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Robinhood files confidentially to go public
Today Bloomberg reported, and Axios confirmed that Robinhood has filed privately to go public. The well-financed Robinhood is an American fintech company that provides zero-cost trading services to consumers.
Private IPO filings have become common in recent quarters, making Robinhood’s decision to file behind closed doors before showing its numbers to the public unsurprising. That it has filed privately, however, implies that the company is closer to a public debut than we might have anticipated.
Robinhood has long been expected to have a 2021 IPO in its plans. The company has not yet responded to an inquiry from TechCrunch regarding the news of its private IPO filing.
There are several reasons why Robinhood may be interested in a near-term public debut, despite running into controversies in recent quarters. No amount of time in front of Congress, bad PR from a user’s suicide, or settlements with the SEC can change the fact that today’s stock market favors growth, something that the company has in spades. Or that recent IPOs have been rapturously received by public investors as a cohort; it’s a warm time to pursue public-market liquidity.
The company’s revenue expanded greatly in 2020, something that TechCrunch has covered through the lens of Robinhood’s payment for order flow, or PFOF income. The company told Congress that the particular revenue source was the majority of its top line, meaning that PFOF growth is a reasonable comp for the company’s aggregate growth. And as TechCrunch has reported, those numbers rose sharply in 2020, from around ~$91 million in Q1 2020, to ~$178 million in Q2 2020, and ~$183 million and ~$221 million in the third and fourth quarter of last year.
Robinhood also makes money from consumer subscriptions, and other sources.
The fact that Robinhood has filed privately implies that it will go public sometimes soon, though perhaps not quickly enough to get around providing Q1 2021 numbers. More when we get our hands on the filing.
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Kargo unveils its new Fabrik publishing system
Digital advertising company Kargo is launching a new product and new business unit called Fabrik.
Founder and CEO Harry Kargman explained that Fabrik is a content management system designed for publishers’ modern needs and integrated with Kargo’s advertising technology.
Kargman suggested that he sees this as part of Kargo’s broader mission of “saving publishing.” That might seem like a tall order for an ad business, but he said the company has tried to do that “by driving extraordinary ad experiences and monetization.” And yet, he’s come to realize, “That’s not enough.”
In particular, Kargman came to realize that many websites have “too much weight” and load far too slowly (to illustrate his point, he loaded the TechCrunch homepage, and it was indeed slower than I would like). This drives readers away and also has a detrimental effect on Google search rankings.
So the goal with Fabrik is to create a “lightning fast” web experience, which you can see for yourself on the OK Magazine website. Fabrik says that one of the key steps to achieving this speed is by eliminating the need for third-party trackers and plugins — in fact, Kargman described plugins as “the death of the internet” and told me he often asks publishers, “Do you want to make money, or do you want to have a lot of plugins?”
“We built it for Google’s best practices and the core Web Vitals,” added COO Michael Shaughnessy. “We’re very strategic about how we load items that would really slow us down.”
This launch comes as many publishers are exploring business models beyond advertising, such as subscriptions and memberships. Shaughnessy suggested that Fabrik is complementary to those efforts, because it’s “simplifying the foundation,” thus freeing teams to focus on new commercial initiatives.
As for the advertising side, Kargman said, “We think we’ve built our adtech directly into Fabrik in a way that there’s absolutely no reason not to use Kargo — but certainly, it doesn’t require you to exclusively use Kargo. We expect publishers to monetize their own sites, to cut branded entertainment deals, to do all the good things that they do.”
And as previously mentioned, the plan is for Fabrik to be a separate business unit under the Kargo’s corporate umbrella, with its own customers and its own CEO — Kargman said he’s talking to a potential hire, but it’s “not quite ready yet to announce.”
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Clubhouse UX teardown: A closer look at homepage curation, follow hooks and other features
Clubhouse, the social audio app that first took Silicon Valley by storm and is now gaining much wider appeal, is an interesting user experience case study.
