Late last year, Solugen, a startup using synthetic biology to take hydrocarbons out of the chemicals industry, decided against pursuing a new round of funding that would have valued the company at over $ 1 billion, TechCrunch has learned.
Instead, the Houston-based bio-manufacturing company raised an internal round of roughly $ 30 million from existing investors and continued working on its latest project — a new bio-based manufacturing process for a high-value specialty chemical that can act as an anti-corrosive agent.
That work represents a potentially lucrative new product line for the company and charts a course for a host of other businesses that are refashioning the basic building blocks of life in an attempt to supplant chemistry with biology for manufacturing and production.
If Solugen can get its high-value chemical into commercial production, the company can follow the path that sustainable tech companies like Tesla have mastered — moving from a pricy specialty product into the mass market. And rather than over-promise and underdeliver, Solugen wanted to get the product line right first before raising big bucks, according to people familiar with the company’s thinking.
As the world looks to move away from oil and its byproducts to reduce greenhouse gas emissions and slow down or reverse global climate change, the chemicals industry is in the crosshairs as a huge target for disruption. Vehicle electrification solves only one part of the oil problem. The extractive industry doesn’t just produce fuel, but also the chemicals that make up most of the products that defined consumer goods in the twentieth century.
Chemicals are everywhere and they’re a huge business.
Companies like Zymergen raised hundreds of millions of dollars last year to develop industrial applications for synthetic biology, and they’re not alone. Startups including Geltor, Impossible Foods, Ginkgo Bioworks, Lygos, Novomer and Perfect Day have all raised significant amounts of capital to reduce the environmental footprint of food, chemicals, ingredients and plastics through synthetic biology.
Some of these companies are seeing early success in food replacements and ingredients, but the promise of biologically based chemicals have been elusive — until now.
Solugen’s new product will produce glucaric acid, a tough-to-make chemical that can be used in water treatment facilities and as an anti-corrosive agent — and the company can make it with a zero carbon (or potentially carbon negative) manufacturing process, according to Solugen co-founder and chief technology officer, Sean Hunt.
The glucaric acid from Solugen is cheaper to produce and more environmentally friendly than existing phosphonates that are used for water treatment — and the company has the benefit of competing against chemicals manufacturers in China.
Given the continuing tensions between the two countries, the U.S. is looking to make more high-value products — including chemicals — domestically, and Solugen’s technology is a good way forward to have home-grown supplies of critical materials.
Solugen still intends to raise more capital, the company just wanted to wait until its latest production plant for the acid came online, according to Hunt.
It’s also the fruit of years of planning. The two co-founders, Hunt and Gaurab Chakrabarti, first realized they could potentially use the technology they’d developed to make specialty chemicals back in 2017, according to Hunt. But first the company had to make the hydrogen peroxide as a precursor chemical, Hunt said.
“It’s advantageous for us to focus on this,” said Hunt. “As we scale, we can enter more commodity-type markets down the road.”
It’s all part of the notable strides the entire industry is making, said Hunt. “Synthetic biology has really made significant strides,” he said. “We have our commercial plant coming online this summer [and it proves] synthetic biology has gotten to the point where we can compete on price and performance.”
So the capital infusion will come as the company gets closer to the completion of these commercial scale facilities.
“It’s not like we were sitting on a term sheet and we said no,” Hunt said. “We want to make sure that we are hitting the milestones and the goals at a commensurate pace which is this year. I’m extremely bullish and optimistic of 2021.”
Solugen’s co-founder sees the path that his company is on as one that other startups working in the synthetic biology space will pursue to bring profitable products to market at the higher end before competing with more sustainable versions of commodity chemicals.
“How do you start a company that has this level of capital intensity?” Hunt asked. “You can start in the fine chemicals space where everything sells for tens to hundreds of dollars per pound. For us, glucaric acid is that specialty chemical and then we will do commodity.”
This morning TripActions, a software company whose tools help businesses book and manage corporate travel, announced a new $ 155 million investment.
Three investors led the round: prior investor Andreessen Horowitz, Addition Ventures, and Elad Gil. The new investment, a Series E, values TripActions at $ 5 billion on a post-money basis, a company spokesperson wrote via email.
Valuation marks are normally only moderately useful, but in the case of TripActions’ latest round carry more weight.
The company — along with restaurant software unicorn Toast — became something of a poster-child for the impact of COVID-19 on some categories of startups. TechCrunch covered the launch of a new $ 500 million credit facility for a TripActions product called Liquid in late February, 2020. A month later in late March TripActions laid off hundreds of staff as the travel market froze solid.
