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Hello and welcome to Daily Crunch for October 8, 2021! It’s Friday! We made it! If you are tired, consider how weary the Instagram team must be. Their service is having even more uptime issues this afternoon. Between that and announcing that its users are no longer allowed to sell bits of the Amazon rainforest, it’s a banner week for Zuck’s empire. Now, let’s talk tech! – Alex
The ProWellTech Top 3
- Elon’s mystery gas: Big plans from SpaceX regarding its largest rockets are missing a few details on where the company intends to find tens of millions of cubic feet of natural gas that it will need. Sure, Tesla is petrol-free, but SpaceX has left a few question marks in a draft programmatic environmental assessment (PEA) regarding combustible gas that have us scratching our heads.
- Europe’s startups set to receive pre-seed boost: Early-stage founders in Europe are about to have a few new accelerators in their neighborhood, courtesy of Techstars. The accelerator collective is opening programs in Paris (again) and Stockholm, in addition to its current efforts on the continent. Per Techstars’ CEO, there’s far more founders in Europe today than are being served, despite record venture capital totals.
- Tesla to move its HQ to Texas: Ah, taxes. Tesla will move its headquarters to Austin, Texas from its traditional California home, but it won’t stop investing in the West Coast state. Indeed, the company intends to boost “output at its Fremont gigafactory by 50%,” ProWellTech reports. So, Texas taxes. That’s what this move appears to be about.
Startups/VC
- ProWellTech’s Annie Njanja reports that “economic growth and the rapid expansion of digital and mobile services” in markets like Kenya and Africa as a whole could lead to a boom in insurtech products. Insurtech has proved fertile ground for founders and investors alike in North America and Europe. So, why not Africa as well? African startups have proved strong in the fintech market, so perhaps the push into insurtech is overdue.
- Today’s Tiger round is actually news of an impending round. Namely that the investing impresario may put capital to work in Slice. Slice is an Indian company looking to bolster credit card usage in the country. Tiger may put $100 million into the company, per ProWellTech reporting. Manish Singh writes for the blog that Slice “raised around $30 million in its previous equity financing rounds and was valued at under $200 million in a round earlier this year.” More soon, I reckon. (Note: Slice, the American pizza software service, is not the same thing as the above Slice. Also note that startups should come up with more distinct names!)
- Next up: Alpha Paw, which just raised $8 million. If you are ready to mock a pet wellness startup for raising venture capital money, I can tell that you have not been to the vet recently. If you can keep your pets healthy, you might be able to save big bucks. Alpha Paw “offers pet products for dogs and cats like food and supplements that are customized with pet breed in mind,” to be specific. Given that about half my generation has more dogs than children (current score is 3-0 in my house), I fully expect Alpha Paw to raise $800 million more by December.
- Closing out our startup coverage today, Productfy has raised $16 million for its banking-as-a-service (BaaS) product. I have to admit that I have lost track of all the different BaaS (pronounced like the fish, if you were wondering) startups out there. They all seem able to raise capital, so there must be growth to be shared. But in time are we going to see BaaS consolidation? We’re finally seeing a little movement in the hot OKR startup space, and BaaS feels even more crowded. For now, however, Productfy “aims to stand out with its mission to build DeFi for traditional finance, according to founder and CEO Duy Vo,” per our own Mary Ann Azevedo.
Private equity is ready to take MSP consolidation to the next level
Good news: Businesses of all stripes are digitizing their operations faster than ever before, creating huge advantages for companies that start the work now.
Bad news: Many technical workers are already looking for new jobs, and companies must compete to find the right people who can build robust, secure IT environments.
Managed services providers (MSPs) are filling the gap, and private equity firms are paying attention.
“MSPs have all the ingredients that private equity loves,” write Mike McGill and Kevin Jolley of Cowen and Company, LLC.
“A strong demand trend, low risk of obsolescence, a ‘sticky’ service that attracts long-term customers and high recurring revenues, strong cash flow margins and a relatively ‘asset-light’ business.”
(ProWellTech+ is our membership program, which helps founders and startup teams get ahead. You can sign up here.)
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