This is the final article in our Something Ventured series on Sote; CEO Felix Orwa declined to participate further as he focuses on the next phase for his company.

CEO sees an opportunity the size of Africa before him: The chance to build a tech-enabled logistics business that will serve that entire continent’s trade infrastructure.

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It’s a vision he’s working to both turn into reality and sell to potential investors.

But he’s now doing it without the person he’s been working the most closely with for the past five years. Since our recent update on Sote in early July, co-founder and product chief left the company.

Orwa declined provide details about the split, but shared a statement noting that while “Meka has transitioned out of Sote to a new chapter,” his co-founder “was great and will remain dear to us at Sote.”

“One of the things both Meka and I are particularly proud about and built into the Sote culture is appreciating that this is a marathon, not a sprint,” Orwa added. “So as a company we remain focused on the goal, strategy, and execution. I am very proud of how everyone has handled this as a team, staying calm, supportive, and focused.”

Este-McDonald declined to comment.

It’s worth noting that founder departures are not uncommon for seed-stage startups. That’s typically the time in a young company’s life when the pressure’s on to agree on a strategy and vision and show the kind of traction Series A investors seek.

With that in mind, I spoke with Orwa further about the challenges and opportunities in front of him as Sote prepares for its next round of fundraising.

His company is a logistics platform—or freight forwarder, in industry speak—that helps import and export businesses in Africa manage complex trade operations: Getting shipping containers from point A to point B, navigating customs and other trade regulations, and the like.

Among the biggest venture-backed startups in the space is San Francisco-based , which has raised $1.3 billion in known funding from the and other investors.

Like Sote, Flexport and other tech-enabled freight forwarders aim to modernize the centuries-old business of moving stuff around the world. But Flexport and other big startups in the space have—for now, anyway—generally spurned the massive African market.

For Orwa, that represents an opening to scale up and become the market leader for a continent with some 1.3 billion inhabitants. A Kenyan who first came to the U.S. to train to be a pilot, Orwa had come to realize that for Africa, “the exchange of goods problem is a logistics nightmare,” he explained in an email interview earlier this summer. “And solving it would be particularly important for my continent’s future. The last frontier to unlocking Africa to its full potential.”

Sote raised a seed round led by Los Angeles-based at the end of 2020. Before that, it had raised pre-seed investment from investors including Palo Alto-based , which exclusively backs immigrant startup founders like Orwa.

In Orwa’s case, Unshackled helped him obtain a visa so he could travel back and forth between the U.S. and Kenya as he built his startup. Orwa said he’s primarily living in the U.S. these days while returning to Nairobi frequently to build Sote on the ground.

What follows is from our interview in late August, edited for length and clarity.

Crunchbase News: How many containers on average is Sote processing in a given month these days? When we chatted in late June, it was around 160. Any other growth metrics to share?

Orwa: Sote this year has already grown our customer base by 3x and we’re well on our way to get that to 5x. Today, we have 31 customers and we see ourselves being able to hit 50 customers before the end of the year very comfortably.

Where do you see the biggest growth potential for Sote and how are you pursuing that?

Orwa: We are building a digital freight-forwarding company that is going to cover the entire continent. It gives us a very unique customer base: manufacturers, retailers and distributors.

What we said when we raised our seed was that this customer base was going to give us data that would unlock so many different opportunities.

What are some examples of those opportunities?

Orwa: Some of the obvious ones are insurance solutions, loan solutions, SaaS solutions that we can provide or give access to this customer base in Africa that typically has not really been served by startups or technology companies, despite being one of the most powerful, if not the most powerful, customer bases in Africa.

We’re talking about a customer base that is composed of manufacturers, retailers, distributors. At scale across the continent, we expect it to be 90 percent of the B2B market of Africa.

That’s really what we’re looking at from a growth potential perspective: What would you be able to do if you were naturally already serving 90 percent of the B2B market around Africa, and could you then layer on top of that?

What are your biggest challenges currently as Sote’s CEO?

