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In the shadow of Amazon and Microsoft, Seattle startups are having a moment

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Venture capital investment exploded across a number of geographies in 2019 despite the constant threat of an economic downturn.

San Francisco, of course, remains the startup epicenter of the world, shutting out all other geographies when it comes to capital invested. Still, other regions continue to grow, raking in more capital this year than ever.

In Utah, a new hotbed for startups, companies like Weave, Divvy and MX Technology raised a collective $370 million from private market investors. In the Northeast, New York City experienced record-breaking deal volume with median deal sizes climbing steadily. Boston is closing out the decade with at least 10 deals larger than $100 million announced this year alone. And in the lovely Pacific Northwest, home to tech heavyweights Amazon and Microsoft, Seattle is experiencing an uptick in VC interest in what could be a sign the town is finally reaching its full potential.

Seattle startups raised a total of $3.5 billion in VC funding across roughly 375 deals this year, according to data collected by PitchBook. That’s up from $3 billion in 2018 across 346 deals and a meager $1.7 billion in 2017 across 348 deals. Much of Seattle’s recent growth can be attributed to a few fast-growing businesses.

Startups Weekly: Will the Seattle tech scene ever reach its full potential?

Convoy, the digital freight network that connects truckers with shippers, closed a $400 million round last month bringing its valuation to $2.75 billion. The deal was remarkable for a number of reasons. Firstly, it was the largest venture round for a Seattle-based company in a decade, PitchBook claims. And it pushed Convoy to the top of the list of the most valuable companies in the city, surpassing OfferUp, which raised a sizable Series D in 2018 at a $1.4 billion valuation.

Convoy has managed to attract a slew of high-profile investors, including Amazon’s Jeff Bezos, Salesforce CEO Marc Benioff and even U2’s Bono and the Edge. Since it was founded in 2015, the business has raised a total of more than $668 million.

Remitly, another Seattle-headquartered business, has helped bolster Seattle’s startup ecosystem. The fintech company focused on international money transfer raised a $135 million Series E led by Generation Investment Management, and $85 million in debt from Barclays, Bridge Bank, Goldman Sachs and Silicon Valley Bank earlier this year. Owl Rock Capital, Princeville Global,  Prudential Financial, Schroder & Co Bank AG and Top Tier Capital Partners, and previous investors DN Capital, Naspers’ PayU and Stripes Group also participated in the equity round, which valued Remitly at nearly $1 billion.

Up-and-coming startups, including co-working space provider The Riveter, real estate business Modus and same-day delivery service Dolly, have recently attracted investment too.

Pioneer Square Labs is invigorating Seattle’s startup ecosystem

A number of other factors have contributed to Seattle’s long-awaited rise in venture activity. Top-performing companies like Stripe, Airbnb and Dropbox have established engineering offices in Seattle, as has Uber, Twitter, Facebook, Disney and many others. This, of course, has attracted copious engineers, a key ingredient to building a successful tech hub. Plus, the pipeline of engineers provided by the nearby University of Washington (shout-out to my alma mater) means there’s no shortage of brainiacs.

There’s long been plenty of smart people in Seattle, mostly working at Microsoft and Amazon, however. The issue has been a shortage of entrepreneurs, or those willing to exit a well-paying gig in favor of a risky venture. Fortunately for Seattle venture capitalists, new efforts have been made to entice corporate workers to the startup universe. Pioneer Square Labs, which I profiled earlier this year, is a prime example of this movement. On a mission to champion Seattle’s unique entrepreneurial DNA, Pioneer Square Labs cropped up in 2015 to create, launch and fund technology companies headquartered in the Pacific Northwest.

Boundless CEO Xiao Wang at TechCrunch Disrupt 2017

Operating under the startup studio model, PSL’s team of former founders and venture capitalists, including Rover and Mighty AI founder Greg Gottesman, collaborate to craft and incubate startup ideas, then recruit a founding CEO from their network of entrepreneurs to lead the business. Seattle is home to two of the most valuable businesses in the world, but it has not created as many founders as anticipated. PSL hopes that by removing some of the risk, it can encourage prospective founders, like Boundless CEO Xiao Wang, a former senior product manager at Amazon, to build.

