Infor lands $1.5 billion investment ahead of IPO

Infor, a NYC-based enterprise software company, announced a massive $1.5 billion investment today that could be the precursor to an IPO in the next 12-24 months. One analyst is estimating that the valuation could be at least $60 billion.

The investment is being led by Koch Industries’ investment arm, Koch Equity Development, and Golden Gate Capital. Today’s investment comes on top of a $2 billion+ cash infusion from Koch in 2017, bringing the total raised to at least more than $3.5 billion along with a hefty $6.1 billion in debt. That’s a lot of cash.

In fact, the company plans to use a large portion of today’s investment to pay down part of that debt, including $500 million in senior secured notes due in 2020, which it plans to pay off next month, and $750 million in HoldCo senior contingent cash pay notes due in 2021, which it plans to pay off in May. The thinking is that the company wants to reduce its debt load ahead of its IPO.

“We expect this paydown, in combination with cash flows and estimated IPO proceeds, will provide Infor with leverage levels consistent with other successful IPOs over the past few years,” Infor CFO Kevin Samuelson explained during an investor call today.

The company wouldn’t rule out additional investments before going public, but it was looking firmly toward an IPO. “We’ve spoken for some time about the many advantages that we believe Infor will receive if the company goes public, including improved brand recognition, a broader employee equity program, additional currency for M&A and more financial clarity for our customers and prospects,” Samuelson said.

Infor may be the largest company you never heard of, with more than 17,000 employees and 68,000 customers in more than 100 countries worldwide. All of those customers generated $3 billion in revenue in 2018. That’s a significant presence.

Ray Wang, founder and principal analyst at Constellation Research, told TechCrunch that based on that revenue, he believes the valuation could be in the neighborhood of $60 billion. He based that on $3 billion in revenue, while using Oracle and SAP as similar industry comparisons. These companies have a 20X price/earnings ratio. He adds, that would make it the largest tech IPO ever for a NYC tech company if that comes to pass. Infor would not confirm this number with a spokesperson telling TechCrunch, “We cannot comment on value at this time.”

What does this company do to achieve this size and scope? It’s not unlike many other large enterprise companies, says Wang. It produces cloud software solutions around typical enterprise needs such as CRM, ERP and supply chain asset management.

Daniel Newman, principal analyst at Futurum Research, says that Infor has grown rapidly through a series of acquisitions and an unusual approach to enterprise software. “What makes its approach to enterprise software unique is that rather than building software and then attempting to customize it for the unique [customer] needs, Infor takes an industry-based approach that incorporates both subtle and material capabilities to address specific industry needs that more generic ERP tools aren’t capable of out of the box,” Newman told TechCrunch.

He adds that this difference is attractive to many companies seeking ERP and enterprise asset management tools that are built with their business in mind, rather than completely customizing a software designed for any business in any industry.

As it turns out, Koch isn’t just an investor, it’s an Infor customer. “Koch was a customer of Infor before we became an investor in the company, and Koch Industries’ companies continue to move their most mission critical applications to Infor CloudSuites,” Jim Hannan, executive vice president and CEO for Enterprises at Koch Industries said in a statement.

The company, which was founded way back in 2002, has been shifting to the cloud over the last five years. It reports that more than 70 percent of its revenue is now derived from cloud products, fueled in part by an aggressive acquisition strategy.

HyperScience, the machine learning startup tackling data entry, raises $30 million Series B

HyperScience, the machine learning company that turns human readable data into machine readable data, has today announced the close of a $30 million Series B funding round led by Stripes Group, with participation from existing investors FirstMark Capital and Felicis Ventures, as well as new investors Battery Ventures, Global Founders Capital, TD Ameritrade and QBE.

HyperScience launched out of stealth in 2016 with a suite of enterprise products focused on the healthcare, insurance, finance and government industries. The original products were HSForms (which handled data-entry by converting hand-written forms to digital), HSFreeForm (which did a similar function for hand-written emails or other non-form content) and HSEvaluate (which could parse through complex data on a form to help insurance companies approve or deny claims by pulling out all the relevant info).

Now, the company has combined all three of those products into a single product called HyperScience. The product is meant to help companies and organizations reduce their data-entry backlog and better serve their customers, saving money and resources.

The idea is that many of the forms we use in life or in the workplace are in an arbitrary format. My bank statements don’t look the same as your bank statements, and invoices from your company might look different than invoices from my company.

HyperScience is able to take those forms and pipe them into the system quickly and easily, without help from humans.

Instead of charging by seat, HyperScience charges by documents, as the mere use of HyperScience should mean that fewer humans are actually “using” the product.

The latest round brings HyperScience’s total funding to $50 million, and the company plans to use a good deal of that funding to grow the team.

“We have a product that works and a phenomenally good product market fit,” said CEO Peter Brodsky. “What will determine our success is our ability to build and scale the team.”

Techstars will build and launch startups with new venture studio

Similar to Y Combinator, early-stage technology startup accelerator Techstars has spent much of the last decade supporting and seeding innovative projects, including Plated, ClassPass, SendGrid and PillPack. Now, it wants to take its service a step further.

Today, Techstars is announcing the launch of Techstars Studio, a new venture that will have the accelerator developing and launching venture-scale businesses with the support of several corporate partners. Leveraging its large network of entrepreneurs, Techstars has invited large companies to co-create startups targeting specific challenges within their industry. Techstars says it has signed on 25 corporate partners so far, each of which will pay an annual membership fee to access an early look at the Techstars Studio projects, as well as updates from the team, as concepts transition into prototypes then to full-fledged companies.