Orwa: We are gearing up for fundraising, so that will be my biggest challenge—to see us through that fundraising round successfully.

But, generally speaking, at the top of my mind is just our people and where they are, from a cultural standpoint, from a health standpoint.

We are a company that operates physically outside as well as digitally. So we have this dual challenge of making sure we keep people safe, not just in the expected work environment and culture, but also physically outside—out in the elements. There’s COVID out there and COVID is increasing.

We want to grow. Balancing that desire for growth with taking care of our people is one of the biggest challenges.

The last time I checked in, Sote had around 40 employees. What’s that figure now and are you hiring?

Orwa: We’re setting up our strategy for hiring and expanding that will take us beyond Kenya.

For right now, within Kenya, which is where we are operating, we’re keeping the numbers as they are. There are a few people we’ve interviewed. There’s been two or three more people that have joined, but we’re not hiring aggressively.

Right now what’s happening aggressively, or with more meat on it, is this strategy for expansion outside of Kenya—to South Africa, to Nigeria, to Egypt and so forth.

With this sort of mindset of growth and expansion, we are going to have to think about recruiting leaders. You know, when you’re growing operationally, your hiring strategies are mostly around your operational people, whether that’s engineering or logistics or operations.

But as we start thinking about layering on new solutions and going after other markets, we then also have to start thinking about recruiting some of the best minds in Africa, in other markets, and in new spaces.

What’s the story you want to be able to tell investors as you raise your Series A?

Orwa: We want to be able to say that we set out to build a digital logistics company, and we have successfully done that in one market, and we have scaled enough to where we have layered on a new service—a high-margin service—that is increasing our lifetime value of each customer in an almost infinite way.

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founder and CEO said results of a pivotal report released last month by the were definitely dire.

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Specifically, the report indicated that the Earth’s temperatures could rise 1.5 degrees Celsius (34.7 degrees Fahrenheit) in the next decade.

“That’s very soon,” said Pal, whose seed-funded startup backed by has built a service for consumers to purchase carbon offsets based on spending.

The IPCC report unequivocally links this increase in temperature to human actions.��

“It gives us a lot more motivation to move quickly and to find paths to scale,” Pal said.

The report also called out the importance of carbon dioxide removal (CDR) technologies, which includes the kind of work Joro encompasses.

“Reduction is the most important thing, but it cannot alone get us to our targets by 2030 or 2050,” said Pal.��

The enthusiasm for Joro’s app since it launched four months ago seems to validate the concerns felt by some consumers around climate change. The app has had very few cancellations of its net-zero option to purchase offsets. Customers pay an average of $25 per month, but many users are prepared to pay more and have added limits at $60 to $65 per month within the app, said Pal.��

In a of the report, Pal highlights the need to invest in an array of climate solutions with different time horizons, some available right now, some medium term, and some that are longer term.��

While Joro offset purchases include forestry projects, soil offsets and bio-oil, some newer technologies the startup is looking at include enhanced weathering and mineralization, using rocks to store carbon for very long periods of time, and direct air capture.

Climate tech meets big tech

Overall, per Crunchbase data, there is an increased focus by venture on climate tech with cleantech funds scaling up. In fact, Joro has partnered with for early carbon offset purchases from , and .

In the last few months, Pal has also seen more commitments from companies to get to net-zero with 2050 as the North Star, per the IPCC report. Since there is no government legislation requiring this behavior, companies are acting based on employee or consumer concerns.��

The companies leading in offsets are , and , according to Pal. “They have very rigorous approaches to evaluating carbon offsets and specifically are focusing on removals,” said Pal.��

Decarbonize consumption

Joros users live in locations where a shows a preponderance of citizens agree that we should do more to address global warming. These include San Francisco, LA-San Diego, Seattle, Chicago, Denver, Minneapolis, Austin, Houston, New York, Philadelphia, Washington, D.C., Boston and Miami.��

Joro is preparing to buy into its next set of offsets, having had lots of conversations with carbon offset providers. And the company also has been looking into providers able to scale on the tracking side.��

Pal takes inspiration from category-defining businesses that have built successful consumer software businesses at scale like , , , and others.��

“We can take financial transaction data and translate it into carbon footprints,” said Pal, who sees opportunity in partnering with banks or fintechs that ingest financial data, to show its customers the carbon implications of consumption, in order to be able to act.��

• Read part 4: With Climate Change On The World Stage, Joro Aims To Grow Army Of Users Cutting Their Carbon Impact

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We recently spoke with , one of the firm’s co-founders and previously an executive at banking and lending giant . Rotman co-founded QED with , another former executive at Capital One.

