SaaS companies flirt with correction territory as another wild week comes to a close

Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

Stocks are set to fall further today, likely forcing shares in SaaS and cloud companies down yet again. After two wild trading weeks, the high-flying tech category is off over 9% from recent highs before the bell this morning, putting it close to correction territory. (A correction is usually defined as a decline in value of 10% or more from recent highs.)

With today’s expected declines, SaaS companies are likely set to close out Friday close to or in a formal correction. Even more notably the Bessemer cloud index, which tracks public SaaS companies, is worth less today — even before fresh declines — than it was last July. That implies that SaaS companies have not only given up recent gains; they’ve shed all their progress since last Summer.

But the news isn’t all bad. Even while all the companies that Bessemer’s handy have grown since their mid-2019 size, Bessemer is reporting a slightly expansion in the value of SaaS revenue since that date. It’s an odd moment that we’d best unpack.

Let’s observe the market data, and examine a few public SaaS companies to see its impacts. For startups, today’s dive is an attempt to understand how public market investors are valuing recurring revenue. It’s something worth grokking if you have a pricing event coming up this year. Let’s go!

Kleiner’s new fund, Atrium is kaput and the latest data on seed rounds

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

This week was packed with news, most of it pretty bad. But Zoom did well, so there’s that. Happily we had our dynamic pairing, Alex “Have I Died” Wilhelm and Danny “Good Hair” Crichton on hand to parse through it all. (A reminder that Equity now hits your podcast app twice a week, so peep us Monday mornings!)

So what was on the docket? A host of things, starting with a big new early-stage fund:

  • Kleiner has more money, again. About a year after raising a $600 million vehicle, Kleiner Perkins raised a new, larger fund. Now flush with $700 million, the longstanding venture group has more money to play with than it has in recent memory. For early-stage deals, that is.
  • Atrium shut down after raising $75 million. Investors got some of their money back, but the company had to lay off its 100 employees. The lesson here is that famous backers and tenured founders can’t will something into existence that doesn’t work.
  • OYO is laying people off. Again. The major SoftBank Vision Fund-backed Indian hotel brand was supposed to be a massive hit. Now, with novel coronavirus and other challenges, it and global tourism are hitting snags.
  • We also poked at the Robinhood downtime that came during a period of sharp trading swings. The company has a lot of work to do to recover user trust, and continue to grow into its valuation. (More on that here.)
  • Zoom was the day’s good news, posting strong earnings (here), possibly indicating that remote-work companies are seeing demand for their products.

We closed on a pair of posts from Danny based on AngelList and DocSend data that shows how signaling risk for startups has changed over the years, and how many pre-seed investors the average founder talks to during their first fundraise.

That’s all from your friendly, local Equity crew. More soon!

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

Greece’s Convert Group raises €1.2M to bring e-commerce visibility to FMCG

Convert Group, a startup based in Athens that offers a SaaS to help FMCG (fast-moving consumer goods) brands understand how they are performing across e-commerce, has raised €1.2 million in seed funding.

The investment comes from Uni.fund, which is backed by the EquiFund investment platform (an initiative created by cooperation between the Hellenic Republic and EIF). It is the first time the otherwise bootstrapped company has taken external funding since being founded in 2014 and initially offering e-commerce consultancy.

The startup’s core product — dubbed “eRetail Audit” — is described as an online platform that provides e-commerce market share data for “sell-out” consumer products (in value, units and volume). It does this by partnering with various large e-commerce platforms and stores — in data-for-data deals — in order to then be able to serve up real-time aggregated data to its own FMCG brand clients.

Rather than compete with marketing insight giants Nielsen and IQVIA, it has signed strategic partnerships as another route to market based on revenue sharing — which is pretty scrappy for an operation hailing from Greece.

“As strange as it may seem, e-commerce market share [data] for FMCGs in value, volume or units was virtually non-existent across the world,” Convert Group founder and CEO Panayotis Gezerlis tells me. “Companies like Nielsen, IRI, and IQVIA only had solutions for the traditional retail ecosystem and were not prepared for the meteoric speed FMCG online sales were increasing. We created a platform called eRetail Audit that connects to the online retailer in real-time, on a data-for-data free model, and we managed to grab online sales in extreme accuracy and detail, per SKU with basket-level aggregation and marketing data.”