Hockey-stick growth — 8 million global downloads as of last month, despite still being in a pre-launch, invite-only mode, according to App Annie — is something most startups would kill for. However, it also means that UX problems can only be addressed while in “full flight” — and that changes to the user experience will be felt at scale rather under the cover of a small, loyal and (usually) forgiving user base.
In our latest UX teardown, Built for Mars founder and UX expert Peter Ramsey and TechCrunch reporter Steve O’Hear discuss some of Clubhouse’s UX challenges as it continues to onboard new users at pace while striving to create enough stickiness to keep them active.
Homepage curation
Peter Ramsey: Content feeds are notoriously difficult to get right. Which posts should you see? How should you order them? How do you filter out the noise?
On Clubhouse, once you’ve scrolled past all the available rooms in your feed, you’re prompted to follow more people to see more rooms. In other words, Clubhouse is inadvertently describing how it decides what content you see, i.e., your homepage is a curated list of rooms based on people you follow.
Except there’s a problem: I don’t follow half the people who already appear in my feed.
Image Credits: Clubhouse
Steve O’Hear: I get it. This could be confusing, but why does it actually matter? Won’t people just continue to use the homepage regardless?
Peter: In the short term, yes. People will use the homepage in the same way they’d use Instagram’s search page (which is to just browse occasionally). But in the long term, this content needs to be consistently relevant or people will lose interest.
Steve: But Twitter has a search page that shows random content that I don’t control.
Peter: Yeah, but they also have a home feed that you do control. It’s fine to also have the more random “slot machine style” content feed — but you need the base layer.
The truth about aha moments
Peter: In the early days of Twitter, the team noticed something in their data: When people follow at least 30 others, they’re far more likely to stick around. This is often described as an “aha moment” — the moment that the utility of a product really clicks for the user.
This story has become startup folklore, and I’ve worked with many companies who take this message too literally, forgetting the nuance of what they really found: It’s not enough to just follow 30 random people — you need to follow 30 people who you genuinely care about.
Clubhouse has clearly adopted a similar methodology, by pre-selecting 50 people for you to follow while signing up.
Have you noticed that some people have accumulated millions of followers really quickly? It’s because the same people are almost always recommended — I tried creating accounts with polar opposite interests, and the same people were pre-selected almost every time.
At no point does it explain that following those 50 people will directly impact the content that is available to you, or that if your homepage gets uninteresting, you’ll need to unfollow these people individually.
But they should, and it could look more like this:
Steve: Why do you think Clubhouse does this? Laziness?
Peter: I think in the early days of Clubhouse they just wanted to maximize connections, and by always recommending the same people (Clubhouse’s founders and investors), they could somewhat control the content that is shown to new users.
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Y Combinator’s new batch features its largest group of Indian startups
Y Combinator’s latest batch — W21 — features 350 startups from 41 nations. Fifty percent of the firms, the highest percentage to date, in the new batch are based outside of the United States.
India is the second-largest demographic represented in the new batch. The world’s second-largest internet market has delivered 43 startups in the new batch, another record figure in the history of the storied venture firm. (For comparison, the W20 batch had 25 Indian startups, up from 14 in S20, 12 each in S19 and W19 and one each in W16, S15 and W15.)
“YC going remote has helped make YC more attractive to companies at different stages and far away geographies. For companies in India, founders no longer have to spend three months away from their customers or teams. Covid has also taught us that building a program that is remote and more software based makes YC more accessible to founders around the globe,” the firm said in a statement to TechCrunch.
“When it comes to choosing founders in India, we accept them based on the same criteria we judge companies from anywhere else. Founders must be able to communicate their local context to investors. That is an important skill.”
Here’s a list of startups, in no particular order, from India that have made it to YC W21, with some context — wherever possible — on what they are attempting to build (several have elected to stay off the record).
QuestBook, from CreatorOS, is an app for professionals to teach in bite-sized courses using chat and a mobile-first experience. We wrote about CreatorOS last year.