QED’s first fund was a $30 million internal fund. Its most recent fund VI was announced in February 2020 and is its largest fund at $350 million.��

According to the firm, it $662 million to date in 142 portfolio companies with $2 billion under management. That includes its investments in Seattle-based and São Paulo-based at Series A. At Series B, the firm invested in Mexico City-based ; and first at Series C, Stockholm-based . The firm invests in the U.S., U.K., Latin America and is starting to invest in Southeast Asia. Investing team members are based in Washington DC, San Francisco, New York, Mexico City and London.����

The team’s sweet spot, according to Rotman, is to “use our operating backgrounds to help crack the code on businesses that still have a lot to figure out.” Based on a Crunchbase News analysis of its investments, the firm appears to invest most often for its first investment at Series A, and then at the seed stage.��

“Venture capital is a very simple asset class that’s very difficult to do well,” Rotman said. We spoke with him further about QED’s investment approach, the fintech sector and more.��

The following was lightly edited for length and clarity.

What has changed in the last five years in fintech investing?

Rotman: There are some very, very large fintechs that kind of show the art of the possible, of what an at-scale player can actually achieve. And that fuels the entire ecosystem, where young founders are spinning out of those companies, are spinning out of banks and saying, “Well, I think I can do the same.”

The combination of new capital and incredible founding teams coming into the space with this vision of what the art of the possible looks like is just this self-reinforcing ecosystem that’s been accelerating.

There seems to be a payment startup funded every week. Is fintech investing becoming too crowded?��

Rotman: I am more bullish on the next decade of fintech than I was on the last decade of fintech. This next wave, you can call it v2.0 or v3.0 of fintech, is going to produce more durable and potentially even larger outcomes than the first wave of fintechs did.

The first wave was a bit more about UX, UI and APIs. It was more about application processes and reducing friction, and the look and feel of what a digital product or digital distribution of banking products look like.��

This next stage is actually tearing apart everything down to the atomic unit, about how financial services are manufactured and distributed, and rebuilding it in a digitally native way.

These new building blocks that are being built within the fintech ecosystem—we don’t know yet how they’re going to be assembled—is going to challenge the notion of how banking is actually manufactured and delivered across every single component of banking, and there are a lot of them.��

There’s a lot of innovation ahead, there are a lot of entrepreneurs and capital chasing it. But there’s a reason for it. There’s a lot still to be done.

Where do you see the opportunities?

Rotman: We are a fintech specialist firm. We have more than a dozen investment professionals, and each one has multiple themes they’re chasing. So it tells you how many things we’re interested in. There are dozens of interesting vectors, subsegments within fintech.��

If you look globally, some of the top market cap companies in each and every country are banks. And it’s not just because of the revenue they’re generating, it’s because of the profit they are generating.

Many of the banking organizations around the globe still are on their v1.0 of delivering a digital version of the product. So there’s a lot of work to do across every single aspect of banking.��

If you think about the core pillars, you have things like storage of money that’s about deposits, you have movement of money that’s about payments, you have the borrowing of money and the whole lending side of the business where people need money today to buy something they will pay for later.��

You have the investment side of the business. You can even start lumping in insurtech at this point so you have insurance. You have capital markets. So there are these different verticals within fintech and each and every one of them is interesting in its own way.

Do you see banks being displaced or adapting?