To that end, Convert Group claims to have grabbed the entire Greece market, one year since pivoting from consultancy to a SaaS model (a move Gezerlis attributes to Convert Group’s first employee, Elena Chailazopoulou, who is now deputy CEO and Product Innovation Director and holds equal shares in the startup).

Two years later, Convert Group expanded to Italy and Spain and has annual contracts that include 10 out of the 15 biggest FMCG manufacturers such as L’Oreal, P&G, Unilever, J&J, The Coca-Cola Company, Nestle, RB, GSK, Henkel, Bayer, Heineken, Barilla, Colgate Palmolive, Piere Fabre, Abbott and others. This has also seen the startup partner with “hundreds” of online retailers including dominant players Carrefour and Ahold Delhaize.

Meanwhile, in November 2019, the company launched “eRetail Content,” which lets brands design their “perfect digital shelf presence” for products sold online. The SaaS offers three layers to e-commerce businesses: e-commerce product content distribution from manufacturers to online retailers (photos, videos, ingredients, SEO optimised descriptions, characteristics, searchable terms & category suggestions); e-commerce content compliance & availability monitoring by manufacturers; and onsite and off-site tracking of e-commerce activations by manufacturers & online retailers such as newsletters, social media posts, onsite display banners and Google AdWords text ads.

And just last week, Convert Group announced its third product: a data marketplace for e-commerce, or as Gezerlis calls it, “the SimilarWeb of transactional e-commerce data.” It is initially targeting the consumer healthcare industry and key account data for online pharmacies, but will soon expand to more e-commerce verticals such as online grocery and online beauty products.

Mark Cuban backs ChatableApps, developer of a hearing assist app that removes background noise

ChatableApps, a U.K. startup commercialising the work of auditory neural signal processing researcher Dr. Andy Simpson, has quietly picked up seed money from Mark Cuban. The company has built a smartphone app that provides hearing assistance by removing background noise in near real-time.

Alongside Simpson, the company’s co-founders are Brendan O’Driscoll, Aidan Sliney and George Boyle — the original team behind the music discovery app Soundwave (acquired by Spotify) — and later joined by CEO Giles Tongue, formerly of wearable tech startup NURVV, who has been tasked with taking the business forward.

“Dr Andy Simpson is our CSO [chief science officer] and inventor,” Tongue tells me. “He brings together the auditory neuroscience, auditory perception, neural signal processing and artificial Intelligence, is an AI maverick and contrarian thinker, and this unusual intersection are what has led to the creation of our proprietary ground up neuroscience-led AI. His prolific research had over 400 citations before he went into stealth mode.”

Since then, the team has been busy (although largely flying under the radar). Chatable’s hearing assistant app is available in the Play Store in open beta but is still considered “pre-launch.”

“We’re in a constant cycle of pre-clinical validation, which is going amazingly,” says Tongue. “We’ve heard ‘life changing,’ and had tears in the eyes… of early adopters.”

Chatable’s O’Driscoll says the company’s technology and approach is “completely unique” because it doesn’t use noise filtering or other DSP techniques. “It’s actually a deep learning neural net approach to speech and noise separation that doesn’t apply filters to the original audio but rather it listens and re-prints a brand new audio stream in near real-time which is a mimic of just the vocal components of the original audio,” he tells me.

Describing Chatable as a “click and go” universal hearing aid, O’Driscoll says the app has been engineered to work on any modern day £100 smartphone and with regular ear buds. “The app produces a clear and loud voice so is easy for the user to hear a conversation, and features two sliders, one to turn up volume, the other to control background noise,” he explains.

More broadly, Tongue believes the “global hearing epidemic” is the biggest health issue at scale that AI can solve, and that Chatable has an opportunity to help millions of people in a life changing way. According to the World Health Organisation there are 466 million people with disabling hearing loss. “I believe Chatable has the power to be the first app able to address a global health epidemic using an everyday smartphone,” he says.

Meanwhile, Chatable plans to generate revenue on a subscription basis, charging £9.99 per month. This is certainly designed to ensure the startup is sustainable and can continue to invest in its product for the long term. (For example, an iPhone version of the app is currently in private beta. However, I hope the price can be brought down over time so that it becomes truly affordable to everybody that needs it.)