Weekly update #48

All the latest news from the startup, VC and fintech ecosystem.

Sep 30, 2024

Welcome to this edition of the weekly newsletter. The idea behind this is to gather all the information in the startup ecosystem in one place, with a special focus on the fintech market.

This week there was no episode of Builders, as I was busy at the Italian Tech Week in a panel with Techstars. But, you can recover the last episode by watching the video here on Youtube, or the podcast here on Spotify or here on ApplePodcast.

Next week the podcast will be back with a very special guest from the VC industry!

And as always, If you are a VC manager or a founder and would like to be the next guest, feel free to drop me a line on Linkedin!

Coming back to us, this week I read a very interesting report named “Scaling SaaS: Forging Excellence Through Fundamentals” from ICONIQ Growth. The report is a very interesting study on SaaS startups over the last 4 years, in order to understand how their growing path changed over time, taking in consideration some variables like ARR, multiples, but also FCF and retention. We all know that the ecosystem is pushing for deep tech and AI right now, and I think it was interesting to see how those two trends impacted on the SaaS model. Here my main takeaways:

In Q2 2024, valuation multiples for public SaaS companies compressed, especially among high-growth firms following their late 2023 surge. While investor optimism about generative AI products boosting top-line growth and efficiency remains high, this optimism hasn't significantly manifested in most SaaS companies' operating results, contributing to recent multiple rationalizations. Even though a higher percentage of public companies beat revenue consensus compared to previous second quarters, fewer are raising full-year guidance—a cautious approach that signals expectations of continued softness for the rest of 2024.

In private markets, top-line growth for growth-stage and late-stage companies has hit an eight-quarter low due to ongoing macroeconomic challenges. Early-stage companies have also experienced a sharp slowdown but are beginning to show signs of stabilization in the first half of 2024. The decline in Annual Recurring Revenue (ARR) growth is largely because companies are finding it increasingly difficult to acquire new customers—driven by tighter budgets, heightened competition, pricing pressures, and a more selective buying environment. Net dollar retention has fallen from peak levels of approximately 120-130% during 2017-2019 to around 110% in the first half of 2024, primarily due to weakened customer expansion efforts paired with steady churn rates.

As achieving top-line growth becomes more difficult, companies have increasingly focused on preserving their bottom lines, leading to consistent improvements in Free Cash Flow (FCF) margins over the past eight quarters. However, the Rule of 40—a metric combining growth and profitability—has remained stagnant during this period, indicating that cost adjustments haven't been sufficient to offset the slowdown in growth. While FCF margins have improved, burn multiples haven't returned to historical baselines for most companies; early-stage and growth-stage burn multiples remain significantly higher than historical norms.

Go-to-market efficiency and productivity, measured by the net magic number, have significantly deteriorated as selling SaaS tools has become increasingly difficult in the current environment. Magic number performance has steadily declined over the past eight quarters, now stabilizing below 1.0x for the first time. This marks the lowest point in sales efficiency in years and underscores a serious challenge in achieving efficient growth.

While headcount productivity—calculated as Annual Recurring Revenue (ARR) per Full-Time Employee (FTE)—has improved, there has been a decline in headcount efficiency, evidenced by an increase in operating expenses (OpEx) per FTE during the same period. Although there's typically a lag between adjustments in operating spend and efficiency gains, the rise in OpEx per FTE may also be driven by inflationary pressures, competitive compensation programs, and a relative increase in spending on strategic initiatives like artificial intelligence.

Anyway we saw some very interesting news in the market this week. Revolut is making waves again, launching a standalone wealthtech app called Revolut invest, but they’re facing some competition as bunq is doing the same with Stock. Lithuanian fintech kevin. is reported filing for bankruptcy, while Klarna teams up with Xero to push BNPL payments, but we also saw Visa acquiring Featurespace . In the VC market, a lot of new funds. Viola Credit launched a $500 million joint venture with Cadma Capital Partners, the italian NEVA SGR launched a $500 million second fund, but also Acurio Ventures, Costanoa Ventures, Avid Ventures and opportuna are raising new funds. The Italian ecosystem is posting some very good news recently! This week we saw Jet HR raising a 12 million seed round, Desia raising a $3.3 million pre-seed (Congrats Raffaele Terrone!) and TrueScreen - Trust as a Service securing a $2.4 million round. Finally, some very interesting rounds from fintech startups like InDebted, Infact, Happy Pay, Settle, Simpler., Mesa, Apron, Outgo, Qist Bazaar and many others.

But let's take a closer look at the main news of the last seven days:

Closed deals

Ant Group secures $6.5 Billion in loans to propel global expansion
Drift Labs secures $25M Series B funding to revolutionize DeFi trading on Solana Foundation
Happy Pay secures $1.8M in pre-seed funding to revolutionize BNPL services in South Africa
Forward Financing expands credit facility to $450M, empowering more US small businesses
London-based Simpler. has secured €9 million in a pre-Series A funding round
Egypt fintech Settle secures a $2 million pre-seed round
Mercado Libre secures a $250 million in financing from J.P. Morgan
Fintech Mesa promises a 1% cash back on mortgages, and closes a $9.2 million seed round
Aussie fintech InDebted raises a $41 million series C round
Pakistan based Qist Bazaar raises a $3.2 million series A led by Indus Valley Capital and Gobi Partners
Apron secures $30m in Series B funding to revolutionize SMB payments
Fintech startup Outgo raises $15 million to help trucking carriers access cash quickly
Koïos Intelligence secures $5 million in funding for its financial intelligence platform
UK based Infact raises $4 million seed round to sets new standards for real-time credit referencing

And here some useful resources for everyone involved in the ecosystem:

Events you don’t want to miss

Bits & Pretzels founders festival | Munich 29.09-01.10.2024 (Link to the invite or website)
Milan Fintech Summit | Milan - 08-09.10.2024 (Link to the invite or website)
VDS+ | Valencia 23-24.10.2024 (Link to the invite or website)

You have a cool event you want to mention or to sponsor? Feel free to send me a DM.

Startups raising funds

Loyyal - Loyalty platform from the MENA region, with entities in the US and South East Asia, provides a B2B2C platform to handle multiple loyalty programs and earn rewards all over the world. Raising a $6M Series A
Freedhome - Proptech and fintech platform, enabling people to be able to gain profit from real estate by renting them to intermediaries. Raising a $1M seed round

PopulaRise - The platform that allows companies of every dimension to promote themselves on social media through the collaboration with their clients. B2B2C SaaS. Raising $1M.
Tutornow - Edtech that provides an online tutoring platform for students with learning disorders. Raising $500k to $1M.
Recivu - Fintech startup trying to digitize the receipt flow by getting rid of papers. Looking for $150k in SAFE, already $50k committed.
Weagle - B2B Tech startup that provides the very first browser designed for company, with total security for sensitive data. Raising $6 millions for their seed round.

Reach Finance - Reach is the fintech platform for wealth accumulation for the Y&Z generations, they provide users with the tools to build wealth such as a budget tracker, a financial plan and a systematization of investments. Looking for $700k, with already $500k committed.
wrapp.ai - A fintech startups that offers a virtual accountant and CFO that can help SMEs scale globally. Looking for $1 million, $750k already granted from public funds, looking to close the last $350k.
Shoppy Code:Gift card platform that offers a points based loyalty program. They share part of the profits coming from marketing budgets with their customers. Raising $500k.

Take also a look at the last edition of the newsletter, Weekly update #47

Weekly update on Fintech by Michele Mattei

Discussion about this post

Ready for more?