“The studio model lends itself really well to people who are 99% there, thinking ‘damn, I want to start a company,’ ” PSL co-founder Ben Gilbert said in March. “These are people that are incredible entrepreneurs but if not for the studio as a catalyst, they may not have [left].”

Boundless is one of several successful PSL spin-outs. The business, which helps families navigate the convoluted green card process, raised a $7.8 million Series A led by Foundry Group earlier this year, with participation from existing investors Trilogy Equity Partners, PSL, Two Sigma Ventures and Founders’ Co-Op.

Years-old institutional funds like Seattle’s Madrona Venture Group have done their part to bolster the Seattle startup community too. Madrona raised a $100 million Acceleration Fund earlier this year, and although it plans to look beyond its backyard for its newest deals, the firm continues to be one of the largest supporters of Pacific Northwest upstarts. Founded in 1995, Madrona’s portfolio includes Amazon, Mighty AI, UiPath, Branch and more.

Voyager Capital, another Seattle-based VC, also raised another $100 million this year to invest in the PNW. Maveron, a venture capital fund co-founded by Starbucks mastermind Howard Schultz, closed on another $180 million to invest in early-stage consumer startups in May. And new efforts like Flying Fish Partners have been busy deploying capital to promising local companies.

There’s a lot more to say about all this. Like the growing role of deep-pocketed angel investors in Seattle have in expanding the startup ecosystem, or the non-local investors, like Silicon Valley’s best, who’ve funneled cash into Seattle’s talent. In short, Seattle deal activity is finally climbing thanks to top talent, new accelerator models and several refueled venture funds. Now we wait to see how the Seattle startup community leverages this growth period and what startups emerge on top.

Read more: https://techcrunch.com/2019/12/30/in-the-shadow-of-amazon-and-microsoft-seattle-startups-are-having-a-moment/

Crowdfunding

Canadian Digital Banking Platform Relay Secures $19.4 Million

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Relay, a Canada-based digital banking platform for small businesses, announced on Thursday it raised US$19.4 million in funding, which includes US$15 million through its Series A funding round that was led by Bain Capital Ventures and seed round of $4.4 million led by Better Tomorrow Ventures, Garage Capital, Tribe Capital, Panache, and Amaranthine.

Founded in 2018, Relay is looking to fully automate the finance function for small businesses through banking that deeply integrates into the back-office systems business owners rely on. The company’s product increases financial visibility and security while significantly reducing time spent on administration. Relay also noted that it is “building banking that is tailor-made” for employer SMBs, offering more customized functionality and support than a traditional bank. Relay Co-Founder and CEO, Yoseph West, further explained:

“Eighty-two percent of businesses fail due to cash flow issues, and traditional banking doesn’t help — business banking is often confusing, expensive, and siloed from other systems. We’re building a challenger bank that helps businesses succeed by offering powerful tools to increase cash flow visibility and streamline time-consuming financial processes — in addition to being affordable and easy to use.”

Relay is on track to have processed $1 billion worth of transactions by the end of 2021. The company went on to add that the funds will be used to accelerate its mission to increase the success rate of small businesses by automating financial management for business owners.

Relay will use this funding to increase customer acquisition, grow the engineering and product teams, and further integrate its platform into the small business back office.”

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Source: https://www.crowdfundinsider.com/2021/05/175335-canadian-digital-banking-platform-relay-secures-19-4-million/

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W.UP Launches Money Stories to Win Consumers’ Divided Attention

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Customer-focused banking tools provider W.UP revealed its latest development today. The Hungary-based company is launching Money Stories.

The new embeddable tool enables banks to offer their customers bite-sized snapshots of their financial lives. These easily consumable bits of content combine data analytics with digital storytelling to make it even easier for banks to help users to understand their financial standing in a fast-paced way.

The new tool takes the concept from millennial-friendly mobile apps such as Snapchat, Instagram, Facebook, and Twitter. Each of these social media platforms are notorious for enabling users to quickly publish and view life updates and ideas, share new songs, and even exchange gossip. The micro-content requires little attention from viewers, who are easily distracted and prone to multi-tasking.

