Category: EC Ecommerce and D2C

As buy-now-pay-later startups keep raising capital, a dive into Klarna, Afterpay and Affirm’s earnings



Venture capitalists continue to fund buy-now-pay-later (BNPL) startups, evidence of ongoing optimism regarding not only e-commerce, but the specific model for financing consumer purchases as well.

Evidence of continued investor confidence in the BNPL space cropped up several times in the second quarter. Divido, a startup that TechCrunch described as a “white-label [BNPL] platform for retail finance that integrates with e-commerce platforms,” raised $30 million. And Zilch raised $80 million for an “over-the-top” BNPL solution.


The Exchange explores startups, markets and money. 

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Zilch is now worth $800 million.

There are other examples, but those will suffice to get us into the correct mindset for today’s work as we look back at data points regarding the financial performance of more mature BNPL tech companies. So, as in February when we were looking at Q4 2020 numbers, today we’re looking into the more recent performance of Klarna, Affirm and Afterpay.

Growth versus profitability

As startups scale, they focus a bit more on profitability. Super-early-stage startups aren’t often too worried about net margins, for example, as their revenues can be nascent and their costs rising as they staff up for a product launch or another similar event.

But as those same startups mature into unicorn territory, questions about their model’s profitability on a unit basis, operating cash burn and aggregate profitability will start to pop up. The Rule of 40 is a startup rubric for a reason.

And (Read more...)

As buy-now-pay-later startups keep raising capital, a dive into Klarna, Afterpay and Affirm’s earnings



Venture capitalists continue to fund buy-now-pay-later (BNPL) startups, evidence of ongoing optimism regarding not only e-commerce, but the specific model for financing consumer purchases as well.

Evidence of continued investor confidence in the BNPL space cropped up several times in the second quarter. Divido, a startup that TechCrunch described as a “white-label [BNPL] platform for retail finance that integrates with e-commerce platforms,” raised $30 million. And Zilch raised $80 million for an “over-the-top” BNPL solution.


The Exchange explores startups, markets and money. 

Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.


Zilch is now worth $800 million.

There are other examples, but those will suffice to get us into the correct mindset for today’s work as we look back at data points regarding the financial performance of more mature BNPL tech companies. So, as in February when we were looking at Q4 2020 numbers, today we’re looking into the more recent performance of Klarna, Affirm and Afterpay.

Growth versus profitability

As startups scale, they focus a bit more on profitability. Super-early-stage startups aren’t often too worried about net margins, for example, as their revenues can be nascent and their costs rising as they staff up for a product launch or another similar event.

But as those same startups mature into unicorn territory, questions about their model’s profitability on a unit basis, operating cash burn and aggregate profitability will start to pop up. The Rule of 40 is a startup rubric for a reason.

And (Read more...)

Etsy asks, ‘how do you do, fellow kids?’ with $1.6B Depop purchase



The news this morning that e-commerce marketplace Etsy will buy Depop, a startup that provides a second-hand e-commerce marketplace, for more than $1.6 billion may not have made a large impact on the acquiring company’s share price thus far, but it provides a fascinating look into what brands may be willing to pay for access to the Gen Z market.

First, a few details: Per Etsy, the Depop deal is worth “$1.625 billion consisting primarily of cash, subject to certain adjustments for Depop’s working capital, transaction expenses, cash and indebtedness, and certain deferred and unvested equity for Depop management and employees.” So, $1.625 billion, plus or minus. We’ll use that number this morning.

Because Etsy is a public company and the transaction is material, it provided a good deal of information on the acquisition. The key facts that relate to the scale of Depop’s business are as follows:

  • 2020 gross platform spend, revenue: “Depop’s 2020 gross merchandise sales (GMS) and revenue were approximately $650 million and $70 million, respectively, each increasing over 100% year-over-year.”
  • Historical gross platform spend trend: “Depop’s GMS grew at a compounded annual growth rate of nearly 80% from 2017-2020.”

At $70 million in 2020 revenue, Depop is being valued at a multiple of 23.2x of the previous year’s top line. That’s rich, but not impossibly high for a company that just had a huge pandemic year. (Though it is somewhat notable that Etsy is valuing Depop as if it was a high-growth SaaS business and (Read more...)

Reading the IPO market’s tea leaves



Although it’s a truncated holiday week here in the United States, there’s been a bushel of IPO news. This morning, we’re going to sort through the updates and come up with a series of sentiment calls regarding these public offerings.


The Exchange explores startups, markets and money. 

Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.


Here’s what’s in our basket of news items this morning:

  • Marqeta‘s first IPO price range (fintech)
  • 1st Dibs‘ first IPO price range (e-commerce)
  • Zeta Global‘s IPO pricing (martech)
  • The start of SoFi trading post-SPAC (fintech)
  • The latest from BarkBox (e-commerce)

A brief note on why we care to do all this work:

We care because it’s worth knowing what current demand is for venture-backed shares on the public markets. The third quarter is expected by many in the private markets to be an active period for exits. So, for founders, investors, and a host of technology startup employees, we’re gearing up for a busy period.

And today’s IPO climate could be the on-ramp to that rush of unicorn liquidity. So let’s understand where we’re starting through the prism of debut updates en masse.

Marqeta

  • First IPO price range: $20 to $24 per share
  • Max IPO raise: $1,254,545,448
  • Implied simple valuation range: $10.6 billion to $12.7 billion

The last known private-market value of Marqeta was set in May 2020, when the company raised $150 million at what PitchBook estimates was a $4.3 billion valuation. From that perspective, (Read more...)

Coupang follows Roblox to a strong first day of trading



Another day brings another pubic debut of a multibillion dollar company that performed well out of the gate.

This time it’s Coupang, whose shares are currently up just over 46% to more than $51 after pricing at $35, $1 above the South Korean e-commerce giant’s IPO price range. Raising one’s range and then pricing above it only to see the public markets take the new equity higher is somewhat par for the course when it comes to the most successful recent debuts, to which we can add Coupang.

The company’s mix of rapid growth and slimming deficits appear to have found an audience among public money types, so let’s quickly explore the price they paid. What was the company worth at its IPO price, and what is worth now? And, of course, we’ll want to calculate revenue run rates for each figure.

Oh — we’ll also need to calculate how much money SoftBank made. Inverted J-Curve indeed!

Coupang’s IPO and current value

As Renaissance Capital notes, Coupang boosted its share allocation to 130 million shares from 120 million. This made the value of both primary and secondary shares in its public offering worth a total of $4.55 billion. That’s a lot of damn money.

At its IPO price of $35, the same source pegged the company’s fully diluted IPO valuation at $62.9 billion. By our accounting, the company’s simple valuation at its IPO price came to $60.4 billion. Those numbers are close enough that we’ll just (Read more...)