For a company that had raised $ 250 million at a $ 4 billion valuation in mid-2019, it was a dramatic reversal of fortunes. (TripActions did raise an additional $ 125 million in what it called “convertible-to-IPO financing” last June, when the travel market was especially bleak.)
Today, however, investors are betting on the company’s fortunes, not only providing it with another nine-figures of capital, but giving it a new, larger valuation as well.
An up-round less than a year after layoffs is an impressive recovery, so TechCrunch wanted to learn more about the corporate travel market, TripActions’ bread and butter, and the pace of the venerable business trip’s recovery; as COVID-19 vaccines roll out, how quickly are employees getting back onto planes?
According to a company spokesperson, the corporate travel market is at “20 percent levels as of this month,” while growing between 3% and 6% “week-over-week.” That pace of recovery could have given investors confidence that TripActions’ recovery to at least most of its former strength was merely a matter of time.
TechCrunch also asked TripActions what the corporate travel market will look like in the Zoom-ready, hybrid-work world that many expect. A spokesperson wrote that the company “strongly” believes that corporate travel will come back, “maybe not at 100 percent immediately,” but to 75% “within the next year.”
The spokesperson also wrote that a more distributed working population could actually boost corporate travel. If that bears out, TripActions could wind up in a stronger position post-COVID than it might have managed if the pandemic had never happened. For a unicorn forced to lay off so many workers when its market temporarily disappeared, such a return to power would be a coup.
Returning to the round, TripActions intends to use the new monies to invest in its product. The company highlighted recent feature releases in an email to TechCrunch to underscore the point, including software integrations, adding that it intends to keep working on its finance-focused Liquid product.
The spokesperson also said that the company “will build features on the travel side for distributed teams to meet in-person more easily.” As many anticipate that the days of completely geographically centered companies are over, the decision makes sense.
TechCrunch asked what portion of its previously laid off staff have been rehired to date, and if the new funds will be used to rehire employees that were let go last year. We’ll update the piece when we hear back.
Regardless, from pre-pandemic highs, to a COVID-19 trough, to today with a newly raised valuation and lots of new cash, TripActions’ last year is a future business case study in the making.
After the pandemic began, the world witnessed a rise in the need for digital services, including the banking sector. In a recent development, a London-based fintech company PPRO, a provider of local payment infrastructure for online commerce, has raised $ 180M (approx €148.5M) in a fresh round of funding.
Investors in the round
The round saw participation from Eurazeo Growth, Sprints Capital, and Wellington Management.
Prior to this, the company had raised $ 50M (approx €48.1M) from Sprints Capital as well as Citi Ventures and HPE Growth. The company’s current valuation after the latest round is now over $ 1B (approx €823.6M).
Financial Technology Partners acted as exclusive financial advisor and Noerr as legal advisor to PPRO in the transaction.
Use of the raised capital
The latest round will be used by the company to fuel its continued global expansion and support the development of its border-free payment technology and services.
Simon Black, CEO of PPRO, says “Beyond securing the support of such prestigious investors and achieving a milestone valuation, we’ve enabled our customers to grow at record numbers during what has been a tough time for many. By giving businesses the ability to offer payment choice, we’ve helped give people around the world better access to goods and services that improve their lives.”
Black continues, “Our unique local payments infrastructure empowers our customers to quickly increase their global footprint. This investment will help us deliver the highest performance possible for companies leading the global payments industry.”
Founded in 2006 by Philipp Bock, Philipp Nieland, and Tobias Schreyer, PPRO’s local payments platform and expert services help its users to get the industry’s best conversion rates in markets globally by allowing online shoppers to pay with their preferred payment method.
According to the company, its technology allows payment services providers and enterprises with payment platforms to plug in via simple APIs and offload the intricate complexities and massive costs of providing payment method choice to local consumers. Its singular focus on local payment methods helps its customers rapidly speed up time to market and reduce operational costs up to 10 times, claims PPRO.
The company says its vision from the start has been to simplify access to the many different payment methods required by consumers and businesses across the world.
In addition, PPRO also offers e-money issuing programs for consumers and corporate. They are FCA licensed to issue e-money as they continue to strengthen their links with alternative payment method schemes and banks around the world.
PPRO claims to have established itself as a trusted infrastructure provider in the cross-border payments space powering international growth for payment service providers and platforms such as Citi, Elavon, Mastercard Payment Gateway Services, Mollie, PayPal, and Worldpay.
