The Information. Index Ventures and First Round Capital are also supposedly participating in the round.
* Slovak e-retail software company, Luigi's Box, acquires software company Persoo. Financial details of the transaction were not disclosed.
* British data and analytics technology firm YouGov acquired data and visualization startup KnowledgeHound for an undisclosed amount. The firm made the acquisition to further expand the capability of its data visualization platform.
* Venture studio AION Labs partnered with early-stage VC firm Amiti Ventures to cement Israel's position as a hub for AI-powered drug discovery.
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Karan Chafekar Analyst
Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot.
This newsletter was edited by Vibha Chapparike
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