B2B Payments

Investors Go After B2B FinTech Maturity

As the fallout from WeWork’s stumbles continues, one could easily wonder if the market is beginning to question not only the position of WeWork backer SoftBank in the tech investment space, but whether venture capitalists (VCs) have placed too much confidence in tech startups as a whole.

The answer is no, according to a Thursday (Nov. 14) Financial Times report.

The publication said several investors have revealed their multibillion dollar plans for late-stage tech startup funding in the coming months, with unnamed sources noting Blackstone planning to raise as much as $4 billion for a new growth equity fund.

Documents seen by the FT show Tiger Global Management is nearing the closure of $11 billion in hedge funds (with plans to raise about $3.75 billion for its next private investment fund early next year).

Lightspeed Venture Partners, as well as Peter Tiel’s Founders Fund, similarly have growing investment plans up ahead, unnamed sources told the publication, although none of these investors agreed to comment on their fundraising plans on the record.

What is changing, however, is that tech startups are taking their time.

“More of the prime growth happens in the private years,” said Michael Larsen, managing director of Cambridge Associates, in an interview with the FT. “Companies are also taking a longer path and achieving more scale.”

It’s unclear how this focus on more mature tech startups will impact investment in the B2B FinTech market, but as the latest VC roundup below shows, late-stage funding does indeed seem to be a focal point, with Series C, D, and even H rounds.

Chaser

Based in London, Chaser offers a collections and accounts receivable solution that helps businesses reduce the risk of unpaid invoices. The company offers a credit control cloud software solution and has just announced $3.86 million in new funding, according to an announcement on the company blog.

Fuel Ventures led the round, while Sussex Place Ventures, Beacon Capital and Craig Winkler, an early investor in and director of Xero, also participated. With a focus on addressing the challenge of late payments for small and medium-sized businesses (SMBs), Chaser said it will use the funding to invest in data science and bolster business intelligence capabilities. The company also plans to grow its product development team and strengthen its Virtual Credit Control offering, it said.

DadeSystems

With $9 million in Series D funding, U.S.-based DadeSystems will continue to focus on growth and adoption of its accounts receivable technology. The company targets middle-market and larger corporates with a platform that aggregates, analyzes and reconciles remittances from incoming collections across payment types and channels.

Investors at Napier Park Financial Partners led the round, while Fifth Third Capital Holdings and Ocean Azul Partners, both returning investors, also participated. In a statement, Napier Park Financial Partners partner Ned May said, “accounts receivable and invoice-to-cash processes are ripe for innovation.”

Workato

Enterprise Software-as-a-Service startup Workato secured $70 million in Series C funding, the company said in a press release, with investors at Redpoint Ventures leading the round. Norwest Venture Partners, Geodesic Capital, and existing investors Battery Ventures and Storm Ventures also participated.

Operating in what Workato describes as a new business function, Business Technology, the company connects professionals to support their digital transformations and technological integration efforts, while fostering connections between the IT department and other business teams. The startup said it will use the investment to fuel innovation in automation technologies.

Freshworks

Another B2B software company, Freshworks, scored the largest round of the week with $150 million of Series H funding. Freshworks offers businesses a range of enterprise tools, including customer relationship management (CRM) solutions, call center management, IT ticket tracking, and beyond.

Reports in Crunchbase said Sequoia Capital, CapitalG and Accel participated in the investment, which is expected to close by the end of 2019. The funding propels Freshworks’ valuation to $3.5 billion, the report said, noting the company is indeed beginning to go public, with plans to IPO on the Nasdaq in 2021 or later.

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