Techstars Studio plans to complete four full spin-outs per year and will identify talent from within its network to lead each venture. The companies will be seeded with a varying amount of capital depending on the business’s needs.

The news is the latest in a series of developments from within Techstars that illustrate the accelerator’s bid to marry corporations and the startup ecosystem. On top of the startup studio, Techstars announced in September a Network Engagement Program, which offers concierge-style connections for corporations looking to build relationships with startups and a 54-hour Innovation Bootcamp, which teaches corporate employees “to rapidly identify and validate solutions for critical business problems.”

“We think of ourselves as the worldwide network that helps entrepreneurs succeed — this will help entrepreneurs in our world be successful,” Techstars co-founder and co-chief executive officer David Cohen told TechCrunch. “We have the history and the talent to do it but this is new for us, so we have to build that muscle.”

Cohen will lead the studio along with portfolio co-founder Isaac Saldana, who will serve as chief technology officer. Saldana co-founded Techstars-backed SendGrid, an email platform acquired by Twilio for $2 billion in October. Mike Rowan, SendGrid’s former vice president, and Sabrina Kelly, Techstars VP of talent, have also joined the new effort.

A slew of Techstars-backed founders have also signed on to advise the projects, including the founders of Remitly, Sphero and DataRobot.

Founded in 2006, Techstars now operates 44 programs in 14 countries with more than 1,600 companies in its portfolio.

Instamojo raises $7M to help SMEs and ‘micro-entrepreneurs’ in India sell online

In India, startups are quietly building the tools and platforms to enable a different kind of gig economy: one that allows “micro-entrepreneurs” to tap growing access to the internet to sell goods and services online.

One such firm helping this burgeoning economy is Instamojo, a seven-year-old Bengaluru-based startup, which has pulled in a $7 million Series B as it aims to grow its reach to more than one million SMEs and micro-SMEs in India.

Founded in 2012 as a side project, Instamojo offers independent merchants the means to operate a mobile-optimized storefront, collect payment and even take micro-loans. In an interview with TechCrunch, CEO and co-founder Sampad Swain said the company has some 650,000 merchants, and it is adding a further 1,200 daily. Most of them, he said, tend to earn less than $30,000 in annual sales; with around half selling physical products, such as e-commerce items, and the remainder using Instamojo to invoice for physical services or sell digital items such as courses.

The idea is to tap into those just testing the water of online commerce and give them the tools to ramp up their fledgling enterprise as India’s internet “population” rises past 400 million people.

“A lot of micro-merchants in India are adopting [India’s payment service] UPI [through services like Paytm and PhonePe] but once they become a little more serious, at around 10-20 sales per month, we ask: ‘Can we give you lending, logistics, online store?’” explained Swain, who started the business with co-founders Akash Gehani and Aditya Sengupta.

It’s a market that few banks or financial institutions care about because small loans and sales require enormous scale to be relevant to them. But Swain is bullish, and he believes the company will pass one million retailers this year.

The new funding is led by existing investor AnyPay — the Japanese fintech startup — with other returning backers Kalaari Capital and Beenext, and angel investor Rashmi Kwatra joining. Gunosy Capital, the VC arm of Japanese news app Gunosy, joined as a new investor. The deal takes Instamojo to around $9 million from investors to date.

Instamojo collects revenue through a two percent cut on sales, a fee on successful deliveries and commission on its micro-loan product, which essentially gives merchants advanced credit (same-day or next-day) on their sales. The loans — which Swain describes as “sachet” lending — are from Instamojo’s recently established Mojo Capital unit, which includes partnerships with 12 financial organizations. In just four months, Instamojo has dished out around $4 million in credit — through 50,000-odd dispersions — and Swain predicts it will scale to a $30 million run rate before the end of this year.

“Even I am surprised!” he said of the rapid uptake.

Instamojo founders [left to right] Akash Gehani, Sampad Swain and Aditya Sengupta

Unlike Meesho, a YC-backed micro-entrepreneurship service in India that recently raised $50 million, Instamojo isn’t dominated by e-commerce to friends, family and neighbors. Swain said typical Instamojo sellers look to access audiences outside of people they know, with platforms like YouTube, Facebook, WhatsApp and others commonly used to reach audiences. Instamojo’s big selling point is ease of sale; that’s through a unique link that sellers share with customers for the check-out, therein bypassing some of the challenges of online payment in India, which include somewhat cumbersome steps for card transactions.

“Sellers just create a link and share it with the customer,” Swain explained. “Essentially they click and check out with debit or credit card or other means. Over the years we realized that’s the best beginning for our business.”

That was Instamojo’s first launch, and since then it has built out online store options to manage inventory and product as well as the recent credit launch. Beyond growing its scale, Swain said the next big focus is on developing a community for merchants, where they can share tips, collaborate and more. He is also aiming to increase the tech team and raise Instamojo’s headcount from 120 right now to around 250 by 2020.

For now, Swain said the company isn’t seeking overseas opportunities, although he did admit that the business could expand to regions like Africa or Southeast Asia. But more immediately, he sees a huge opportunity in India, where he believes there are 65 million SMEs, of which 25 million are “micro-merchants,” to tackle initially. The company is planning a Series C round for later this year to finance a deeper push.

Article updated 1/16/19 07:55 PST to correct the names of the company co-founders.