Plaid CEO touts new ‘clarity’ after failed Visa acquisition

Yesterday, we spoke with Plaid CEO and co-founder Zach Perret after news broke that Visa no longer plans to buy his company for $ 5.3 billion.

The deal was heralded in early 2020 as a sign of the growing importance of fintech startups. Then it failed to close, eventually running into a lawsuit from the U.S. Department of Justice. A few months later, the acquisition was dropped.

Sentiment in the market changed since the transaction was announced. As TechCrunch reported yesterday, there’s a good deal of optimism to be found amongst investors and others that Plaid will eventually be worth more than the price at which the Visa deal valued it.

What follows is a summary of our conversation with Perret, digging into a number of topics we felt most were pressing in the wake of Plaid’s unshackling.

Now what?

First and upfront: it does not appear that Plaid is racing to the public markets via a blank-check company, or SPAC, a question several readers asked on Twitter. Our impression from our chat regarding near-term liquidity via the public markets is that those with their hopes up have them up a few years too early.

TechCrunch asked Perret how it feels to be free from his erstwhile corporate boss.

He said that the last few years have been a “rollercoaster,” adding that when they made the choice to sell, it made sense at the time from mission, and delivery perspectives — Visa wanted to accomplish similar things and could give his company access to a wide network of potential customers.

Startups – TechCrunch

Demandbase acquires Engagio to bring consolidation and ‘clarity’ to B2B marketing

Two business-to-business marketing companies are teaming up, with Demandbase acquiring Engagio.

Both companies focus on account-based marketing (ABM), an approach where marketing and sales coordinate their outreach to specific, high-value accounts. Engagio co-founder and CEO Jon Miller (who previously co-founded Marketo) told me, “Most people who aren’t super close to the category would have said we’re competitors.”

Instead, Miller said that Demandbase and Engagio have more than 30 shared customers. Similarly, Demandbase CEO Gabe Rogol described the companies as having “very much had a complementary partner strategy with each other.”

More specifically, Rogol said Demandbase’s strength is in helping marketers take advantage of third-party data, whereas Engagio was more focused on helping them utilize of their own first-party data.

The financial terms were not disclosed — Engagio had previously raised $ 32.5 million, according to Crunchbase, while Demandbase raised $ 158 million. As a result of the acquisition, Miller will become chief product officer at Demandbase, while his co-founder Brian Babcock becomes chief technology officer.

Demandbase

Image Credits: Demandbase

Rogol acknowledged that it’s going to be an “incredible challenge” bringing the two teams together during the pandemic, with everyone working from home and large gatherings in traditional offices currently off the table. However, he said unifying the companies and the technology will be “our strategic initiative for the second half of the year.”

Meanwhile, Miller argued that the pandemic hasn’t eliminated the need for what Demandbase and Engagio are offering. In fact, he suggested that where marketers may have previously seen the shift to ABM as something they could deal with later, their plans have accelerated: “It’s a now priority, because I [as a marketer] still have to create revenue.”

In fact, Rogol said that Demandbase “crushed” its advertising goals during its first quarter.

“We’re really confident that this will define what’s been a fragmented ABM market,” he said. “The market needs clarity here.”

Startups – TechCrunch

Cash is everywhere. But investors need clarity instead of fancy words and slides. The brief outcome from series of VCs interviews

Hi everyone. This is the cross post from r/entrepeneur, cause I think this may be relevant for the local r/startups community even more.

I was reading a lot of posts and comments on how difficult it is to raise capital for a startup during the recession. Well, since the beginning of the lockdown my friends from InnMind accelerator were talking with globally recognized VCs from Silicon Valley and Europe, trying to clarify what is expected to happen on the VC market in general and how do investors themselves react and behave during the crisis.

The detailed report with the outcomes will be published soon. But before I summarized a few insights from the interviews with investors which differ significantly from the dust circulating in media.

1. Investors' money didn't disappear

Majority of big VCs (especially seed & early stage) continue seeking for and considering new investment opportunities. Nothing has changed in this regards: investors are still interested in good projects. Some of them who got used to meet with founders personally have troubles in switching to online communications and decision making, but those which previously practised international investments without personal meetings have switched to 100% online mode very fast and now are communicating with founders in zoom, listening to pitches and making investment committees online.

2. Investment deal origination process moved online

Usually, a huge part of investment deals comes from the trusted sources/referrals, and here nothing actually changed. But also part of the deals was originated from the offline events: startup competitions, demo days, accelerators, etc. Since the lockdown started and events are over, many investors started to use dedicated online platforms more proactively and participate in online demo days (YC demo day last month had more investors watching online pitches than ever). Among commonly used platforms they mentioned Crunchbase, Angel list and InnMind.

3. There is NO lack of investors / money. There is a lack of good projects and sane ideas pitches.

Speaking about the investment decision and startup assessment process, all investors shared the same problem they are facing: lack of quality deal flow. For late-stage VCs it is more or less obvious: not easy to find good startups, which found product-market fit and generated impressive traction which proves their business model. But early and seed stage investors, who are used to act in the framework with many unknowns and uncertainties, the biggest issue was… the inability of startups to deliver clear message and value proposition in their pitch deck.

For example, both Silicon Valley billionaire Tim Draper, the founder of Altair Capital Igor Ryabenkiy and many other interviewed VCs said, that in the majority of startup pitches they receive they simply fail to understand WHAT this startup is doing and HOW are they going to make money or change the world (what is often claimed).

Investors say that so many startup founders are sending decks with fancy slides and complicated wordy descriptions which move the whole thing away from the focus and the sense. Meanwhile, in the early stage when there is no proven traction and financial income yet, what is really valuable for investors is to see the clear picture of the business idea and its market potential. If the founders can't communicate it even to investors, they will most probably fail to communicate it to potential users and customers.

***

These were my 5 cents to the topic of "how to raise money during the recession". Hope it will help some of you to gain more confidence during fundraising and (hope) more understanding on how to approach investors during the crisis. If you have other insights on this topic, please don't hesitate to share in the comments.

PS: The original interviews with investors I watched and used for the summary can be found in this playlist, and the final report and text transcriptions are published here.

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