Leap Club is attempting to build a Good Eggs for India. Leap Club users can order fresh and organic groceries sourced from local farms through the startup’s website or through WhatsApp. The startup says it delivers the item to customers within 12 hours of harvesting. Leap Club is already garnering over $14,000 in monthly revenue.
CashBook is building a cash account app for small businesses in India. There are over 60 million small businesses in the country, nearly all of which currently rely on traditional ways — pen and paper — for bookkeeping. The startup launched its app just six months ago and has already amassed 200,000 monthly active users. In the month of February, CashBook logged cash transactions of $511 million.
GimBooks is attempting to solve a similar problem as CashBook, though from a different angle. The startup says it offers industry-based invoicing and bookkeeping with integrated banking and payments. Its app has been downloaded more than 1.4 million times, amassed over 11,000 paying customers and clocked revenues of over $450,000.
BusinessOnBot is banking on the popularity of WhatsApp in India, where the Facebook-owned app has amassed over 450 million monthly active users. BusinessOnBot says it is building Shopify on WhatsApp for direct-to-consumer brands and small and medium-sized businesses, helping them acquire users and automate sales.
ZOKO is helping businesses do sales, marketing and customer support on WhatsApp.
Prescribe is a Shopify for hospitals. Its platform is aimed at helping doctor’s offices run their business online. Users can book appointments, chat with the doctor, pay and refer friends on WhatsApp.
Chatwoot is an open-source customer engagement suite alternative to Intercom and Zendesk. Over 1,000 companies are already using Chatwoot and it’s clocking $32,000 in ARR from six customers.
Weekday is helping companies hire engineers who are crowdsourced by their network of scouts. The startup says it has found a way to solve the biggest problem with referrals — that it doesn’t scale.
Fountain9 helps food brands and retailers reduce food wastage. According to some estimates, over $260 billion worth of food is wasted every year due to mismanaged inventory.
Dyte is attempting to build a Stripe for live video calls. The startup says a firm can integrate its branded, configurable and programmable video calling service within 10 minutes using the Dyte SDK.
YourQuote has built a writing platform, with over 100 million posts. It has over 250,000 daily active users. The startup clocked revenues of $200,000 last year and is profitable.
Fifthtry is building a GitHub for product documentation. The tool blocks code changes until documentation has been approved. It has piloted its tool with three companies, all of which have over 100 developers. The startup plans to launch its tool publicly next month.
Voosh is building an OYO for restaurants and dark kitchens in India, helping them improve their economics using tech.
Kodo is building a Brex for India, helping Indian startups and small businesses secure corporate credit cards. (Banks and other credit card companies are still not addressing this opportunity. The problem Brex solved in the U.S. is even acute in India, Deepti Sanghi, co-founder and chief executive of Kodo, said in the presentation.
Krab provides instant loans for trucking companies in India. India’s logistics market, despite being valued at $160 billion, remains one of the most inefficient sectors that continues to drag the economy. In recent years, a handful of startups have started to explore ways to work with trucking companies.
Bueno Finance says it wants to help the next billion users in India get access to financial services. It says it wants to solve for short-term cash needs of customers by using digital credit card over UPI. It was to build a Chime for India, and has amassed 70,000 customers.
Betterhalf is building a Match.com for 100 million Indians. It says it is generating $75,000 in monthly revenues, a figure that is growing 30% every month.
Pensil is helping teachers who use YouTube monetize their courses. “YouTube is the largest education platform in India — but it’s not built for teachers,” said Surender Singh, co-founder of Pensil, at the presentation on Tuesday. The startup has built tools to allow teachers to create content, facilitate discussions and collect payments.
AcadPal operates an eponymous app for India’s 10 million teachers to share homework with a tap. The startup is attempting to target a $1.4 billion market, which consists of over 400,000 private schools.
Pragmatic Leaders is attempting to build a platform to provide cost-effective alternative to an MBA. It is already clocking a monthly revenue of $112,000 and is cash-flow positive.