Similarly, Money Stories leverages transactional and behavioral analytics to show users daily highlights, weekly and monthly forecasts, and yearly summaries. Overall, these updates take the form of unusually large transactions, double charges, sharp balance drops, recurring transitions, top spending categories, changes in spending or credit card usage, and more. In addition to showing users their historical data, Money Stories can also help users plan for the future by showing options to pay off credit card debt, avoid overdrafts, and more.

All of the graphics appear on a single screen for seven-to-ten seconds, so the user does not need to scroll or set aside much time in their day to understand the analyses.

W.UP is keeping the integration easy for banks. “When all is said and done, the only decision for banks to make remains what product and service offers to slide into the story stream to boost targeting accuracy, conversion, and customer satisfaction levels,” said W.UP Head of Product Gellért Vinnai.

Founded in 2014, W.UP takes PFM to a personalized level by leveraging AI and real-time data. These product offerings have obviously struck a chord in the banking crowd; the company has won Best of Show awards at FinovateEurope 2018, 2019, and most recently for its demo in 2020.


Photo by Karolina Grabowska from Pexels

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Source: https://finovate.com/w-up-launches-money-stories-to-win-consumers-divided-attention/

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Fintech

Fintech Rho rolls out corporate card alongside BaaS offering

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Fintech Rho Technologies today announced the roll out of its bank-issued corporate card coupled with its banking-as-a-service offering, which operates as a financial management platform on top of banking services provided by $691 million Evolve Bank and Trust. While banking as a service has been a growing trend during the past year, banking fintechs have […]

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Source: https://bankautomationnews.com/allposts/corp-bank/fintech-rho-rolls-out-corporate-card-alongside-baas-offering/

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Crowdfunding

Cash Still King? UK FCA Says 5 Million Still Count on Cash for Majority of Transactions

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In a digital world, physical cash still counts. A lot, according to UK regulators.

A speech delivered today by Sheldon Mills, Executive Director for Consumers and Competition at the Financial Conduct Authority (FCA), he revealed that 5 million individuals still count on the pound sterling for the majority of their purchases. Additionally, 750,000 or one in seven adults struggled with cash point and bank branch closures during the COVID-19 health crisis. As one may anticipate, the majority of these individuals are elderly, or perhaps small businesses.

The Death of the Bank Branch? Not So Fast.

Mills says that the transition from face-to-face services to online or telephone will take time. There are times when an in-person meeting is easier, it seems.

Mills adds:

“Based on our evidence, we believe that access to cash across the UK is generally good for most people. 95% can access cash in urban areas within 650 metres and in rural areas within 3.5 km. Only around 150,000 people live more than around 5 km away from their nearest access point. And of course, in addition to bank branches, Post Office counter services and ATMs provide a significant and important part of the existing geographic coverage. The Post Office has national access criteria requiring that 99% of the population must live in areas within 3 miles [or 5 km] of their nearest Post Office, and 90% within 1 mile [1.6 km].”

While cash use is declining due to the ubiquitous nature of digital alternatives, cash continues to be needed. Perhaps, cash is no longer king but digital is not quite satisfying all the requirements of the population. UK firms are responsible for making sure that when a branch or ATM closes, there are alternatives in the area.

An updated review of the UK’s cash infrastructure is expected to be released this summer.

A joint statement by the FCA and PSR states that cash must remain available to the masses:

“The overall decline in the use of cash makes it more expensive to maintain the existing infrastructure that supports it. However, as we move out of the pandemic, cash continues to serve a socially useful purpose for many communities. Following a fall in ATM withdrawals of 40% year-on-year across 2020, withdrawals have started to increase again since restrictions have begun to ease. Although our data shows that most people can access cash easily now, there is a need to maintain access to cash and banking services for those that still need it, particularly vulnerable consumers. At the same time, a critical part of maintaining this access will be supporting others that can to transition to digital and other alternative ways of banking and making payments.”

Sheldons states:

“… the nature of cash use and everyday banking is changing, and we should acknowledge that and help people to transition where they are able to. However, we must also all work together to protect the ability of consumers to access cash and banking services in ways that meet their needs.”

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Source: https://www.crowdfundinsider.com/2021/05/175324-cash-still-king-uk-fca-says-5-million-still-count-on-cash-for-majority-of-transactions/

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