Rotman: It’s hard to talk about banks as if they’re a single thing, when you have almost 10,000 in the U.S. You have 5,000 traditional banking depository institutions. And another 5,000 credit unions. It’s hard to lump them all together and say this thing is going to behave in a particular way.

Within the banking ecosystem, you have banks that are addressing this issue in different ways. You have the top four or five banks in the country that are extremely well known, extremely well capitalized. They have the ability to innovate themselves. They can invest in people, in technology. They can choose to procure products from fintechs or build them themselves. They have every option available to them.��

I would put in that camp. If JPM wants to build something, it can build something. Whether it can build it, as well as a fintech can, comes down to the talent they can hire.��

You have much smaller organizations, smaller community banks and credit unions that are relying on third parties to assemble solutions for them. They don’t have the ability to attract the talent or put the investment in, to basically keep up with what’s happening in this transformation from the old way of delivering their service to the new way.

And you’re seeing some interesting companies emerge in the space.��

Look at as a good example of a more modern platform that a lot of smaller banking institutions, community banks and credit unions can use to basically catch up and become digitally native very quickly.

There’s a whole layer of fintechs that can exist to help the banking ecosystem update legacy tech without rip and replace. It could be additive, it could be new functionality. It’s less daunting than it was in the past about ripping out your core systems.

And then there are a lot of banks that are in the middle, where they’re going to give it the good old college try. And the question is whether they succeed. Some of them think they can build it, and the jury’s out on whether they will be able to build it.

Because banks are not a uniform thing, they’re not addressing the issue in a uniform way, and that actually creates a lot of opportunity for startups.

Is the banking system leveraging fintechs or are fintechs leveraging the banking system?

Rotman: Think about , think about , think about , think about all of these API companies and middleware layer companies that are emerging. They help everyone. Think about as another example of a company that’s helping both incumbents and fintechs.��

And then there’s another breed of fintech, one that’s going directly to the consumer, with whatever the product or service is, and meeting their needs. And some of those companies could be taking business away from banks. A lot of those need to rely on banks behind the scenes to actually be the regulatory layer and sometimes even the execution layer of the business or product that they are serving out to the market.��

So there isn’t a single configuration. You might have a challenger bank like a or a that has amazing UX, UI and an amazing assemblage of product and service. But in reality they’re not a bank, which means they don’t have the legal ability to offer an FDIC insured account without another partner bank behind the scenes.

At the same time, you might have a company that is in the small business accounts payable or accounts receivable space, like a or an , where the banks might become a distributor of the product because it helps their customers.

Banking is being broken down into atomic units at this point, and the question is how you reassemble those atomic units. The Lego blocks of banking are not different than they were before, and banks can buy the Lego blocks, they can partner with the Lego blocks, they can build the Lego blocks, but so can other people.

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They seem to be everywhere — as both the topic of serious discussion and the subject of memes.

I’ll be honest: I didn’t know what an NFT was when I saw people tweeting about it a few weeks ago. I was hastily Googling the term, trying to decipher jokes from various VC and finance meme accounts, and asking my colleagues about it during team meetings.

So you don’t have to subject yourself to the same process, I thought I’d write an explainer for my column this week (better late than never, right?).

In short, an NFT is a non-fungible token. Put more simply, it’s something like a digital collectible.

“I think the simplest description of an NFT or a way to think about it is it’s the first time you can actually establish and enforce ownership of a digital asset,” said , chief growth officer of crypto payments infrastructure startup .

NFTs are a way of enforcing property rights on digital properties, Feroz said. The content of the NFT is tied to a token, and that token represents the title of the item.��

When you buy an NFT, that ownership is recorded on the blockchain.

They are often compared to owning an original piece of artwork. There could be reprints of a painting you own, but you own the original painting and the title for it. NFTs are typically sponsored by the actual owners of the copyright, according to Louis Lehot, a partner at the law firm ��

To give a more recent, relevant example, CEO announced he’d auction off his first tweet as an NFT, with the proceeds going to charity. So, the buyer could buy the NFT, and then he or she owns it. Of course, anyone can go online and look at Dorsey’s tweet, but the owner of the NFT has claim to it.