Splitsub is addressing a problem that tens of millions of users in India face — subscription fatigue. It says it has built a Pinduoduo for online subscriptions in India, allowing group buying and sharing of online subscriptions for services such as Netflix and Spotify.
Zingbus has built a platform for bus travel between Indian cities. (Several startups in India are helping users get cabs, three-wheelers autos and two-wheelers bikes. Buses have remained largely untapped.)
Tilt is building a docked bike-sharing platform for Indian campuses. The startup, which has generated about $20,000 in revenues this month so far, says it has been profitable for the past 18 months.
FanPlay is a platform for social media influencers, helping them monetize by playing mobile games with their fans and followers.
(Also read: Why Y Combinator Went 8,725 Miles Away From Mountain View To Find The Next Big Startup)
In India only a fraction of the nation’s 1.3 billion people currently have access to insurance and some analysts say that digital firms could prove crucial in bringing these services to the masses. According to rating agency ICRA, insurance products had reached less than 3% of the population as of 2017.
An average Indian makes about $2,100 a year, according to the World Bank. ICRA estimated that of those Indians who had purchased an insurance product, they were spending less than $50 on it in 2017.
Three startups in the current batch are planning to disrupt this market, which is largely commanded by state and bank-backed insurers.
GroMo is an app for independent agents to sell insurance in India. Most insurance policies in India are sold by agents. The startup says it is already generating monthly revenues of over $200,000.
Bimaplan is attempting to replace the agents with an app and reach users by a referral network. The app launched last month and has already sold 700 policies this month.
BimaPe helps users better understand their policies, and make informed decisions about whether those policies are right for them. The startup, leveraging New Delhi’s new regulations, is using a government issued ID card to fetch insurance policies.
Codingal is an online, after-school program for K-12 students in India to learn computer science. There are roughly 270 million K-12 students in the country.
Unschool provides professional education for college students in India. The founders say, “As former leaders in youth-run organisations with 3,000 members and edtech startups in India, we saw how colleges are not preparing students for the real world.”
Flux Auto builds self-driving kits for trucks.
SigNoz is an open-source alternative to DataDog, a $30 billion company, helping developers find and solve issues in their software deployed on cloud. The startup says recent laws such as GDPR and CPRA have helped drive adoption of SigNoz.
Pibit.ai are APIs to turn unstructured documents into structured data.
Invoid creates identity workflows in India. It’s tapping into a huge market opportunity: About 11 billion know-your-customers authentication is conduced by firms in India each year.
Redcliffe Lifesciences performs genetic testing and IVF treatments across India. Its revenue in March has topped $600,000.
Veera Health is an online clinic that treats Polycystic Ovary Syndrome (PCOS), a lifelong condition that affects 10-20% women in India. The startup says it launched 12 weeks ago, and 85% members have reported feeling “in control” of their PCOS after 1 month.
Snazzy is SmileDirectClub for India. The startup says it sells clear aligners that are 70% cheaper than those sold by dentists.
BeWell Digital is building the operating system for India’s 1.5 million hospitals, labs, clinics and pharmacies by starting with insurance regulatory compliance.
Triomics is operating a SaaS platform for end-to-end automation of clinical trials.
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Pre-seed round funding is under scrutiny: Is VC pandemic posturing here to stay?
All successful companies start off as a great idea, scribbled on the back of a cocktail napkin during a late-night meeting of the minds or gleaned from a fleeting inspiration that leaves you with a feeling of “I could do that better.”
For most, that’s as far as entrepreneurship ever goes, because, unfortunately, a great idea can’t raise money, develop a product or disrupt an industry.
It’s only an idea.
Investors’ heightened expectations for monetization potential and a company’s positioning within its competitive landscape are unlikely to lessen in the years to come, even in a post-COVID economy.
New data from the DocSend Startup Index show that for early-stage fundraising, particularly in the pre-seed round, founders need to approach VCs with much more than a great idea to secure funding. Our newest report on the state of pre-seed fundraising shows that investors became laser-focused on sections of the pitch deck that address monetization and business viability — signs that founders need to come to the table with better-defined businesses in order to succeed.
