All posts in “Fundings & Exits”

Fairjungle is a modern take on corporate travel management

French startup Fairjungle wants to make it easier to book a flight or a hotel room for corporate purposes. The company just raised a $2 million funding round (€1.8 million) from Thibaud Elzière, Eduardo Ronzano, Bertrand Mabille and Whitestones Ventures.

If you work for a big company, chances are you book corporate flights through GBT, CWT or BCD Travel. And let’s be honest, the web interface usually sucks. It’s often hard to compare flights, change dates or even get a fair price.

Fairjungle is betting on a modern user experience and a software-as-a-service business model to change this industry. The idea is to make it feel more like you’re using a flight comparison service instead of a travel agency with a website.

“The value proposition [of legacy competitors] was historically around finding the best travel options for the business traveler, which has become obsolete today when you have tools like Skyscanner and Google Flights,” co-founder and CEO Saad Berrada told me.

In order to modernize that industry, the startup is leveraging the inventory of Skyscanner, Booking.com, Amadeus, Travelfusion and Hotelbeds. This way, you can book flights on 400 airlines and reserve hotel rooms in one million hotels.

After searching for a flight or a hotel room, you can book directly from Fairjungle. This way, employees don’t have to download invoices and file expense reports on a separate platform every time they travel. Companies can set up different rules to keep costs down. For instance, a flight that is unusually expensive requires approval from a manager.

Instead of charging per transaction, Fairjungle has opted for a SaaS model with a subscription of €5 per monthly active user.

Fairjungle currently focuses on small and mid-sized companies. The company has attracted 20 clients so far, including OVH. And it expects to generate $3.4 million (€3 million) in gross bookings by the end of the year.

Cleo, the London-based finech, has quietly taken debt financing from US-based Triplepoint Capital

Cleo, the London-based “digital assistant” that wants to replace your banking apps, has quietly taken venture debt from U.S.-based Triplepoint Capital, according to a regulatory filing.

The amount remains undisclosed, though I understand from sources that the figure is somewhere in the region of mid-“single digit” millions and will bridge the gap before a larger Series B round later this year. Cleo declined to comment on the fundraising.

However, sources tell me that the need to raise debt financing is partly related to Cleo Plus, the startup’s stealthy premium offering that is currently being tested and set to launch more widely soon. The new product offers Cleo users a range of perks, including rewards and an optional £100 cash advance as an alternative to using your bank’s overdraft facility. The credit facility is, for the time bring at least, being financed from the startup’s own balance sheet, hence the need for additional capital.

The new funding also relates to Cleo’s U.S. launch, which began tentatively around a year ago. This has been more successful than was expected, seeing Cleo add 650,000 active U.S. users to date. The U.S. currently makes up over 90% of new users now, too. Overall, the fintech claims 1.3 million users have signed up to the Cleo chatbot and app, with 350,000 active in the U.K.

Accessible via Facebook Messenger and the company’s iOS app, Cleo is an AI-powered chatbot that gives you insights into your spending across multiple accounts and credit cards, broken down by transaction, category or merchant. In addition, Cleo lets you take a number of actions based on the financial data it has gleaned. This includes choosing to put money aside for a rainy day or specific goal, sending money to your Facebook Messenger contacts, donating to charity, and setting spending alerts and more.

Meanwhile, alongside Triplepoint, Cleo is backed by some of the biggest VC names in the London tech scene — including Balderton Capital, Entrepreneur First, Moonfruit co-founders Wendy Tan White and Joe White, Skype founder Niklas Zennström, Wonga founder Errol Damelin, TransferWise founder Taavet Hinrikus and LocalGlobe.

PayFit raises $79 million for its payroll service

French startup PayFit is raising a new $79 million funding round (€70 million) from Eurazeo and Bpifrance. The company first started with a payroll service for small and medium companies in France. It has evolved into a full-fledged HR solution for multiple European countries.

PayFit uses a software-as-a-service approach so that small companies can easily manage payroll and HR information from a web browser. Everything stays up-to-date and compliant with labor regulation.

After you enter information about your employees, PayFit automatically generates pay slips every month. Your employees receive an email when their pay slips are ready. If somebody is getting a raise, you can connect to your PayFit account and modify an amount for all pay slips going forward.

When it comes to payroll taxes, the service automatically reminds you when you have to pay them and how much you’re supposed to pay. You can also generate exports for your accountant, see reports about your staff, etc.

And PayFit doesn’t want to stop at payrolls. You can also manage absences and leaves, expense reports and shifts. It makes sense to build those tools in house as they have a direct effect on your payroll.

