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Melio raises $110M on a $1.3B valuation to bring B2B payments for SMBs into the 21st century



Payments for consumers have made a huge shift to the online world in the last year, a time when they have moved more of their purchasing to the internet to minimize in-person transactions in the midst of a virus-based health pandemic. Today, a startup that has built a similar kind of payments infrastructure — but specifically targeting small businesses and the payments they need to make — has raised a big round of funding to double down on its own slice of the market.

Melio, which provides a platform for SMBs to pay other companies electronically using bank transfers, debit cards or credit — along with the option of cutting paper checks for recipients if that is what the recipients request — has closed $110 million in funding at a valuation that the company said was now $1.3 billion.

The company’s focus to date has been building and growing system to replace the paper invoices, snail mail, and bank transfers that might take multiple days to clear and still dominate payments for small and medium enterprises. The company was founded in Israel but has to date focused a lot of its attention on the U.S. market, where it saw growth of 2,000% last year (it doesn’t disclose the actual number of customers that it has). CEO Matan Bar said that this is where the company will continue to focus for now.

This latest round was led by Coatue and also included participation from previous backers Accel, Aleph, Bessemer Venture Partners, Corner Ventures, General Catalyst, and Latitude. It caps off a huge year for the company, which raised $130 million in 2020 (and $256 million overall), with other recent backers including others like American Express and Salesforce.

The latter two are strategic backers: AmEx is one of the options given to customers paying other businesses through Melio’s rails.

Salesforce, meanwhile, is not yet an integration partner, but Bar — who co-founded the company with Ilan Atias and Ziv Paz (respectively CTO and COO) — described its interest as similar to that of Intuit-owned accounting giant Quickbooks. Quickbooks connects with Melio so that users of one can seamlessly import activity from one platform into the other, and Bar hinted that there is an interest from the CRM giant, which provides a number of other business and productivity tools, to work together in a similar fashion.

Bar came to found Melio on the heels of years of experience in peer-to-peer payments focused on the consumer market. He previously ran PayPal’s business unit focused on peer-to-peer payments, which included Venmo in the US and equivalent services (not branded Venmo) outside of it. He came to PayPal, which at the time was a part of eBay, through eBay’s acquisition of his previous startup, a social gifting platform called The Gifts Project.

As Bar describes it, PayPal “was the first time I experienced what the digitization of payments looked like as they were shifting from cash to mobile payments. Consumers were buying online instead of at brick-and-mortar stores, and even when they were getting physical items, they were paying online.” What he quickly realized, though, was that the same was not applying to the businesses themselves.

“There are still trillions being transferred via paper checks in the B2B space,” he said, with paper invoices and paper checks dominating the market. “The space is way behind other payment areas. I would be talking with SMB owners who would be using fancy Square or PayPal point of sale devices, but when they had to pay, say, a coffee bean supplier, they stuffed checks in envelopes. That’s very intriguing obviously, and it triggered our interest.”

Interestingly this isn’t a problem that hasn’t been identified before, but many of the solutions, such as or Tipalti, are really designed for larger enterprises. “They are too overwhelming for SMBs,” he said. “Even their names say it all: Accounts Payable Automation Solutions. It’s about tens of thousands of payments, and accounting departments, not an order from a wine shop.”


That formed the basis of what the startup started to build, which has been, in essence, a very pared-down version of these other payments platforms with SMB needs in mind.

The first of these is a focus on cashflow, Bar said. Specifically, the Melio platform lets payments be made automatically but businesses themselves can delay the timing on when money actually leaves their accounts: “Buyers keep cash longer, vendors get paid faster” is how Bar describes it.

This is in part enabled by the tech that Melio has built, which builds in risk assessment, as well as fraud management, and balances payments across the whole of its platform to send money in and out without the need for the company to raise debt to back up those payments.

“We leverage data to assess risk,” said Bar. “Every dollar in this round is going towards R&D and sales and marketing. We don’t need the capital in our model.” It also works with the likes of AmEx and its own credit system in cases where people are paying on credit, but Bar also noted that currently most of the transactions that happen on its platform are not credit based. Most are bank transfers.

