Vertical SaaS For Your App, Coinbase Goes Shopping, And Uber’s Losses

Morning Markets: Welcome back to work, America. Here’s what’s happening in StartupLand to get you up to speed.

Hello from the frozen East Coast, where the snow has turned to ice and it’s cold enough that I’ve opted for warm espresso. It’s awful here, but happily, in the world of startups, things are still pretty hot.

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I want to hit on three things this morning, starting with a funding round. Then we’ll visit a small acquisition in crypto and close on a note regarding Uber’s latest quarterly results.

Three Cheers For  SendBird and Twilio

SendBird is riding the SaaS wave. The company, which powers messaging inside applications, just raised $52 million in a Series B round led by Iconiq Capital.

The financing comes as public companies operating in similar spaces have been posting sharp gains. Twilio in particular has been on a tear in the public markets in recent quarters. The company’s recent success, however, wasn’t always assured.

After proposing an IPO value near its final private valuation back in 2016, shares of Twilio priced at a sharper $15 per and shot higher once it began trading. After climbing north of $60 per share, Twilio lost altitude, crashing into the $20s and $30s from late 2016 into 2018.

Then its shares took off, showing investors both public and private alike that vertical SaaS companies powering other firms’ apps and services could generate toothsome revenues and winsome growth.

As TechCrunch’s Ron Miller pointed out this morning, Stripe, a popular payment processing unicorn, could be lumped in with Twilio. Along with, private-market investors hope, SendBird, which powers messaging inside applications.

How is that different than what Twilio offers? The two products actually aren’t very close; Twilio wants to supply SMS and other forms of comms for your app as needed, similar to a utility. SendBird wants to place its messaging functions into your app.

Investors appear to agree with Ron that there are similarities, however. We can surmise as such given that the investing class just fired a big Series B at the firm. Before the new round, SendBird had raised a comparatively-scant $18.7 million.

Coinbase Wants More Coins

The popular crypto company Coinbase bought Neutrino, a company that the unicorn calls “a blockchain intelligence platform.”

Why did Coinbase want the smaller company? From its blog post on the matter, this stuck out: “[Neutrino will] also help us bring more cryptocurrencies and features to more people while helping ensure compliance with local laws and regulations.” I presume that the deal means that Coinbase will bring more coins onto its platform over time.

There’s some pushback over Coinbase’s work to expand its crypto lineup; amidst the complaints, however, it’s often hard to tell at times what is pro-bitcoin drumbeating, and what is well-grounded worries about less established crypto projects receiving the Coinbase imprimatur.

The deal wasn’t priced, but as Crunchbase doesn’t have listed funding information for Neutrino, I doubt that the agreement was a tough chew for Coinbase.

Uber’s Not-Really-Slimming Losses

Here’s some correct coverage of Uber’s fourth-quarter results that we should discuss that The Information emailed out last week:

To which we need to reply: Yes, but.

Yes, but a huge tax benefit saved Uber from posting a higher Q4 net loss in 2018 than it did in 2017.

The ridehailing company’s Q4 2017 net loss came to $1.1 billion. Uber’s Q4 2018 net loss after taxes was $865 million. But Uber’s Q4 2018 net loss before the impact of income taxes was -$1.22 billion.

In short, Uber had a $358 million (benefit from) taxes that I don’t think that anyone external to the company fully understands. And since I suspect that Uber won’t be able to gin up a similar bump every quarter, perhaps we should look at some more recent profit metrics to see if the company is getting closer, or further away from profitability.

Well, in Q3 2018 Uber’s operating loss was $773 million. In the fourth quarter of the same year, that figure swelled to a $1.06 billion loss. Whoops.

Top Image Credit: Li-Anne Dias.