Last year, the company doubled its year-on-year transaction volumes in the fourth quarter, expanded its global team by 60 per cent, and developed new strategic partnerships with local payment methods in high-growth markets like Indonesia and Singapore.
Commenting on the market, Nathalie Kornhoff-Bruls, MD at Eurazeo Growth, says, “All signs for the future indicate that digital commerce, and even more so cross-border commerce, will continue to grow exponentially while innovation in payment methods remains strong. As a result, facilitating local payments is becoming increasingly complex. Payment service providers, however, no longer have a choice as merchants and their customers are pushing for the adoption.”
In December 2020, Apexx Global, a global payments platform, announced its partnership with PPRO to drive cost savings and conversion rates for merchants globally. Through the sharing of industry expertise, the partnership was aimed at providing benefits to merchants seeking a wide range of payment options and increased transaction flexibility.
Prior to that in June 2020, PPRO announced direct integration with Paysafecash. With this integration, Paysafecash will be available for 24 markets, including the Czech Republic, Greece, Hungary, Romania, and other markets where cash remains a preferred payment method. Payment service providers (PSPs) and their merchants who partner with PPRO get easy access to consumers in over 175 e-commerce markets through just one API and one contract.
The pandemic has hastened a shift of most commerce becoming e-commerce in the last year, and that has brought a new focus on startups that are helping to enable that process.
In the latest development, PPRO, a London-based startup that has built a platform to make it easier for marketplaces, payment providers and other e-commerce players to enable localised payments — that is, make and take payments in whatever form local customers prefer to use, which extend well beyond basic payment cards — has closed a round of $ 180 million, funding that catapults PPRO’s valuation to over $ 1 billion.
PPRO (pronounced “P-pro”, as in payments professionals) plans to use the funding to continue expanding in newer markets.
Simon Black, PPRO’s CEO, said in an interview that two particular areas of focus in the coming year will be more activity in Asian countries like Singapore and Indonesia, as well as Latin America, where the company acquired a local player, allpago, back in 2019.
In both cases, the opportunity comes in the form of high growth stemming from more transactions moving online, as well as the chaos that is the fragmented payments market.
The capital is coming from a group of investors that includes Eurazeo Growth, Sprints Capital and Wellington Management. It comes on the heels of a $ 50 million round the company raised last August from Sprints, along with Citi and HPE Growth; and a further $ 50 million it picked up in 2018 led by strategic investor PayPal.
PayPal, alongside Citi, Mastercard Payment Gateway Services, Mollie and Worldpay are among PPRO’s 100 large global customers, which use the company’s APIs for a variety of functions, including localised gateway, processing and merchant acquirer services.
The flood of activity coming from consumers and businesses buying more online — a by-product of the pandemic leading to many businesses shutting down physical operations for the moment — has seen the company double transaction volumes between Q4 2020 and the same quarter in 2019.
PPRO is not the only company to be targeting that opportunity.
The fragmentation of financial services overall — where realistically, there is only a handful of types of transactions that might be made (usually: deposits, payments, credit), but quite literally thousands of permutations and methods to make them, with specific markets and their populations typically coalescing around their own localised selections.
That has led to the rise of a number of companies providing what has come to be called “banking as a service” or “fintech as a service,” where a tech provider stitches together in the background a number of services, sometimes thousands, and makes it easier for their customers, by way of an API, to plug in those services for their own customers to use more easily, most often connected to a range of other services provided to them like money management.
Others in this wider space that includes payments and other fintech services include the likes of Rapyd, Mambu, Thought Machine, Temenos, Edera, Adyen, Stripe and newer players like Unit, with many of these raising large amounts of money in recent times in particular to double down on what is currently a rapidly expanding market.
The unique aspect of PPRO is that it was an early mover in the area of identifying the conundrum of fragmentation in payments for companies that operate in more than one country or region, and that it has continued to play only in payments, without a jump to adjacent services.
“We’re ultra focused because the local payments problem is actually growing,” said Black, who believes that “the disconnect between what a consumer wants to use, but also their appetite and the proliferation of payment options” all contribute to more complexity (with the trade-off being more choices for consumers, but equally possibly too much choice?).
As Black sees it, the company’s focus on payments has given it more momentum to build better tech specifically to address that globally.
