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Startups for startups

Financial model

Hello! Today: A new breed of startups is trying to help other startups manage their finances better.

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Overheard

  • "Valuations [of startups] have also gone up significantly in Indonesia." — Patamar Capital's Beau Seil explained the effect of Chinese investors' funding Indonesian companies, now that India is off limits for them.
  • "The sudden influx of institutional interest from the North American region is driving a shift in bitcoin trading." — Huobi Global Markets' Ciara Sun said the current Bitcoin boom was being driven by American investors, a big contrast to 2017's East Asian-fueled boom.

The Big Story

Startups for startups

As regular readers of Index will know, finance is really complicated. And when you're a startup CEO trying to build a product, find customers and raise investment, dealing with your company's finances is often an added headache that's hard to get right. Thanks to a new breed of startups, though, that might not be a problem for much longer.

In recent Y Combinator cohorts, a bunch of "financial tools for startups" companies have surfaced. Those tools could help startups offload a lot of the complicated finance work, letting them focus on their core product instead. Some examples:

  • Maytana, which consolidates startups' global bank accounts into one view
  • Pulley, a cap-table management platform that recently raised a Series A led by Stripe
  • Finmark, which helps startups build financial models

"A bad financial model actually almost killed my last company," Finmark CEO Rami Essaid told me. That experience prompted him to think about how to help other startups avoid that same problem.

  • "We guide people through building a model," he explained. Finmark asks startups a bunch of questions — how do you drive sales, what kind of business are you, what does your headcount look like — and then uses those answers to build a financial model for them.
  • If, for instance, a company says it drives sales based on its sales headcount, Finmark would pull a building block that links future sales to the company's forecasted future headcount. It's not particularly complicated, but by prompting the questions and making it fast, it makes the financial modeling process much quicker.
  • Crucially, the model "keeps itself up to date," Essaid said. It integrates directly with startups' accounting, payroll and payment processing tools to constantly ingest information, meaning the model automatically updates as the company's fundamentals do.

There's another advantage beyond just speed: data. "We can also help give you insight into every other company, and how you're doing relative to that," Essaid said. Right now, founders often guess how they're doing compared to their peers, but as Finmark should eventually have data on a whole bunch of startups, it can provide objective benchmarks.

  • Stripe President John Collison pointed out the benefit of that approach in a recent interview with Stratechery. Because of all the data Stripe has, he said, "we can often be more optimistic about a business than the business themselves can."
  • And with that data comes the ability to offer advice. "The software becomes consultative," Essaid explained. "We can look at your industry and your size of company, and tell you 'based off your peers, your margins are too low, or your churn is too high.'"

It's early days for companies like Finmark. But the potential is significant — and a lot of startup CEOs could soon find their lives a lot easier.

A MESSAGE FROM MICRON

At Micron, we see an opportunity to establish memory and storage platform capabilities that will unleash software developers to deliver solutions that speed insight and ultimately support emerging customer requirements. The data-centric era has ushered in a new opportunity to tap data for business growth, but many companies continue to struggle to transform mounting data stores into competitive advantage.

Learn how here.

Up to Speed

  • Monday: Facebook bought Kustomer, a customer service CRM platform, for a reported $1 billion. It could help bolster Facebook's plan for Messenger and WhatsApp to become the future of customer service interactions. Also Monday: S&P Global bought IHS Markit for $44 billion, ServiceNow bought Element AI; Vista Equity Partners bought a majority stake in Gainsight; SoftBank bought a 10% stake in Sinch; and GlobalWafers was reported to be in talks to buy Siltronic for $4.5 billion.
  • Tuesday: Salesforce bought Slack for $27.7 billion. It's a bet on the future of work, with the hopes that Slack will become the new front door for all things Salesforce. Also on Tuesday: Ivanti bought MobileIron for $872 million in stock; Lightspeed POS bought Upserve for $430 million; Scale raised $155 million at an over $3.5 billion valuation; and BlackBerry shares soared more than 50% on news of an AWS vehicle partnership.
  • Wednesday: Ant was reported to be considering selling its stake in Paytm, worth around $5 billion, thanks to the tensions between India and China. Also Wednesday: Google bought Actifio; Microsoft bought Smash.gg; Amazon was reportedly in talks to buy Wondery; Tata was reportedly in talks to buy BigBasket; a Grab and Gojek merger came closer to agreement; and Snowflake's first results disappointed investors.
  • Thursday: Stripe launched Treasury, a set of APIs that lets platforms create Goldman Sachs and Citibank accounts for their users. Ben Thompson summed up the move well: Stripe wants to be the "platform of platforms." Also Thursday: Affirm bought PayBright for around $265 million; Thoma Bravo re-bought Flexera for a reported $2.85 billion; JD Health reportedly raised $3.5 billion in its IPO; and Flipkart "partially" spun off PhonePe, raising $700 million led by Walmart at a $5.5 billion valuation.

Coming Up

  • It's a big week for IPOs. DoorDash is expected to list on Wednesday, followed by Airbnb on Thursday. DoorDash is hoping to raise up to $2.8 billion, compared to Airbnb's $2.3 billion.
  • State AGs are expected to file an antitrust suit against Facebook next week. And Google might finally get EU approval for its Fitbit acquisition.
  • Oracle, Broadcom, Adobe, Asana, Sumo Logic and MongoDB report earnings.

A MESSAGE FROM MICRON

At Micron, we see an opportunity to establish memory and storage platform capabilities that will unleash software developers to deliver solutions that speed insight and ultimately support emerging customer requirements. The data-centric era has ushered in a new opportunity to tap data for business growth, but many companies continue to struggle to transform mounting data stores into competitive advantage.

Learn how here.

Thoughts/feedback/tips? Email me — shakeel@protocol.com — or tips@protocol.com. And subscribe to get Index in your inbox every week. Thanks for reading — have a great weekend, and see you next week.

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