While others like Stripe have also built B2B payment services to pay out suppliers, Bar points out that what it has created is unique in that it is a standalone service: no need to be a part of Stripe’s wider ecosystem of services to use this if you already use another payments provider you are happy with.

Given that focus on cashflow for SMBs, what’s also interesting is the low bar to entry that Melio has built into its platform. Specifically, the service is completely free for businesses to use — that is, no fee is charged — as long as companies are making bank transfers or using debit cards. It takes a 2.9% fee when a business elects to use a credit card for a transaction (and even then Melio says that the fee is tax deductible in the US).

He noted that one of the reasons that Melio has to date targeted the US market is because of how antiquated it still is. “The average bank transfer still takes three to four business days, if you don’t want to take any risk,” he said. “We have developed models to do it same day. We take the risk that the buyer might not have the funds in that account but think about how that impacts cash flows. With Melio you still pay in three days, but money will be delivered the same day. That is how you can keep cash longer, without a payments risk.”

Targeting a market that remains very underserved at a time when so much has gone virtual in payments is why investors are also interested.

“Melio has identified both the opportunity and duty to help small businesses manage their finance remotely and improve cash flow, in normal times as well as during this crisis, as physical payments supply chains are interrupted and overwhelmed,” said Michael Gilroy, a general partner at Coatue, in a statement. “Going digital is the only way small businesses can compete against larger rivals and stay ahead of the curve.”

In terms of more product development, Bar said that the company has received “a lot of incoming interest from partners to enable B2B payments within their products on their product,” similar to what Quickbooks is doing and Salesforce is likely to do. “Payments are contextual and they want to enable a quicker way to get there. The SMB is underserved. And yes, from a unit economics it’s much better to go after Nike. But this is also to really create some financial inclusion. We want to enable services for the small shop that the big guys already have.”

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Snowflake latest enterprise company to feel Wall Street’s wrath after good quarter



Snowflake reported earnings this week, and the results look strong with revenue more than doubling year-over-year.

However, while the company’s fourth quarter revenue rose 117% to $190.5 million, it apparently wasn’t good enough for investors, who have sent the company’s stock tumbling since it reported Wednesday after the bell.

It was similar to the reaction that Salesforce received from Wall Street last week after it announced a positive earnings report. Snowflake’s stock closed down around 4% today, a recovery compared to its midday lows when it was off nearly 12%.

Why the declines? Wall Street’s reaction to earnings can lean more on what a company will do next more than its most recent results. But Snowflake’s guidance for its current quarter appeared strong as well, with a predicted $195 million to $200 million in revenue, numbers in line with analysts’ expectations.

Sounds good, right? Apparently being in line with analyst expectations isn’t good enough for investors for certain companies. You see, it didn’t exceed the stated expectations, so the results must be bad. I am not sure how meeting expectations is as good as a miss, but there you are.

It’s worth noting of course that tech stocks have taken a beating so far in 2021. And as my colleague Alex Wilhelm reported this morning, that trend only got worse this week. Consider that the tech-heavy Nasdaq is down 11.4% from its 52-week high, so perhaps investors are flogging everyone and Snowflake is merely caught up in the punishment.

Snowflake CEO Frank Slootman pointed out in the earnings call this week that Snowflake is well positioned, something proven by the fact that his company has removed the data limitations of on-prem infrastructure. The beauty of the cloud is limitless resources, and that forces the company to help customers manage consumption instead of usage, an evolution that works in Snowflake’s favor.

“The big change in paradigm is that historically in on-premise data centers, people have to manage capacity. And now they don’t manage capacity anymore, but they need to manage consumption. And that’s a new thing for — not for everybody but for most people — and people that are in the public cloud. I have gotten used to the notion of consumption obviously because it applies equally to the infrastructure clouds,” Slootman said in the earnings call.

Snowflake has to manage expectations, something that translated into a dozen customers paying $5 million or more per month to Snowflake. That’s a nice chunk of change by any measure. It’s also clear that while there is a clear tilt toward the cloud, the amount of data that has been moved there is still a small percentage of overall enterprise workloads, meaning there is lots of growth opportunity for Snowflake.