Why now

NFTs became more or less mainstream in the past few weeks. Part of the reason is the general hype around bitcoin, according to Lehot. The price of bitcoin rose to $60,000 and .

“The price of bitcoin went to 10x. We’ve been in a pandemic so everybody is at home, so they’re consuming art and music and they can’t go to concerts, they can’t congregate,” Lehot said. “So really your only way to connect with your artist or your musician is online, your financial assets. There’s really nowhere to go but the stock market, so bitcoin has taken off as people look for other ways to monetize. So you have this great confluence of digital currencies and NFTs.”

Lehot thinks that NFTs will be a way for a vast array of creators to monetize their digital content.

“I think NFTs are going to be something that media, celebrities from all walks of life, whether they be musicians or artists or other creators of collectible products, will use to monetize,” said Lehot.

“So with the advent of platforms like Spotify and Apple Music, and with other platforms kind of democratizing books … it’s too easy to acquire and use them and it’s become more and more difficult for creators of content to monetize what they have and what they do. So what I think NFTs present is an opportunity to excite fans and collectors to step up and distinguish themselves in their appreciation for that author or artist or singer.”

It’s important to note that NFTs are not securities and shouldn’t be treated as such. It can’t be ownership of a common enterprise where a buyer buys it with the expectation that the NFT will appreciate in value because of the efforts of someone else, Lehot said.��

“The creator of the marketplace needs to make sure it’s not a security either. Because if it is, their marketplace needs to be a securities exchange and the registration process for that is a monster,” Lehot said.

The artist POV

From an artist standpoint, it’s important to understand what rights the artist is handing over when minting an NFT and selling it, according to , special counsel at Foley & Lardner. Different marketplaces have different allocations of those rights.��

“Being really cognizant of that when you’re on the seller side is going to be important. When you’re on the buyer side, the legal considerations are a little different. You want to be concerned about what rights you’re receiving. Typically an NFT is an artist grant to the buyer … it’s a license to the buyer to the underlying content through owning the NFT.”

It’s something like buying and owning a one-of-a-kind signed Beatles record, but not owning the songs on the record. The buyer owns the signed record, but can’t reproduce and sell the songs.

In other words, the artist owns the underlying content.

If you’re looking to buy an NFT, one thing to be aware of is authenticity, according to Zhu. Right now, there’s a lot of room for “the equivalent of a counterfeit,” so buyers should make sure they’re going to a reputable seller or marketplace.

So that’s NFTs in a nutshell. If you have questions, comments, or bought one and want to share a photo, I’m still sophiak@crunchbase.com.

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The round included investment from , , , and .

This raise comes after the company grew subscription revenue by 11 times in calendar year 2020 — and net revenue by 54 percent year to year for the year ended last June.

“It was a great time to raise capital,” said founder and CEO . “We have an exciting product roadmap …The new capital will allow us to grow our team.”

Designing a design company

DesignCrowd’s growth has been driven in part by the introduction of its new DIY design tool on BrandCrowd, which helps entrepreneurs and small business owners make logo designs for marketing purposes as well as social media posts and emails. The company also houses its DesignCrowd platform, which is a crowdsourcing platform of more than 800,000 freelancers who helps companies develop logos.

The BrandCrowd platform alone saw 5 million users create accounts last year, Lynch said.

That growth led the company to raise the new money as it looks to expand in different markets, however it will have a “massive focus” on growing the U.S. market where it already sees more than 50 percent of its revenue.

Founded in 2007, the 60-person company has raised nearly $17 million to date.

Australia

, partner at Alium Capital, said the company was an intriguing investment opportunity on several levels, including because of its growth and capital efficiency as well as the growing design market due to so many new companies forming.

He added the design market in general in Australia is rather robust, with large companies like , which has raised more than $300 million according to Crunchbase data.

While the new round is being called a “pre-IPO fundraising” to help position the company for a potential offering on the Australian Securities Exchange, Gupta said there also has been dealmaking in the sector, including parent company acquiring freelance design marketplace last October.

