Welcome back to The TechCrunch Exchange, a weekly newsletter for startups and markets. It’s based largely on the daily column that appears on Extra Crunch, but it’s free and made for your weekend reading. Would you like it in your inbox every Saturday morning? Login here.
The earnings season is coming to an end, and public tech companies are finalizing their fourth quarter and 2020 results. We don’t care too much about the results of the bigger players here at TechCrunch, but smaller tech companies that we knew as small startups can provide startup-related data points that are worth digging into. As a result, The Exchange spends time each quarter talking to a variety of CEOs and CFOs to find out what’s going on so we can get the information out to private companies.
Sometimes it comes in handy, as our chat with the recent Fintech IPO Upstart proved after talking to the company about the increasing adoption of AI in conservative banking.
This week we met with Howard Lerman, CEO of Yext, and Mark Mader, CEO of Smartsheet. Yext develops data products for small businesses and places its future on search products. Smartsheet is a collaboration, no-code, and future of work software company.
They are really quite different companies. However, what they shared throughout the profit cycle this time around was macro notes or details about their financial forecast and the economic conditions they expected. As a macro nerd, it piqued my interest.
Yext cited a number of macro headwinds when reporting its fourth quarter results. And to relate its future results somewhat to an uncertain macro image, the company said it was “based” [its] Terms and conditions guide [it sees for itself] and [its] Customers currently with the macroeconomy, which is still sluggish, and customers who remain cautious, ”a log said.
Lerman told The Exchange that it wasn’t clear when the world would open – something that matters to Yext’s location-based products – and the company managed the year like nothing would change. Wall Street didn’t love it, but when the economy improves, Yext doesn’t have big hurdles to jump over. This is one approach a company can take when talking about guidelines.
Taking a slightly different approach, Smartsheet said in its call for results that its “Fiscal 22 year guidance is for a gradual improvement in the macro environment in the second half of the year.” Mader said in an interview that his company doesn’t hire economists, they just listen to what others say.
He also said the macro climate is more important in saturated markets, which he believes Smartsheet is not. Hence, the results should be more influenced by things like “the secular move to the cloud and digital transformation” to quote the profit call.
What the economy will do this year is very important for startups. An improving economy could boost interest rates, make money a little more expensive, and make bonds more attractive. Valuations could see slight downward pressure in this case. And venture capital could slow down a little. But with Yext predicting like it’s facing a flat road, and Smartsheet is just expecting things to get faster by the third quarter, it’s likely that what we have now is mostly what we’re going to get .
And things are pretty darn good for startups right now and late-stage liquidity. So, smooth sailing for startup land? At least as far as our current perspective can tell.
We still have notes from Douglas Merritt, CEO of Splunk, on how to turn an old-school software company into a cloud-first business, and Dean Hager, CEO of Jamf, on packaging discrete software products. More of them come into seizures.
Different and different
This week there were big and small rounds. Companies like Squarespace raised $ 300 million while Airtable raised $ 277 million. On the smaller end of the spectrum, my favorite round of the week was a modest $ 2.9 million raise through Copy.ai.
But there were other rounds that TechCrunch didn’t make and that are still worth our time. So, here are a few more to try this weekend:
- A so-called Pre-Series A round for Lilli, a UK-based startup that uses sensors and other technology to track the well-being of people who may need help to live alone. It is always good for me to use technology to take care of people. The deal was valued at £ 4.5m per UKTN.
- An IPO for Tuya, a Chinese software company that raised $ 915 million on its American debut. Chinese IPOs on American indices were once a big deal. They are less common now. Surprised I missed this one, but hey, it’s busy.
- And the $ 36 million Republic Round is based on the recently expanded American crowdfunding regulations. Some startups have seen success with the approach, including Juked.gg.
Next week is the week of the Y Combinator Demo Day. So expect a lot of early stage coverage on the blog. Here’s a preview. From The Exchange, we look back at Insurtech (with data from WeFox and Insurify) and discuss Austin-based software startup AlertMedia’s decision to sell to private equity instead of raising more traditional capital.
For your reading material, be sure to check out the reviews of free trading apps, the issues with double-tier stocks, the recent IPO gain for the New York scene, and the inequality of the global corporate capital market is real.
In the end, this BigTechnology piece was good, as was this not boring essay. Hugs and a nice break