In order to approve expense reports and vacation days, you can also build an organizational chart in PayFit and decide who’s managing who.

While it’s easy to build an HR giant in the U.S., it’s a bit more complicated in Europe as labor laws vary so much from one country to another. But the startup has managed to launch its service in France, Spain, Germany and the U.K. — Italy is coming soon.

The company says that it has developed its own programming language called Jetlang in order to transform labor code into computer code.

There are 3,000 companies relying on PayFit and 300 people working for the company. With today’s funding round, PayFit plans to double its workforce by 2020.

How to negotiate term sheets with strategic investors

Three years ago, I met with a founder who had raised a massive seed round at a valuation that was at least five times the market rate. I asked what firm made the investment.

She said it was not a traditional venture firm, but rather a strategic investor that not only had no ties to her space but also had no prior investment experience. The strategic investor, she said, was looking to “get their hands dirty” and “get in on the ground floor.”

Over the next 2 years, I kept a close eye on the founder. Although she had enough capital to pivot her business focus multiple times, she seemed to be at odds, serving the needs of her strategic investor and her customer base.

Ultimately, when the business needed more capital to survive, the strategic investor didn’t agree with the founder’s focus, opted not to prop it up, and the business had to shut down.

Sadly, this is not an uncommon story as examples abound of strategic investors influencing startup direction and management decisions to the point of harm for the startup. Corporate strategics, not to be confused with dedicated funds focused on financial returns like a traditional venture investor like Google Ventures, often care less about return on investment, and more about a startup’s focus, and sector specificity. If corporate imperatives change, the strategic may cease to be the right partner or could push the startup in a challenging direction.

And yet, fortunately, as the disruptive power of technology is being unleashed on nearly every major industry, strategic investors are now getting smarter, both in terms of how they invest and how they partner with entrepreneurs.

From making strong acquisitive plays (i.e. GM’s purchase of Cruise Automation or Toyota’s early-stage investment in Uber) to building dedicated funds, to executing commercial agreements in tandem with capital investment, strategics are getting savvier, and by extension, becoming better partners.  In some instances, they may be the best partner.

Negotiating a term sheet with a strategic investor necessitates a different set of considerations. Namely: the preference for a strategic to facilitate commercial milestones for the startup, a cautious approach to avoid the “over-valuation” trap, an acute focus on information rights, and the limitation of non-compete provisions.

VMware announces intent to buy Avi Networks, startup that raised $115M

VMware has been trying to reinvent itself from a company that helps you build and manage virtual machines in your data center to one that helps you manage your virtual machines wherever they live, whether that’s on prem or the public cloud. Today, the company announced it was buying Avi Networks, a 6-year old startup that helps companies balance application delivery in the cloud or on prem in an acquisition that sounds like a pretty good match. The companies did not reveal the purchase price.

Avi claims to be the modern alternative to load balancing appliances designed for another age when applications didn’t change much and lived on prem in the company data center. As companies move more workloads to public clouds like AWS, Azure and Google Cloud Platform, Avi is providing a more modern load balancing tool, that not only balances software resource requirements based on location or need, but also tracks the data behind these requirements.

Diagram: Avi Networks

VMware has been trying to find ways to help companies manage their infrastructure, whether it is in the cloud or on prem, in a consistent way, and Avi is another step in helping them do that on the monitoring and load balancing side of things, at least.

Tom Gillis, senior vice president and general manager for the networking and security business unit at VMware sees this acquisition as fitting nicely into that vision. “This acquisition will further advance our Virtual Cloud Network vision, where a software-defined distributed network architecture spans all infrastructure and ties all pieces together with the automation and programmability found in the public cloud. Combining Avi Networks with VMware NSX will further enable organizations to respond to new opportunities and threats, create new business models, and deliver services to all applications and data, wherever they are located,” Gillis explained in a statement.

In a blog post,  Avi’s co-founders expressed a similar sentiment, seeing a company where it would fit well moving forward. “The decision to join forces with VMware represents a perfect alignment of vision, products, technology, go-to-market, and culture. We will continue to deliver on our mission to help our customers modernize application services by accelerating multi-cloud deployments with automation and self-service,” they wrote. Whether that’s the case, time will tell.

Among Avi’s customers, which will now become part of VMware are Deutsche Bank, Telegraph Media Group, Hulu and Cisco. The company was founded in 2012 and raised $115 million, according to Crunchbase data. Investors included Greylock, Lightspeed Venture Partners and Menlo Ventures, among others.