Linkedin is the reason Apple made the M1 chip

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

This week was good fun not only because we had the whole team together to record, but also because we are still basking in the endless glory of our winning a Webby earlier this week. Frankly we are still shocked. But happy-shocked, like when you get a new toy and it is covered in static electricity.

Anyhoo, we had a packed show with much, much left on the floor as we tried to shoehorn the week into our time slot. Here’s what we got into:

The show flew by, much like our days recently, simply because it was so fun and jam-packed with news. And we got to make jokes about our listeners and Monday.com PR timing, so what else could we ask for? Talk soon!

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday morning at 7:00 a.m. PST, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

#coinbase, #creator-economy, #criminal-justice, #decarceration, #equity-podcast, #fave, #fintech, #forbes, #fundings-exits, #ipo, #linkedin, #marqeta, #media, #monday-com, #piano, #somewhere-good, #spokn, #spot, #squarespace, #startups, #subscription, #tc, #the-hustle, #theskimm, #union, #uptrust

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Temasek and BlackRock form Decarbonization Partners with $600 million to create a zero-emission economy

The $9 trillion financial management firm Blackrock is collaborating with the $313 billion Singapore investment firm Temasek to back companies developing technologies and services to help create a zero emission economy by 2050.

The two mega-investment firms will invest an initial $600 million to launch Decarbonization Partners, and look to raise money from investors committing to achieving a net zero world and long-term sustainable finacnial returns. The two partners have set themselves a goal to raise $1 billion for their first fund, including capital from Temasek and BlackRock.

The partnership, coming during Earth month, is one of several big multi-billion dollar initiatives that are underway to prevent global climate change caused by greenhouse gas emissions.

Indeed, BlackRock is somewhat tardy to the party. Temasek, for its part, has already made a number of high-profile bets in the alternative meat market — namely in companies like Impossible Foods — and in alternative energy technology developers including Eavor, a geothermal company, and a $500 million bet on a renewable power developer in India.

Meanwhile, a coalition of billionaires led by Bill Gates are already on their second billion dollar investment vehicle through Breakthrough Energy, a multi-stage, multi-strategy initiative that includes a venture capital arm as well as other types of financing on the way.

“The world cannot meet its net zero ambitions without transformational innovation,” said Larry Fink, Chairman and CEO of BlackRock, in a statement. “For decarbonization solutions and technologies to transform our economy, they need to be scaled. To do that, they need patient, well-managed capital to support their vital goals. This partnership will help define climate solutions as a standalone asset class that is both essential to our collective mission and a historic investment opportunity created by the net zero transition.”

To get a sense of what Decarbonization Partners might back, companies should probably look to the Breakthrough Energy portfolio — the firms share similar interests in new sources of energy, technologies to distribute that energy, building and manufacturing technologies, and material science and process innovations.

It’s a big swing that the firms are taking, but the flood of capital coming into the sustainability sector is commensurate with both the size of the problem, and the potential opportunity in returns generated by solving it.

A report from Morgan Stanley estimated that solving climate change would be a $50 trillion problem, according to a 2019 report from Forbes.

“Bold, aggressive actions are needed to make the global net zero ambition a reality. Decarbonization Partners represents one of several steps we are taking to follow through on our commitment to halve the emissions from our portfolio by 2030, and ultimately move to net zero emissions by 2050,” said Dilhan Pillay, Chief Executive Officer of Temasek International. “Through collective efforts with like-minded partners, we will be able to create sustainable value for all of our stakeholders over the long term, and investors will have the opportunity to help deliver innovative solutions at scale to address climate challenges.”

#articles, #bill-gates, #blackrock, #chief-executive-officer, #energy, #forbes, #greenhouse-gas-emissions, #impossible-foods, #india, #morgan-stanley, #singapore, #tc, #temasek, #temasek-holdings

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Startups have about $1 trillion worth of reasons to love the Biden infrastructure plan

The sweeping infrastructure package put forward today by President Joe Biden comes with a price tag of roughly $2 trillion (and hefty tax hikes) but gives startups and the broader tech industry about $1 trillion worth of reasons to support it.

