Swedish fintech giant Klarna was doing well before the pandemic, but today, it’s a mega-unicorn: In June 2021, it reached a $45.6 billion valuation after raising $639 million.
Much of this growth was fueled by U.S. consumers, which makes sense, considering that most of us still can’t cover a $1,000 emergency expense. Today, BNPL can be used to facilitate the purchase of a pizza oven — or just a single pepperoni pie.
Growth is good, but like the James Brown song, Klarna is paying the cost to be the boss: The BNPL leader generated $1.375 billion in 2021 revenue, but it had “a $658 million operating loss and a $709 million net loss,” reported Alex Wilhelm in The Exchange.
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“It may bear out that Klarna’s high spend in 2021 set the groundwork for a strong 2022, with the company’s cost growth slowing and its revenue growth maintaining pace,” wrote Alex.
Smaller competitors like Affirm and Afterpay are in similar straits: Affirm is trading around $35 per share this morning, a long way from its 52-week high of $176.65.
Amid shrinking profits for BNPL companies and a cooling stock market, I asked Alex if he expected any consolidation, and he outlined two scenarios: one where smaller players join forces and another where platform fintechs acquire BNPLs to augment their service offerings.
“Regardless, with falling BNPL corporate valuations and lots of expensive competition amongst existing players large and small, I suspect that we’ll see at least a handful more tie-ups and acquisitions before the year is out,” he said.
“Everyone has cash, and when potential acquisition targets get cheaper, who doesn’t love a deal?”
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Robotics founders: Focus your pitch deck on problem-solving, not technology
The robotics industry is advancing in leaps and bounds, and if you’ve witnessed the parkour performance by Boston Dynamics’ Atlas robots, you’ll understand that I’m being literal.
Even so, founders should be prepared to discuss practical applications, as opposed to simply touting the benefits of their technology.
In a recent episode of TechCrunch Live with Agility Robotics co-founder and CTO Jonathan Hurst and Playground Global founding partner Bruce Leak, they looked back at how Agility’s early pitch deck related its impressive tech to the needs and wants of its prospective customers.
“From the customer’s point of view, you can see how they’d look at it and say, ‘Oh, I can imagine how this is going to solve my problem,” says Hurst.
“It’s not just technically interesting. That’s the transition right there.”
With capital aplenty, modern corporate investors marry financial and strategic goals
Following up on a prior column that looked at corporate venture capital activity in 2021, Anna Heim and Alex Wilhelm interviewed three execs “to look more deeply into why companies are building their own investing arms.”
- Arjun Kapur, managing director, Forecast Labs (Comcast)
- Andrés Saborido, global director, Wayra (Telefónica)
- Serge Tanjga, finance exec, MongoDB
Box strikes back with a quarter that beats everyone’s expectations, including its own
Last year, a proxy fight led by a group of activist investors nearly pushed out Aaron Levie, CEO and co-founder of cloud storage company Box.
But last quarter, Box reported $233 million in revenue, a year-over-year increase of 17%.
“Now that the proxy fight is over, it’s clear that some of the initiatives that Box had been building over the past few years to move further into the true enterprise market are paying off,” said Alan Pelz-Sharpe, principal analyst at Deep Analysis.
How quickly do enterprise tech firms need to grow to satisfy today’s investors?
Six publicly traded enterprise companies released their earnings last week, and each of them (Box, Splunk, Salesforce, Nutantix, Okta, Snowflake) saw strong increases in yearly revenue.
The stock market, however, was less enthralled: Four of these six firms saw their share price decline, with Snowflake taking the biggest hit.
Alex Wilhelm and Ron Miller pored over the results to find out “if these companies truly warrant the reaction they got, or if Wall Street is just being skittish like the rest of us.”
It’s pivot season for early-stage startups
It’s tempting to relax if you’re a founder who’s already received a tranche of funding and have another to look forward to.
But when the winds in the private markets are blowing stiff and cold, having a long runway is not your best protection. That’s why some entrepreneurs are looking to pivot now, says Natasha Mascarenhas.
“Some may re-prioritize objectives to reduce risk, while others may pursue new, more near-term business models to finally get some revenue in the door,” she writes.