Do not pass go — VCs insist pitch decks meet 3 key criteria
According to the data, overall founder and VC activity took a nosedive in early 2020 once the serious nature of the pandemic became apparent. But as the year progressed and investors adjusted to the new market conditions and remote dealmaking, overall activity quickly surpassed pre-pandemic levels.
Despite this flurry of activity and an unprecedented appetite for new startup pitches, investors made it very clear that strong positioning in three sections of the pitch deck was nonnegotiable.
Image Credits: DocSend(opens in a new window)
- Competitive landscape — When we published our 2019 pre-seed report, the competitive landscape section of pitch decks was firmly in the middle of the pack in terms of time spent reviewing by investors: They averaged around 35 seconds to clearly articulate their own uniqueness and product-market fit. In 2020, the VC time spent on the same section increased by 51% to an average of 53 seconds across both successful and unsuccessful decks (those that did or did not lead to a funding offer).
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Superhuman CEO Rahul Vohra is coming to TechCrunch Early Stage in July
The frequent difficulty of founders finding product-market fit has been a topic of constant (and ever-evolving) discussion at TechCrunch conferences over the years.
Superhuman founder and CEO Rahul Vohra will be joining us at TechCrunch Early Stage: Marketing & Fundraising in July to dive into the much-obsessed topic of product-market fit. We’re looking to dig into what exactly finding product-market fits means to the startup ecosystem of 2021.
The repeat founder’s email service platform has raised more than $33 million in funding from firms like Andreessen Horowitz and First Round Capital, providing users with an algorithmically-sorted email app that has set a lot of trends in emerging enterprise software on both the design and go-to-market strategy front.
The startup is oft-referenced as a prime example of the “consumerization” of enterprise software trend which has seen more and more workplace SaaS apps level-up their focus on user-centric design. We’ll ask him how he feels about the fact that “Superhuman for X” has grown to be a fairly common formula for workplace elevator pitches.
We’ll also talk with him about how he found an audience for a $30 per month subscription app and how the company has scaled its product to meet their customers’ other needs. In addition to the hat he wears as the founder of Superhuman, we’ll ask him about how he views the challenge from the other side of the table as a prolific angel investor. The fund that he manages with Eventjoy founder Todd Goldberg announced a $7 million fund last year and the duo has backed several startups, including Clubhouse, Mercury and Coda.
We think it’s going to be a conversation you can’t miss and it’s just one part of a two-day event exploring the many aspects of early-stage startups this July. And if you move fast, you can check out Rahul’s session in July as well as all of the great content happening at TC Early Stage: Operations & Fundraising in April with a dual event ticket — check out the entire April event agenda lineup here.
Our first TC Early Stage event is coming up fast, so be sure to grab your dual event ticket to TC Early Stage on April 1-2 and July 8-9 to save $100 or more before prices increase this Friday.
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Stock trading app Freetrade raises $69 million
U.K. challenger stockbroker Freetrade has raised a $69 million Series B round led by Left Lane Capital. The growth fund of L Catterton and existing investor Draper Esprit also participated. Freetrade operates a stock trading app and has managed to attract 600,000 users in the U.K. — they generated £1 billion in quarterly trade volume.
Freetrade has reached a post-money valuation of $366 million following today’s funding round. In December 2020, the company generated $1.4 million in revenue.
After signing up, Freetrade lets you buy and sell shares from the company’s mobile app. If you want to invest in companies with expensive shares, such as Alphabet (Google’s parent company), you can buy fractional shares. Instead of spending over $2,000 for a single share, you can buy one-tenth of a share for one-tenth of the price.
Freetrade lets you access U.S. and U.K. stocks as well as ETFs. Like Robinhood in the U.S., the company doesn’t charge any trading commission for basic orders — there’s a 0.45% foreign exchange fee on transactions in foreign currencies. Unlike Robinhood, the company doesn’t want to push you toward day trading.
