
European communications startup Infobip raises $200M for over $1B valuation - rospaya
https://www.reuters.com/article/us-infobip-fundraising-exclusive/exclusive-european-software-startup-infobip-raises-over-200-million-in-series-a-funding-sources-idUSKCN24V05E
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Kosirich
By chance, I know the company well as it is based in my region, as well as
knowing a bit the "owner brothers" and their family. Myself and people whom I
know have worked for them (in the begging and later) don't have anything but
the words of praise for them. They have built the company on hard work and
innovation in a country that doesn't favor and sometimes punishes
entrepreneurship. Furthermore, instead of moving the company to some place
more favorable, they decided to stay and continue providing job opportunities
for people in the region they were born and raised in. All the best luck to
them in their further endeavors, sincerely by fellow Istrian

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mrkramer
Glad to see company from my country being so successful. They were Twilio
before Twilio.

Infobip has $1bn valuation at $710m revenue and Twilio has $37bn valuation at
$1.1bn revenue.

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bevenky
Well, thats not a fair comparison. A key aspect of valuation here is governed
by __Gross Margins __. Infobip and a lot of the companies mentioned below on
this thread have gross margins in the __early to mid twenties __in contrast to
Twilio, which is in the early fifties and thats one major reason for the
difference in valuation. The other is growth % YoY.

Disclosure: I am the co-founder of
[https://www.plivo.com/](https://www.plivo.com/), a startup in the same space.

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daneel_w
"Software startup". I don't know where this label came from. They've been the
largest leading SMS services provider in all of Europe for about 5 years now.

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mrkramer
I guess private tech companies are called "startups" for very long time until
either they go public or they are so big and old it doesn't make sense to call
them startups anymore.

One example would be Kingston Technology which is private and over 30 years
old with $10bn of revenue.

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nl
They raised $200M at a $1B valuation, so sold 20% of the company to the
investors.

 _" The company, currently profitable, generated €602 million ($710 million)
in revenue last year, up 38% year over year, the sources said."_

Why on earth would they accept a valuation that was less than 1.5x revenue?
Service companies get a better valuation than that!

The article says they are profitable, so presumably not about to run out of
cash.

Something very strange is going on with this deal.

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barrenko
It's EU, Bizzaro-World for startups and business.

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nl
Sure, but capital isn't geographically limited. I live a lot further away from
the US than Croatia and I have multiple friends here who've raised from the
US.

Something smells wrong here.

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eaenki
Agreed

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mac_was
In my opinion this seems like a low valuation for what they do and the
customers (Costco, Uber). If it would be based in San Francisco it would be
several billions.

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ponker
Yeah, something must be amiss to get a $1 billion SaaS valuation at $710m
revenue. This is not the whole story.

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officialchicken
It's between the lines - EU prefers or demands GAAP/conservative especially
for startups versus financial engineering/stratospheric approach to growth in
the US.

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wjnc
Valuation for investment purposes and GAAP for accounting purposes are quite
unrelated. Valuation is the art of estimating future cashflows, GAAP is the
practice of reporting current cashflows that are comparable between firms.
Obviously, valuation gets easier when the accounting is "more" GAAP. But just
as firms are allowed to report all kinds of non-GAAP measures to further
enhance their attractivity, the valuing party can use all kinds of measure,
like future growth rates or debt schemes to enhance the valuation (caveat
emptor). So there might be a huge difference in valuation and P/E between EU
and US, but GAAP has little to do with that. In second order effects we could
discuss whether US GAAP vs IFRS has an effect on how aggresively investors can
account for these investments but I don't think that's the main driver of what
I look at as runaway valuations in the US.

Edit: Seeing the rest of the thread. If the valuation seems low I'd expect
that the due dilligence turned up some nasty things that where not in line
with the non-GAAP financial statements of Infobit in the past. I couldn't find
any audited financial statements. € 700 mln. revenue with growth potential at
18% margin does not lead to a € 1 bn. valuation in the absence of red flags.

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namdnay
I wouldn't call it a startup, looking at their careers site they have more
than 10 locations and at least 5 engineering locations (Russia, Croatia,
Bosnia, India, Colombia)

They seem to be leveraging relatively low-cost countries for their
engineering, good for them!

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arnvald
A term "scale-up" has been recently gaining traction and I believe it's more
accurate and better distinguishes companies at different stages of growth.
Still, "start-up" became so popular it lost its original meaning and is now
umbrella for any company taking private funding

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magriz
What are their man competitors in this space? And what is the innovative part?
Do they just provide a SMS + other messaging platforms gateway for businesses?

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filipn
Twilio[1] and MessageBird[2] come to my mind as competitors. They both are a
"Voice & SMS" communications platform and I guess the innovative part is that
they provide an easy way of connecting companies to their customers via
multiple channels.

[1] [https://www.twilio.com/](https://www.twilio.com/) [2]
[https://messagebird.com/en/](https://messagebird.com/en/)

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bevenky
[https://www.plivo.com/](https://www.plivo.com/)