Tech companies have spent the past decade or more developing innovations that can be applied to old-world industries like agriculture, construction, energy, education, manufacturing and transportation and logistics. These are industries where structural impediments to technology adoption have only recently been broken down by the advent of incredibly powerful mobile devices.

Now, these industries are at the heart of the President’s plan to build back better, and the hundreds of billions of dollars that are earmarked to make America great again will, either directly or indirectly, be a huge boost to a number of startups and large tech companies whose hardware and software services will enable much of the work the Biden administration wants done.

“The climate-oriented investment in Biden’s new plan would be roughly ten times what came through ARRA,” wrote Shayle Kann, a partner with the investment firm, Energy Impact Partners. “It would present a huge opportunity for a variety of climate tech sectors, ranging from clean electricity to carbon management to vehicle electrification.”

Much of this will look and feel like a Green New Deal, but sold under a package of infrastructure modernization and service upgrades that the country desperately needs.  Indeed, it’s hard to invest in infrastructure without supporting the kind of energy efficiency and renewable development plans that are at the core of the Green New Deal, since efficiency upgrades are just a part of the new way of building and making things.

Over $700 billion of the proposed budget will go to improving resiliency against natural disasters; upgrading critical water, power, and internet infrastructure; and rehabilitating and improving public housing, federal buildings, and aging commercial and residential real estate.

Additionally there’s another roughly $400 billion in spending earmarked for boosting domestic manufacturing of critical components like semiconductors; protecting against future pandemics; and creating regional innovation hubs to promote venture capital investment and startup development intended to “support the growth of entrepreneurship in communities of color and underserved communities.”

Climate resiliency 

Given the steady drumbeat of climate disasters that hit the U.S. over the course of 2020 (and their combined estimated price tag of nearly $100 billion), it’s not surprising that the Biden plan begins with a focus on resiliency.

The first big outlay of cash outlined in the Biden plan would call for $50 billion in financing to improve, protect and invest in underserved communities most at risk from climate disasters through programs from the Federal Emergency Management Agency, Department of Housing and Urban Development, and new initiatives from the Department of Transportation. Most relevant to startups is the push to fund initiatives and technologies that can help prevent or protect against extreme wildfires; rising sea levels and hurricanes; new agriculture resource management; and “climate-smart” technologies.

As with most of Biden’s big infrastructure initiatives, there are startups tackling these issues. Companies like Cornea, Emergency Reporting, Zonehaven are trying to solve different facets of the fire problem; while flood prediction and weather monitoring startups are floating up their services too. Big data analytics, monitoring and sensing tools, and robotics are also becoming fixtures on the farm. For the President’s water efficiency and recycling programs, companies like Epic CleanTec, which has developed wastewater recycling technologies for residential and commercial buildings.

Fables of the reconstruction

Energy efficiency and building upgrades represent by far the biggest chunk of the Biden infrastructure package — totaling a whopping $400 billion of the spending package and all devoted to upgrading homes, offices, schools, veteran’s hospitals and federal buildings.

It gives extra credence to the thesis behind new climate-focused funds from Greensoil Proptech Ventures and Fifth Wall Ventures, which is raising a $200 million investment vehicle to focus on energy efficiency and climate tech solutions.

As Fifth Wall’s newest partner Greg Smithies noted last year, there’s a massive opportunity in building retrofits and startup technologies to improve efficiency.

“What excites me about this space is that there’s so much low-hanging fruit. And there’s $260 trillion worth of buildings,” Smithies said last year. “The vast majority of those are nowhere up to modern codes. We’re going to have a much bigger opportunity by focusing on some not-so-sexy stuff.”

Decarbonizing real estate can also make a huge difference in the fight against global climate change in addition to the its ability to improve quality of life and happiness for residents. “Real estate consumes 40% of all energy. The global economy happens indoors,” said Fifth Wall co-founder Brendan Wallace, in a statement. “Real estate will be the biggest spender on climate tech for no other reason than its contribution to the carbon problem.”

