Growth Companies

Unicorns Take the Opportunity to Raise Capital

Despite a slowdown in venture deals, accounts payable firm Tipalti and procurement platform vendor Zip land later-stage financing.
Unicorns Take the Opportunity to Raise Capital
Photo: Getty

To whoever has, more will be given.

The slowdown in venture capital investment has not prevented some unicorn companies from raising new money. And even new unicorns — privately held startups valued at $1 billion or more — are being minted.

Two existing unicorns announced capital injections last week, though they didn’t have a burning need for it.

Procurement fintech Zip announced a $100 million Series C funding at a $1.5 billion post-money valuation. Y Combinator led the round (it also led Zip’s Series B) with participation from existing investors Tiger Global and CRV.

Zip was not actively looking to raise a Series C, said Rujul Zaparde, the company’s 28-year-old founder and CEO. “The opportunity came up … and we felt it would be the right decision to take the investment, close the Series C, and give us the flexibility to continue investing further in product engineering and design over the coming years,” Zaparde told CFO.

Zip, founded in 2020, has raised $181 million to date. In conjunction with the financing release, the company announced new procure-to-pay capabilities.

‘A Prudent Time’

The other unicorn transaction came from Tipalti, the global payables automation platform. The Foster City, Calif.-based company raised $150 in incremental growth financing from JP Morgan Chase and Hercules Capital. Tipalti’s new capital was debt financing in the form of a revolver and a long-tenured term loan, Tipalti CFO Sarah Spoja told CFO.

The company still has most of the $270 million in Series F funding it raised in 2021 (at a valuation of $8.3 billion).

Large lenders are only looking to lend to top-tier companies in positions of strength. — Sarah Spoja, CFO, Tipalti

“The opportunity for well-priced debt capital gives us more flexibility,” said Spoja. “Given the uncertainty in tech capital markets, we believe for our shareholders, customers, and employees that this is a prudent time to add debt capacity and strengthen the balance sheet.” The funds will be used to continue investments in product innovation and customer support.

Tipali has known the JP Morgan Chase and Hercules teams for years, said Spoja, but working with them on the corporate side was a first. Both organizations “make very deliberate and careful decisions when choosing investment partners,” she said.

Spoja called raising debt in this macro environment “challenging.”

“Large lenders are only looking to lend to top-tier companies in positions of strength,” said Spoja. “This is because they need to underwrite a base case that gets them their money back at the end of the loan.”

Tipalti CEO and co-founder Chen Amit told the Israeli newspaper Calcalist that the money also “opens up a lot of possibilities for acquisitions.”

Newly Admitted

Three new unicorns were added last week:  

  • Water tech startup Gradiant announced it had raised $225 million in a Series D, valuing it at $1 billion. 
  • Restaurant365, an enterprise software provider, landed $135 million in a round co-led by KKR, valuing it at $1 billion.
  • Property management firm Avenue One became a unicorn after a $100 million raise led by WestCap. Founded in 2020, the company “provides a handful of services to single-family rental investors,” according to Crunchbase.

When Zip CEO Zaparde was asked if he was glad to have raised the Series C given the macroeconomic environment, he said he and his colleagues don’t spend that much time thinking about the macro climate. 

“We’re just very focused on making the product better and the customer successful,” said Zaparde.