Hey — It's Nico.

This newsletter contains:

• 5 startup news.
• 5 resources for founders.
• 1 failed startup.
• 1 hot startup.

This issue is brought to you by Divvy:

With Divvy, BILL’s spend and expense management solution, budgets become a powerful tool to control spending. Our free-to-use software gives you real-time reporting and easy-to-use financial controls, so you can see every cent spent and stop overspending before it happens. All without a single spreadsheet.

With Divvy, you’ll always be able to:

• See transactions instantaneously.
• Set spend limits tied to employee cards.
• Get credit, earn rewards, and more.
• Plus get a $100 gift card for hopping on a demo.

​

What happened this week?

🤖 Zume, a robot pizza startup, shuts down after raising $500M.

😮 NestAway, once valued at $225M, is being sold to Aurum PropTech for $11M.

📉 Fidelity slashes Reddit valuation by 41% since 2021 investment.

🙌 GetYourGuide secures $194M Series F at a $2B valuation.

😡 Stack Overflow Moderators ‘strike’ over AI-generated content moderation policy.

​

What to read this week?

👀 A16z discusses 2022’s macroeconomic impact on startups and what they’re doing to manage those challenges effectively.

👏 A thread breaking down Sequoia Capital's YouTube investment.

💯 Kevin Lee on how to go to market with confidence.

🗣 Brian Bourque's three-part framework for maintaining focus on your startup without distractions.

✍️ Fernando Pessagno shares his journey of building and launching a SaaS in 10 Days.

​

Failed startup story: Aria Insights

Aria Insights, previously known as CyPhy Works, was a Massachusetts-based startup operating in the drone technology sector.

The company raised $39M, with the last influx of $4.5M in debt financing coming in June 2018. However, the company shut down a year later due to operational troubles.

Aria Insights was primarily known for its Persistent Aerial Reconnaissance and Communications (PARC) platform, a tethered drone system providing secure communication and continuous flight capabilities to its clients.

The startup primarily catered to law enforcement and military contracts but also expanded its customer base to the oil and gas industry, first responders, and telecommunications customers.

In Between the Lines:

The company underwent a significant pivot in January 2019. This shift reflected a strategic move from hardware production to leveraging artificial intelligence and machine learning to analyze data collected by drones.

While this new direction demonstrated an awareness of the increasing value of data analytics, the execution did not match up to the vision.

Aria Insights' partners had been amassing vast amounts of data, but the industry lacked efficient services to convert this raw data into actionable insights. The CEO, Lance Vanden Brook, said, “A number of our partners were collecting and housing massive amounts of information with our drones, but there was no service in the industry to quickly and efficiently turn that data into actionable insights.”

Lessons Learned:

Aria Insights' experience highlights the crucial need for a business to have all necessary components—infrastructure, resources, and partnerships to fully deliver its services. This fundamental principle applies to all businesses, regardless of their industry or scale.

In Aria's case, they were proficient in the data collection aspect of their service, which involved using drones to gather massive amounts of information. This represented a critical part of their value proposition. However, they missed a key element—data analytics. The service they offered was incomplete without the capability to analyze and interpret the data collected.

​

Hot startup of the week: Vault

​Vault, a Toronto-based fintech startup funded in late 2021, recently announced a $3.7M seed funding round. The startup is designed to serve small-to-medium-sized businesses (SMBs) with online banking services.

The company aims to revolutionize the financial landscape for Canadian entrepreneurs and SMBs by helping them manage their money more efficiently and save on banking fees. Vault is supported by a variety of investors, including fintech and technology veterans from companies such as PayPal, Google Pay, Affirm, and more.

In Between the Lines:

Vault's innovative approach lies in its ability to identify and address a gap in the Canadian banking sector. Traditional banking processes, particularly for SMBs, are often antiquated and heavy on fees. Vault has differentiated itself by offering a service that is quick to set up, more efficient, and less costly than its competitors. This approach provides strong product differentiation, a key factor in its appeal to SMBs.

The startup also offers its services without monthly or annual fees. Instead, Vault has designed a clear revenue model that aligns with its customer-centric approach, generating income through interchange and transaction fees. This allows Vault to provide its customers with cost-effective services while ensuring the startup's revenue stream.

Lessons Learned:

We can learn two main takeaways from Vault's journey. These are the importance of product differentiation and having a clear revenue model.

Product differentiation is about providing unique value that separates your offering from competitors in a way that customers appreciate. This could take many forms, including having better technology, unique features, superior customer service, or even brand reputation.

In Vault's case, its differentiation strategy is to provide a banking service that removes much of the hassle and high costs associated with traditional banking services.

It offers an online platform that enables SMBs to manage their money more efficiently while saving on banking fees, with features like quick sign-up, multi-currency accounts, real-time currency exchange, and free transfers. Understanding their customers' needs and creating a differentiated solution to address them is critical for startups.
​
Moreover, a startup's revenue model is one of the most fundamental aspects of its business strategy. It defines how the company plans to charge its customers and make money. The clarity in the revenue model is crucial for sustainability, growth, and investor confidence.

In Vault's case, it has opted for a revenue model based on interchange and transaction fees. Developing a clear and viable revenue model early on is essential for startups. This requires understanding customer willingness to pay, market dynamics, and the value provided by the product/service.

​

What do you think of today's newsletter?

• ​🔥 Great​
• ​😒 Meh​
• ​👎 Not interesting​

Cheers,

Nico