“PPRO is building solutions for performance in industrial strength. It’s growing rapidly because there are no other players that are truly global. We are globalizing to support the needs of customers who want to nationalize, so we have an opportunity to focus on payments, to be a strategic outsource partner.”
This doesn’t mean that there isn’t room for product expansion: alongside payments, Black highlighted product compliance and providing better analytics as two areas where the company is already active and will be doing more for customers.
“Where we partner and provide value is in anticipating changes in consumer demand,” he noted. “We monitor how customers are using those methods and — whether you are a service provider or furniture or travel company — determine which are the best relevant payment methods.” Services like open banking, tools for banks to enable allowing payments directly from customers’ accounts, or buy-now-pay-later payments, are examples, he said, of areas that speak of further opportunities.
“We are delighted to support Simon and the team at PPRO as they continue to develop best-in-class local payment solutions,” commented Nathalie Kornhoff-Brüls, managing director at Eurazeo Growth, in a statement. “All signs for the future indicate that digital commerce, and even more so cross-border commerce, will continue to grow exponentially while innovation in payment methods remains strong. As a result, facilitating local payments is becoming increasingly complex. Payment service providers, however, no longer have a choice as merchants and their customers are pushing for the adoption.”
“PPRO has proven to be the go-to problem solver in this area, providing the local payments technology and expertise that the world’s biggest payment players rely on. Our investment reflects our confidence in the growth potential for PPRO and we’re excited to support PPRO and its team on their journey,” added Voria Fattahi, a partner at Sprints Capital, in a separate statement.
K Health, the virtual healthcare provider that uses machine learning to lower the cost of care by providing the bulk of the company’s health assessments, is launching new tools for childcare on the heels of raising cash that values the company at $ 1.5 billion.
The $ 132 million round raised in December will help the company expand and help pay for upgrades, including an integration with most electronic health records — an integration that’s expected by the second quarter.
Throughout 2020 K Health has leveraged its position operating at the intersection of machine learning and consumer healthcare to raise $ 222 million in a single year.
This appetite from investors shows how large the opportunity is in consumer healthcare as companies look to use technology to make care more affordable.
For K Health, that means a monthly subscription to its service of $ 9 for unlimited access to the service and physicians on the platform, as well as a $ 19 per-month virtual mental health offering and a $ 19 fee for a one-time urgent care consultation.
To patients and investors the pitch is that the data K Health has managed to acquire through partnerships with organizations like the Israel health maintenance organization Maccabi Healthcare Services, which gave up decades of anonymized data on patients and health outcomes to train K Health’s predictive algorithm, can assess patients and aid the in diagnoses for the company’s doctors.
In theory that means the company’s service essentially acts as a virtual primary care physician, holding a wealth of patient information that, when taken together, might be able to spot underlying medical conditions faster or provide a more holistic view into patient care.
For pharmaceutical companies that could mean insights into population health that could be potentially profitable avenues for drug discovery.
In practice, patients get what they pay for.
The company’s mental health offering uses medical doctors who are not licensed psychiatrists to perform their evaluations and assessments, according to one provider on the platform, which can lead to interactions with untrained physicians that can cause more harm than good.
While company chief executive Allon Bloch is likely correct in his assessment that most services can be performed remotely (Bloch puts the figure at 90%), they should be performed remotely by professionals who have the necessary training.
There are limits to how much heavy lifting an algorithm or a generalist should do when it comes to healthcare, and it appears that K Health wants to push those limits.
“Drug referrals, acute issues, prevention issues, most of those can be done remotely,” Bloch said. “There’s an opportunity to do much better and potentially cheaper.
K Health has already seen hundreds of thousands of patients either through its urgent care offering or its subscription service and generated tens of millions in revenue in 2020, according to Bloch. He declined to disclose how many patients used the urgent care service versus the monthly subscription offering.
Telemedicine companies, like other companies providing services remotely, have thrived during the pandemic. Teladoc and Amwell, two of the early pioneers in virtual medicine, have seen their share prices soar.
Backing K Health are a group of investors led by GGV Capital and Valor Equity Partners. Kaiser Permanente’s pension fund and the investment offices of the owners of 3G Capital (the Brazilian investment firm that owns Burger King and Kraft Heinz), along with 14W, Max Ventures, Pico Partners, Marcy Venture Partners, Primary Venture Partners and BoxGroup also participated in the round.
Organizations working with the company include Maccabi Healthcare; the Mayo Clinic, which is investigating virtual care models with the company; and Anthem, which has white-labeled the K Health service and provides it to some of the insurer’s millions of members.