What’s more, Snowflake executives pointed out that there is a significant ramp up time for customers as they shift data into the Snowflake data lake, but before they push the consumption button. That means that as long as customers continue to move data onto Snowflake’s platform, they will pay more over time, even if it will take time for new clients to get started.

So why is Snowflake’s quarterly percentage growth not expanding? Well, as a company gets to the size of Snowflake, it gets harder to maintain those gaudy percentage growth numbers as the law of large numbers begins to kick in.

I’m not here to tell Wall Street investors how to do their job, anymore than I would expect them to tell me how to do mine. But when you look at the company’s overall financial picture, the amount of untapped cloud potential and the nature of Snowflake’s approach to billing, it’s hard not to be positive about this company’s outlook, regardless of the reaction of investors in the short term.

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A first look at Coursera’s S-1 filing



After TechCrunch broke the news yesterday that Coursera was planning to file its S-1 today, the edtech company officially dropped the document Friday evening.

Coursera was last valued at $2.4 billion by the private markets, when it most recently raised a Series F round in October 2020 that was worth $130 million.

Coursera’s S-1 filing offers a glimpse into the finances of how an edtech company, accelerated by the pandemic, performed over the past year. It paints a picture of growth, albeit one that came at steep expense.


In 2020, Coursera saw $293.5 million in revenue. That’s a roughly 59% increase from the year prior when the company recorded $184.4 million in top line. During that same period, Coursera posted a net loss of nearly $67 million, up 46% from the previous year’s $46.7 million net deficit.

Notably the company had roughly the same noncash, share-based compensation expenses in both years. Even if we allow the company to judge its profitability on an adjusted EBITDA basis, Coursera’s losses still rose from 2019 to 2020, expanding from $26.9 million to $39.8 million.

To understand the difference between net losses and adjusted losses it’s worth unpacking the EBITDA acronym. Standing for “earnings before interest, taxes, depreciation and amortization,” EBITDA strips out some nonoperating costs to give investors a possible better picture of the continuing health of a business, without getting caught up in accounting nuance. Adjusted EBITDA takes the concept one step further, also removing the noncash cost of share-based compensation, and in an even more cheeky move, in this case also deducts “payroll tax expense related to stock-based activities” as well.

For our purposes, even when we grade Coursera’s profitability on a very polite curve it still winds up generating stiff losses. Indeed, the company’s adjusted EBITDA as a percentage of revenue — a way of determining profitability in contrast to revenue — barely improved from a 2019 result of -15% to -14% in 2020.

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The owner of Anki’s assets plans to relaunch Cozmo and Vector this year



Good robots don’t die — they just have their assets sold off to the highest bidder. Digital Dream Labs was there to sweep up IP in the wake of Anki’s premature implosion, back in 2019. The Pittsburgh-based edtech company had initially planned to relaunch Vector and Cozmo at some point in 2020, launching a Kickstarter campaign in March of last year.

The company eventually raised $1.8 million on the crowdfunding site, and today announced plans to deliver on the overdue relaunch, courtesy of a new distributor.

“There is a tremendous demand for these robots,” CEO Jacob Hanchar said in a release. “This partnership will complement the work our teams are already doing to relaunch these products and will ensure that Cozmo and Vector are on shelves for the holidays.”

I don’t doubt that a lot of folks are looking to get their hands on the robots. Cozmo, in particular, was well-received, and sold reasonably well — but ultimately (and in spite of a lot of funding), the company couldn’t avoid the fate that’s befallen many a robotics startup.

It will be fascinating to see how these machines look when they’re reintroduced. Anki invested tremendous resources into bringing them to life, including the hiring of ex-Pixar and DreamWorks staff to make the robots more lifelike. A lot of thought went into giving the robots a distinct personality, whereas, for instance, Vector’s new owners are making the robot open-source. Cozmo, meanwhile, will have programmable functionality through the company’s app.

It could certainly be an interesting play for the STEM market that companies like Sphero are approaching. It has become a fairly crowded space, but at least Anki’s new owners are building on top of a solid foundation, with the fascinating and emotionally complex toy robots their predecessors created.

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