While either exit remains viable, Gupta said a listing is definitely possible.

“They could have IPO’d in calendar year 2020 in Australia,” said Gupta, adding he believes the company has more growth ahead of it before such an event.

“Our plan A is to one day IPO in Australia,” Lynch said. “This (round) helps position us for that.”

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The company announced that $2 billion of ’s previous financial commitments will be targeted towards its well-established Indonesian operations. Indonesia is Grab’s largest market and also the home of its biggest regional competitor, .

SoftBank CEO said there’s plans for a second Grab HQ in Indonesia, . While the $2 billion capital commitment to the country — made possible by SoftBank — isn’t new, Son reportedly said that “on top of that, we will invest more.”

For SoftBank, which recently announced a second Vision Fund, making bets on ride-hailing companies isn’t a recent trend. Back in 2018, the Japanese conglomerate invested roughly $7 billion in Uber. SoftBank also invested in China’s and . One analyst put SoftBank’s stakes in these three companies as worth anywhere between $22.1 billion and $26.5 billion, .

As we’ve covered time, time, and time again, Singapore’s Go-Jek and Indonesia’s Grab keep adding cash to their seemingly never-ending funding rounds (Grab’s Series H and Go Jek’s Series F.) It’s because ride-hailing, you guessed it, costs a lot of money. But, as our EIC Alex Wilhelm tell us, the industry can wrack up billions in bets and hopes without even proving profit. It shows that some investors are okay with a future of potential profit, as they stay distracted by booming growth in the present.

Plus, as TechCrunch’s , this capital commitment could help Grab be in better cahoots with the local Indonesian government and the tech scene there, since the announcement was made after a meeting between the company, SoftBank, Indonesia’s president and other high-ranking officials.

To wrap up with some context, Grab and Go-Jek are both barreling toward become ‘super-apps’ ��in Southeast Asia and beyond. I’m betting it won’t be too long until we’re back here reporting on the new cash, or promises, the companies make to do so.

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And there’s evidence that 2019 could be a��year in which another set of giant private technology companies manage their own listing. Unicorns like Uber, Airbnb, and Pinterest are expected to pick 2019 as their IPO year.

What’s driving the recovery in technology offerings, many of which have been modern software companies that sell their wares on a recurring basis, is a good question. I doubt that there is a single reason, but we do have a good, partial answer to why tech IPOs are finally picking up.

ARR’s Rising Value

This morning published its for the third quarter. The tome is nearly always worth reading, and this quarter’s iteration fit the pattern.

Tucked away on page nine was a fascinating graphic that caught our eye. (Note: this chart shows valuation multiples based on annual recurring revenue, or “ARR.” ARR is a standard revenue metric favored by modern software companies who sell their wares on a recurring, instead of one-time basis.) Take a peek:

The chart tracks the run rate multiple¹ for public cloud companies.

You can quickly see two trends:

1. The SaaS Crash, or the early-2016 period when the tech sector worried that the fun was over, was very real. The valuation compression of that interval was brutal.
2. Since that crash, recurring revenue has been on a steady ramp north to��new local maximums in terms of value. (Cloud software companies mostly charge for their products as a service, so we are using run rate as a cognate for ARR.)

Recall that the��2016 IPO market was bad, the 2017 IPO market was better, and that 2018 is a return to form. The chart makes it plain as to why. As public market investors re-valued ARR upwards, IPOs have followed.

Tech startups didn’t want to go public when doing so would force a debut with a valuation haircut stapled to it. But now that ARR has recovered its value, it’s a good time go out.

All of this is unsurprising but useful to know. What we can also imply from the chart is that sustained market chop could derail the current IPO pace. So if we have more days like yesterday, IPO debuts could slow once again.

1. Last quarter’s revenue * 4 / enterprise value. The data comes from the Bessemer Cloud Index, which we here at Crunchbase News cite often. We have an email into the firm asking for the same data set so that we can chart it ourselves, hopefully with a longer preamble.