As many Instagram users will know, the app doesn’t allow you to put links in captions. The only way to do it is by putting them in the bio (or in the stories, if you have more than 10,000 followers) and it has limits: you can only include one. So much influencers As normal profiles, they usually want to share more than one link – to other networks, to their websites or stores – so it was a matter of time before someone came up with a solution.
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What was not so expected is that this solution – a link to accumulate other links, a simple list of links! – would become the object of desire for venture capitalists. The small Australian company Linktree, one of the most popular services of its kind, has raised 45 million dollars (37.9 million euros) from Index Ventures (Deliveroo, Revolut, Etsy, Just Eat, Patreon, ASOS …) and Coatue (Spotify, Snap, Instacart …). It is its second round of investment, the so-called series B. The first, series A of 11 million (9 million euros) was in October 2020, only five months before.
With some exceptions, it is not the usual thing: the normal thing is that between these two rounds, 19 to 23 months go by, according to 2018 data collected by Crunchbase. Has venture capital gone completely insane, or could a little link-gathering tool be a lucrative business for the future?
“We started Linktree in 2016. We lived together and we were focused on growing our digital agency, Bolster,” explains Alex Zaccaria, one of the three founders. “Linktree was the answer to the problem of managing our clients’ social networks. Instagram only allows one link in each biography. That means wasting a lot of time updating it and a lot of content and clicks they lost. With Linktree we created a new category of social network. The internet is fragmented and social media is the most important medium for many businesses to connect with their audience. It’s a way to reduce friction between channels and maximize interaction. ”
The service has a paid version of $ 6 per month that includes extra analytics and integration functions. But the company does not say how many of its 12 million users are paying.
The 47.2 million euros that Linktree accumulates, which started with its own funds and already employs 70 people, have three possible readings:
1: Venture capital is crazy
Both January and February 2021 have marked maximums in this type of investment. In February 41,000 million dollars were invested; in January, 35,000 million. Last year it was practically half: 21,000 million in January and 18,000 million in February. 64% of the rounds were of more than one hundred million, compared to 56% reached in 2020 and 48% in 2019.
According to data from Crunchbase, there are already 700 companies with a unicorn rank around the world (valued at more than one billion and among which is the Spanish Glovo). 22 of them were ‘born’ in February. Among the closest geographically are Blockchain.com, a London-based cryptocurrency trading platform, and Nexthink, a Swiss-based human resources software founded by an engineer from Soria, Pedro Bados.
“It is a fact that valuations are growing, driven by the great liquidity of the market”, assesses Javier Megías, investor and director of the program for startups of the Bankinter Foundation. “Investors don’t want to be left out of the most competitive rounds, which is where they are most likely to get returns.” As is customary in this market, funds compete to enter companies that they believe will succeed. And succeeding means going public (at high valuation) or being bought by a bigger company. As money flows, company valuations rise in no time.
In Spain, Megías observes, “there is a clear tendency for rounds of growth [crecimiento]. We’ve had nine so far this year. “Namely: Glovo, Idealista, Wallapop, Jobandtalent, Copado, Wallbox and Preply, a platform of Ukrainian origin based in Barcelona.
Zaccaria explains to elDiario.es the speed between both rounds of Linktree financing. “This round follows in the footsteps of Serie A to capitalize on our incredible current moment,” he says. “We are growing very fast (four million users in the last three months), scaling, expanding and creating a global team. Investors with experience and the ability to help us are coming in.”
Among his plans to use the money are the opening of hubs for creators that also serve as offices for their remote workers and continue to expand around the world.
2: We will need a tool that collects our “digital identity”
“The influencers they usually have a presence in several networks. Sometimes they have their own website, store or commercial agreements to promote a brand or product “, explains Patricia González, marketing director of the representation agency 2btube.” That means having many links, but in networks like Instagram you can only add one. Also, many do not have the same username on each network. To avoid having to choose which link to promote, tools like Linktree allow you to group them together. Most of the creators use the free version, but some are encouraged to hire the paid version. ”
The founders of the Australian company define it as “the connecting fabric” of all your online identities whose success lies in a very simple design. “The platform allows brands, artists, agencies, creators and small businesses to take control of their digital identity,” they say. “It doesn’t highlight what an algorithm thinks you want to see, but rather shows what is most important to the user and guides their audience.”
Both Linktree and another similar service, Beacons, allow you to add links to receive payments or donations to monetize it. “Centralizing your online identity is becoming more and more real,” explains designer José Luis Antúnez. “Now it’s time to add the transactional layer. The creators show their identity and people subscribe to it.”
Linktree, Beacons and other services of the kind – there are many: linkin.bio, bio.fm, Link in Profile … – are part of the so-called “creator economy”. There is a whole generation of digital products and services designed for content creators (people who make videos on TikTok, who share on Twitter or YouTube, who write their own newsletter or voice a podcast) charge their fans for it, consumers who want to support them. Patreon, Onlyfans, Substack, and Streamlots (popular on Twitch) are some examples. NFTs, the authenticated digital assets that have been exploited in recent weeks, were also born to help artists protect their works.
Mutual funds are aware of this trend, which also explains the investment in Linktree. “This issue has been tried by many companies but few with success. If the metrics accompany them, it can be a good opportunity. It can be one of the pillars of the creators’ economy, not so much pushed by technical people as by people who sell products and you don’t want to complicate your life, “adds Megías. “Interesting fact: Before Pinterest, there were more than twenty companies funded with venture capital money that failed.”
3: There are any potential buyers
Link companies are not entirely new. A decade ago, services such as About.me and Flavors.me became popular, starting from the same premise: to be a tool, a kind of personal website, to centralize profiles on social networks. About.me was a success for its founders and investors because it was bought by AOL within days of the official launch, for an undisclosed amount. Three years later, in 2013, one of its founders regained control of the company and in 2019 sold it again. This time to Broadly, the parent company of Vice magazine. About.me maintains its essence and is used to build personal websites.
The fact that there is a precedent does not mean that Linktree already has that potential buyer, but that is a possibility that funds always think about when entering startups So. Until then, its founders hope to continue leading what they consider to be a new category. “With 12 million users and 88% market share, we have inevitably seen many competitors born. But we will continue to lead the category and grow as it evolves.”