In addition to free general investment accounts, Freetrade offers individual savings accounts (ISA). It’s a type of account specific to the U.K. that encourages long-term investments as tax on capital gains goes down over time. Freetrade charges £3 per month to open an ISA.
The company also offers pension savings accounts (SIPP). You get tax relief on contributions. If you live in the U.K., you’re probably familiar with SIPP. Those accounts cost £9.99 per month.
Finally, Freetrade has a premium plan for its most engaged users. You can pay £9.99 for Freetrade Plus. After that, you get 3% interest on cash up to £4,000, more stocks and more order types (limit and stop loss orders). You also get a free ISA and a discount on your SIPP.
As you can see, Freetrade is betting heavily on subscription revenue combined with a freemium approach. People who just want to buy a few shares probably stick with free accounts. But people who want to convert part of their savings into stocks and ETFs will likely end up subscribing to a tax-efficient account or a Freetrade Plus subscription.
With today’s funding round, the company plans to expand its product beyond its home country. You can expect some European expansion moves in the future.
For instance, Freetrade plans to launch in France with 5,000 stocks and ETFs from major European, U.K. and U.S. exchanges. Freetrade will support PEA, France’s equivalent of ISA, for €3 per month. And users will be able to subscribe to Freetrade Plus for €9.99 per month.
In other words, it’s going to be a very similar product in France and in the U.K. While there’s no dominant stock trading app in France, German startup Trade Republic recently launched its app on the French market. It’s going to be interesting to see how these two startups grow outside of their home countries.
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Startups book an expo booth at TC Sessions: Mobility 2021 to double down on connection and exposure
When it comes to fast-moving technology, mobility zooms ahead of the pack — both literally and figuratively. Early-stage startup founders and investors need to keep their fingers on the sector’s very rapid pulse and the best place to do that is, you guessed it, TC Sessions: Mobility 2021 on June 9.
If you’re eager to introduce your early-stage startup to the top leaders, investors, experts and policy makers across the mobility tech community, don’t just attend TC Sessions: Mobility — exhibit there. Double down on essential exposure and increase your opportunities.
Budget-friendly tip: The early-bird price remains active until May 5 at 11:59 pm (PST). Buy your Startup Exhibitor Package before the deadline hits and save 35 percent.
Talk about a rapt audience. One big reason people attend the show is to see and meet exciting, innovative new startups. A Startup Exhibitor Package lets you showcase your tech, build your network and expand your opportunities for growth and success. Here’s what your package includes (Note: They’re available only to pre-Series A, early-stage startups).
- Virtual booth space: Display your pitch deck, host a video display and demo your products.
- Lead generation: Track booth visitors for easy post-show follow-up.
- Event passes: The package price includes four passes to TC Sessions: Mobility. Bring your team and increase your networking opportunities.
- Full event access: You can tune in to all presentations on every stage.
- Video on-demand: No FOMO for you. You’ll have VOD access to all presentations after the show ends.
- Breakout sessions: Don’t miss these presentations, each with a special focus.
- Networking: Whether you connect on the fly using the virtual platform’s chat feature or find specific people and schedule meetings using CrunchMatch, our AI-powered networking platform, you’ll make connections to drive your mobile business forward.
Keeping with the networking theme, this is how Karin Maake, senior director of communications at FlashParking, described her experience.
“TC Sessions: Mobility isn’t just an educational opportunity, it’s a real networking opportunity. Everyone was passionate and open to creating pilot programs or other partnerships. That was the most exciting part. And now — thanks to a conference connection — we’re talking with Goodyear’s Innovation Lab.”
Don’t miss your chance to sashay your superior stuff in front of the mobility industry’s leading mover, shakers and makers. Buy a Startup Exhibitor Package now, save 35 percent and get ready for TC Sessions Mobility 2021.
Is your company interested in sponsoring or exhibiting at TC Sessions: Mobility 2021? Contact our sponsorship sales team by filling out this form.
