Fintech, edtech, and SaaS are not dead

This is our startup-focused Wednesday episode, so we’re taking a deep look at a number of startup fundraisings, and the latest from the world of venture capital itself. Startups and capital, it’s our jam! Here’s what we got into on the show today: Goodshuffle raised $5 million, showing that vertical SaaS is far from kaput, even if software valuations remain under strain. SUMA Wealth put $2.2 million into its own accounts, showing that audience-tuned fintech products still have legs. SUMA Wealth’s target Latinx demographic seems to be resonating with what the startup is building. Behold! A crypto startup showing hella consumer traction. On the social media side, Bluesky is now open to everyone and growing quickly, and Blush raised $7 million more to keep its dating app invite-only. And then there were more rounds! Finally closed $10 million, while Klas put together $1 million for its edtech efforts. In closing, Episode 1 has a new early-stage UK fund that we wanted to talk about. For episode transcripts and more, head to Equity’s Simplecast website. Equity drops at 7 a.m. PT every Monday, Wednesday and Friday, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. TechCrunch also has a great show on crypto, a show that interviews founders and more! Credits: Equity is produced by Theresa Loconsolo with editing by Kell. Bryce Durbin is our Illustrator. We'd also like to thank the audience development team and Henry Pickavet, who manages TechCrunch audio products. Learn more about your ad choices. Visit megaphone.fm/adchoices

• 0:10Speaker 00

  Hello and welcome back to Equity, the TechCrunch Podcast, where we unpack the numbers and the nuance behind the headlines. Today is February 7, 2024. Good morning, this is Alex and welcome to our Wednesday show, where we dig into the critical startup and venture capital stories of the week thus far. On the pod today, I have just for you, why vertical SaaS is not dead, how quickly Sumo Wealth is growing, a consumer crypto app with real traction, I promise, new capital for both fintech and edtech, and the latest early-stage fund in Europe. Now, you may have seen some news out there about WeWork, Adam Newman, and buying the company out of bankruptcy. Clearly, I have a whole lot of thoughts, but we're going to save that for Friday.

• 0:55Speaker 00

  And as a quick programming note, if you did hear the Monday show, you may have noticed my audio was a little bit weird. It's because I'm traveling and was not holding my mic correctly, but I have since learned and will hold it well today. All right, let's go.

• 1:10Speaker 00

  First up, let's talk about Good Shuffle, which is building software for the event rental and production industry. It just closed a $5 million Series A funding round that was led by FinTop Capital. So a couple of things here. First of all, that's an old-school Series A in terms of size. Keep in mind that rounds have gotten larger over time, but it wasn't that long ago that a $5 million Series A wouldn't have raised an eyebrow. The second thing that stood out to me here was, hey, good news, vertical SaaS is still a thing. If you want to think about it, vertical SaaS is kind of like startups distilled. You go and find an industry that is super outdated and depends on paper and pencils, and then you build software for it.

• 1:54Speaker 00

  Next, you go out and try to conquer the market before competitors arrive and try to make a real challenge of it. But it's a model we've seen a lot of times. Recently, in fact, we saw Bulk Exchange, which just raised a similar amount of money, and it's building an exchange for bulk construction material purchase and disposal. Again, vertical SaaS for a particular industry. In the case of Good Shuffle, the company did not want to give us real hard revenue growth metrics, but did say that it now has thousands of customers, which for a SaaS product, isn't too bad. All we need now is an ARR number and then a countdown to the Series B. Next up, we have Suma Wealth, that's S U M A Wealth, and it just put together $2.2 million in new capital. What's the funding for?

• 2:38Speaker 00

  Well, the company is building financial tools, content and digital activations for young US Latinos to help them build wealth. This is a fintech play. Now, the round was actually led by Radical Impact and was also given capital by Vamos Ventures, OVO Fund and the American Heart Association Impact Fund. All told, TechCrunch reports that Suma Wealth has now raised about $5.5 million in total. Again, smaller dollar amounts, but that doesn't mean that the companies in question aren't doing big things. In the case of Suma Wealth, what is that? Well, it was actually a new company to me. So I spent a minute this morning poking around its website and app to get a better feel. So Suma Wealth is essentially a, I'll just call it a multi-part fintech app

• 3:23Speaker 00

  aimed at the Latinx population that uses cultural intelligence and modern tech to help folks live a better money life. And that may sound a little bit, I don't know, altruistic or optimistic, but given how much everyone hates talking about money and hates not having enough of it, I think it's a cool idea. And the round indicates to me that fintech startups are not entirely hosed when it comes to raising capital. The narrative around fintech has been, I don't know, down and to the left lately. So it's good to see smaller companies in the space still doing cool things. But the bar is still high. Suma Wealth's platforms have seen 62% annual user growth, according to TechCrunch, and its revenue grew by nearly 5X last year.

