Andreessen Horowitz leads London fintech Sequence’s $19m seed round

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Sequence, the UK business payments startup, has announced one of the biggest European fintech seed rounds this year.

US venture capital giant Andreessen Horowitz (a16z) led the $19m seed round – its 11th European investment this year – giving Sequence a post-money valuation of $75m.

London-based Sequence is the brainchild of two second-time founders: CEO Riya Grover, who was previously co-founder and CEO of food delivery platform Feedr, and chairman Eamon Jubbawy, ex-co-founder of the digital identification startup Onfido.

It’s about tackling the clunky world of corporate billing and payments – something the two founders say they wasted valuable time and resources in their previous ventures, and that some of the world’s biggest startups (like Deliveroo, Hopin and Pipe) have already used Sequence to repair .

The problem

Most startups that accept payments — whether consumer businesses in food delivery or retail, or SaaS businesses that charge other businesses for their services — build their billing from scratch, Grover tells Sifted. This takes up a lot of their engineers’ time – which the founders would rather spend on groundwork on the products.

But payments are often not simply the case of an identical repetitive transaction between two parties. Instead, they vary widely depending on a company’s pricing model.

The founders of Sequence say that when finance teams struggle with variable payments on spreadsheets, they miss countless opportunities for data insights that can be critical to business growth.

The first complication is simply the number of players in each transaction. Companies like Deliveroo, for example, have to split each end consumer’s payment between their drivers, restaurants and the Deliveroo platform itself.

The second mainly concerns SaaS companies, which tend to charge more people use their software. With a usage-based component, a billing system must be able to extract real-time data. But at the moment this is done almost entirely manually.

Other companies struggle when sales teams sell contracts that can vary wildly and are difficult to track and analyze.

That’s what Feedr and Onfido struggled with, Grover tells Sifted.

Feedr orders varied depending on the workforce and the particular meals that were ordered. Onfido billed customers per background check performed.

“It made the billing and financing operations challenge very acute,” says Grover, “because it was hard to know what you were supposed to collect, and then all that data was locked away in a spreadsheet.

“This meant that it was difficult to then derive trends and insights from the fees charged to different customers and the product lines that were generating revenue.”

What does Sequence actually do?

Sequence has created a modular, low-code software product so companies can choose which billing, payment, and revenue data elements they need help tracking.

It targets companies that typically collect payments from their business customers through bank transfers or direct debits.

His pitch to customers is that once a business has automated their end-to-end billing and payment process with Sequence, they can start doing much more exciting things on top of that – like giving customers access to certain features or give them financial incentives based on their use.

“Imagine that an energy company could get discounts or rewards for its customers based on certain behavioral patterns,” says Grover. “You can use this type of data to understand how to optimize your prices or understand how to calculate sales commissions.

“There’s a lot that streamlining usage and payment data can give businesses to fuel their growth.”

Sequence charges software fees for its core platform, but Grover says it’s generally free for businesses to start with. They can then choose whether they use Sequence’s billing product and/or its payment product, and it bills per payment once they sign up for them.

What’s next for Sequence?

Sequence is already working with unicorns on both sides of the Atlantic – including Pipe, Deliveroo, Omnipresent, Snyk and Reachdesk – on designing the desired “stack” for their payments.

Being well-connected in the world of European startups has paid off for Grover and Jubbawy. A16z investors say part of what attracted them to the company was the fact that they were already talking to unicorn founders Plaid, Intercom, Jeeves, GoCardless, Marshmallow, Lendable, Hopin, UiPath, Monzo and Comply Advantage – all of whom are now invested like angels in Sequence.

So far, Sequence has hired a team of 30 people from companies like Wise, Hopin and Revolut – and Grover tells Sifted that while he expects hiring to increase sometime next year, he does. with caution.

“Having built a company before, I strongly believe that the team size lens is a really flawed metric because growing team size doesn’t actually mean company growth,” says -she.

“We’re at this really amazing point where we’re well-equipped as a team, but we’re lean and nimble enough to move very quickly – and we really want to take advantage of that now.”

Who invests in Sequence?

  • US venture capital firm a16z led the round, which is its sixth European fintech investment – after Stoik and Payrails earlier this year
  • Salesforce Companies
  • Capital from the first minute
  • Crew Capital
  • Captain Passion
  • Dig companies
  • End Capital
  • 9 meters
  • Founders of Plaid, Intercom, Jeeves, GoCardless, Marshmallow, Lendable, Hopin, UiPath, Monzo and Comply Advantage.

How is the market?

As the economy slows and the consumer fintech market loses its appeal, investors are turning their attention to slightly less attractive fintech that makes life easier for other startups.

CFO tools have long been ripe for innovation – many finance teams still rely on spreadsheets and siled data streams.

But European startups creating tools for CFOs have raised $66.5 million so far this year — a record amount. Meanwhile, the global accounting market was valued at $12 billion in 2020 and is expected to reach over $20 billion by 2026.

Sequence is certainly not alone in tackling this clunky operational problem, but it does seem to be tackling an aspect of a CFO’s job that other startups don’t. Most focus on cash management (like Tidely or Sibill), business planning (like Pigment and Growblocks), or consolidating bank accounts and financial data (like Airbank and Aurelia).

So far, we haven’t seen a particular focus on billing and payments for companies with variable-use business models. Legacy billing platforms like Chargebee cover some of that, but they’re designed for fixed recurring subscriptions, rather than the varied usage-based billing that Sequence targets. On the programmatic banking payments side of the business (i.e., initiating payments without manual intervention), GoCardless is already tackling Direct Debit, but they are primarily focused on consumer-facing businesses.

The taking of sieved

Sequence’s main challenge will be proving that companies need to swap out the custom in-house billing and payment engines that their own engineers are working on for Sequence’s shiny new APIs.

There is also a danger that other, slightly older CFO tool startups will capitalize on the access to payment streams and corporate financial data they already have and launch products similar to Sequence as as an add-on for their existing customers.

But CFO tools are definitely taking off right now, and in the current economic climate, anything that makes it easier for business builders to devote resources to growth is likely to be a very attractive proposition.

Amy O’Brien is a reporter at Sifted. She tweets from @Amy_EOBrien and writes our fintech newsletter You can register here.

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