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Discord’s reported $10B exit; Compass and Intermedia Cloud Communications set IPO price ranges
It’s demo day for the current Y Combinator class, so we’ll have a largely early-stage focus at TechCrunch today. But there’s also a host of late- and super-late-stage news this morning that matters.
Let’s get to all of it before we start to talk accelerators, overheated pre-seed valuations and the like.
The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.
There are three things to discuss. First, the possible $10 billion exit of Discord to Microsoft. Discord is a well-financed unicorn that has raised oodles of capital and reportedly sports rapidly expanding revenues. Our goal will be to vet whether the price tag in question makes any sense, or if it is too low.
Second: Real estate tech company Compass has set an IPO price range we need to explore. Is its resulting valuation strong? Does it line up with its recent financial performance?
And, third, Intermedia Cloud Communications has priced its IPO. We’re behind on this entire debut, so we’ll take a second to riff on what the company does and what it is worth.
It’s a lot. But if we don’t get through it all now, we’ll fall behind and feel silly later. Let’s get to work!
Discord and Microsoft
Microsoft might be getting good at community, which is an odd thing to say about the enterprise software and cloud computing giant. The company’s Xbox gaming ecosystem has survived the test of time, Github is doing fine under Microsoft’s auspices, and Minecraft seems unharmed by Redmond’s stewardship.
That means gamers, developers and kids are all content to hang with Satya Nadella and company. Adding Discord to the mix might give Microsoft even more tooling to augment its existing communities, or perhaps tie them more closely together. But that’s all product news, which isn’t our remit. Let’s talk numbers.
The New York Times reported that Discord has “held deal talks with Microsoft for a transaction that could top $10 billion.” That figure has been widely reported, so we’ll use it for our work.
With a possible valuation in hand, we need revenue numbers to figure out if the possible sale price makes any sense. Happily, we have somewhat fresh numbers: The Wall Street Journal reported earlier this month that Discord “generated $130 million in revenue [in 2020], up from nearly $45 million in 2019.”
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OneTrust adds ethics to its privacy platform with Convercent acquisition
OneTrust, a late stage privacy platform startup, announced it was adding ethics and compliance to the mix this morning by acquiring Convercent, a company that was built to help build more ethical organizations. The companies did not share the purchase price.
OneTrust just raised $300 million on a fat $5.1 billion valuation at the end of last year, and it’s putting that money to work with this acquisition. Alan Dabbiere, co-chairman at OneTrust sees this acquisition as a way to add a missing component to his company’s growing platform of services.
“Integrating Convercent instantly brings a proven ethics and compliance technology, team, and customer base into the OneTrust, further aligning the Chief Ethics & Compliance Officer strategy alongside privacy, data governance, third-party risk, GRC (governance, risk and compliance), and ESG (environmental, social and governance) to build trust as a competitive advantage,” he said.
Convercent brings 750 customers and 150 employees to the OneTrust team along with its ethics system, which includes a way for employees to report ethical violations to the company and a tool for managing disclosures.
Convercent can also use data to help surface bad behavior before it’s been reported. As CEO Patrick Quinlan explained in a 2018 TechCrunch article:
“Sometimes you have this interactive code of conduct, where there’s a new vice president in a region and suddenly page views on the sexual harassment section of the Code of Conduct have increased 200% in the 90 days after he started. That’s easy, right? There’s a reason that’s happening, and our system will actually tell you what’s happening.”
Quinlan wrote in a company blog post announcing the deal that joining forces with OneTrust will give it the resources to expand its vision.
“As a part of OneTrust, we’ll be combining forces with the leader across privacy, security, data governance, third-party risk, GRC, ESG—and now—ethics and compliance. Our customers will now be able to build centralized programs across these workstreams to make trust a competitive differentiator,” Quinlan wrote.
Convercent was founded in 2012 and has raised over $100 million, according to Pitchbook data. OneTrust was founded in 2016. It has over 8000 customers and 150 employees and has raised $710 million, according to the company.
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