• 4:06Speaker 00

  So sure, you can raise money still in fintech. You just have to do incredibly well, like Suma Wealth. And if Suma Wealth is good news for fintech, well, behold, I have for you a crypto startup that is showing hella traction. It's called Farcaster, and I saw so many tweets about it that I actually asked TechCrunch Plus reporter Jackie Melanick, who also, of course, hosts our Chain Reaction podcast, to dig into it, and boy, am I glad that I did. So founded by former Coinbase employees, Dan Romero and Varun Srini Vasan back in 2020, Farcaster is a network for decentralized applications.

• 4:46Speaker 00

  Stay with me, I promise. And it just took off thanks to a new app on its network called Frames. Now, why do we care about this? Because in our testing, we found it very, very easy to join Farcaster. And the signup process did not require crypto know-how. So Farcaster and its constituent apps are therefore a little bit more like a trad web 2.0 platform. Of course, albeit one with a crypto backend and some web 3 tuning. I think this is cool because I've thought for a long time that blockchain should exist in the background and not the foreground of any digital experience that it helps power. No one wants to spend their time when using a consumer app wondering what kind of database it has, right?

• 5:31Speaker 00

  Right. So my question is this, will Farcaster keep riding its current momentum and become the breakout hit that consumer crypto really needs? Time will tell, but at least today we're not talking about the Bitcoin ETF anymore. You're welcome. Scooting along, I have two bits of social startup news for you that I'm smushing together because I want to get as much into the show as I can. So first up, Twitter competitor or ex-competitor, I suppose, Blue Sky has opened to the public. And in an interview with its CEO Jay Graber, we learned that after throwing its doors wide open, Blue Sky was getting about two new signups per second. That's a lot, and I noticed this myself because suddenly I was getting a lot of pings from Blue Sky,

• 6:17Speaker 00

  which means that I now have to care about yet another social service. But Blue Sky's all right. People like it. Cool. And then next up, there's money going in the other way. If Blue Sky is opening up, Blush is keeping its doors closed. The company just announced a $7 million raise for its invite-only dating app. So if you're in the dating world, you might want to give it a look. Sure, of course, there are a lot of dating apps out there already. But as you know, they're mostly owned by a single company and a lot of folks find them to be less than ideal. So what is Blush and how can it do things differently? Well, the company is leaning into curated events, and honestly, those are pretty hard to scale.

• 6:57Speaker 00

  So I don't know what the company will look like in five years' time, but certainly it's seen enough traction today to get new capital. And because I always want to fit more total deals into the show than I actually can. Finally, a fintech startup that helps businesses automate accounting and finance functions just picked up another $10 million in venture capital. I love seeing fintech continue to survive despite the narrative that it is more popped balloon than startup nexus. And to close us out on the startup side, Nigerian online teaching platform KLAS put together a million bucks in pre-seed funding led by Ingressive Capital with participation from tech stars.

• 7:40Speaker 00

  Now, KLAS offers a kind of standard edtech suite of things, including class scheduling, payments, community features, analytics, that sort of thing. But like fintech, edtech has taken so many body blows in recent years. It's just great to see folks still building in the startup area so that we can all learn.

• 8:00Speaker 00

  One venture capital story to close out your fine morning. And this time it's early stage European venture capital firm, episode one. It just closed its third fund worth 76 million pounds or about $95 million. And the London-based investor does use in-house data-driven deal tools to help it find the next thing. We'll be able to see how good those tools work when this fund matures. Episode one claims that around one-third of its funds LPs are former or current founders. So we can think of it a little bit like a founders fund for the UK. The firm is going to target investments between a quarter million and three million pounds at both the pre-seed and seed stage level. And of course, has an eye for its local market in the UK.

• 8:43Speaker 00

  It's going to focus on putting money into software companies in the AI, infra, health, and open source spaces, which means it's going to invest in the same software companies as everyone else. Still, good to see more capital in Europe at the earliest stages.

• 8:59Speaker 00

  And that is all the time we have on this absolutely lovely Wednesday morning. But don't worry, Equity is back on Friday with our news roundup. And if you need even more from us in the meantime, we are EquityPod on both X and Threads. And if you are a TikTok type, well, we are Tech Launch Pods over on that platform. Just before I let you go, don't forget, we have two sister podcasts, Chain Reaction, focused on all things crypto, and Found, talking to founders about how they built what they did. All right, this is Alex. This is Wednesday. We're done. I'll talk to you soon. Bye.

• 9:33Speaker 00

  Equity is hosted by myself, Alex Wilhelm, and TechCrunch senior reporter, Mary Ann Azevedo. We are produced by Teresa Locan Solo with editing by Kel. Bryce Durbin is our illustrator and a big thank you to the audience development team and Henry Pickavet, who manages TechCrunch Audio Products. Thank you so much for listening and we'll talk to you next time.