The Biden plan calls on Congress to enact new grant programs that award flexible funding to jurisdictions that take concrete steps to eliminate barriers to produce affordable housing. Part of that will include $40 billion to improve the infrastructure of the public housing in America.

It’s a project that startups like BlocPower are already deeply involved in supporting.

“Get the superhero masks and capes out. The Biden Harris Climate announcement is literally a plan to save the American economy and save the planet. This is Avengers Endgame in real life. We can’t undo the last five years… but we can make smart, massive investments in the climate infrastructure of the future,” wrote Donnel Baird, the chief executive and founder of BlocPower. “Committing to electrify 2 million American buildings, moving them entirely off of fossil fuels is exactly that — an investment in America leading theway towards creating a new industry creating American jobs that cannot be outsourced, and beginning to reduce the 30% of greenhouse gas emissiosn that come from buildings.”

As part of the package that directly impacts startups, there’s a proposal for a $27 billion Clean Energy and Sustainability Accelerator to mobilize private investment, according to the White House. The focus will be on distributed energy resources, retrofits of residential, commercial and municipal buildings; and clean transportation. A focus there will be on disadvantaged communities that haven’t had access to clean energy investments.

Financing the future startup nation

“From the invention of the semiconductor to the creation of the Internet, new engines of economic growth have emerged due to public investments that support research, commercialization, and strong supply chains,” the White House wrote. “President Biden is calling on Congress to make smart investments in research and development, manufacturing and regional economic development, and in workforce development to give our workers and companies the tools and training they need to compete on the global stage.”

To enable that, Biden is proposing another $480 billion in spending to boost research and development — including $50 billion for the National Science Foundation to focus on semiconductors and advanced communications technologies, energ technologies and biotechnology. Another $30 billion is designed to be targeted toward rural development; and finally the $40 billion in upgrading research infrastructure.

There’s also an initiative to create ARPA-C, a climate focused Advanced Research Projects Agency modeled on the DARPA program that gave birth to the Internet. There’s $20 billion heading toward funding climate-focused research and demonstration projects for energy storage, carbon capture and storage, hydrogen, advanced nuclear and rare earth  element separations, floating off shore wind, biofuel/bioproducts, quantum computing and electric vehicles.

The bulk of Biden’s efforts to pour money into manufacturing represents another $300 billion in potential government funding. That’s $30 billion tickets for biopreparedness and pandemic preparedness; another $50 billion in semiconductor manufacturing and research; $46 billion for federal buying power for new advanced nuclear reactors and fuel, cars, ports, pumps and clean materials.

Included in all of this is an emphasis on developing economies fairly and equally across the country — that means $20 billion in regional innovation hubs and a Community Revitalization Fund, which is designed to support innovative, community-led redevelopment efforts and $52 billion in investing in domestic manufacturers — promoting rural manufacturing and clean energy.

Finally for startups there’s a $31 billion available for programs that give small businesses access to credit, venture capital, and R&D dollars. Specifically, the proposal calls for funding for community-based small business incubators and innovation hubs to support growth in communities of color and underserved communites.

Water and power infrastructure 

America’s C- grade infrastructure has problems extending across the length and breadth of the country. It encompasses everything from crumbling roads and bridges to a lack of clean drinking water, failing sewage systems, inadequate recycling facilities, and increasing demands on power generation, transmission and distribution assets that the nation’s electricity grid is unable to meet.

“Across the country, pipes and treatment plants are aging and polluted drinking water is endangering public health. An estimated six to ten million homes still receive drinking water through lead pipes and service lines,” the White House wrote in a statement.

To address this issue, Biden’s calling for an infusion of $45 billion into the Environmental Protection Agency’s Drinking Water State Revolving Fund and Water Infrastructure Improvements for the Nation Act grants. While that kind of rip and replace project may not directly impact startups, another $66 billion earmarked for upgrades to drinking water, wastewater and stormwater systems and monitoring and managing the presence of contaminants in water will be a huge boon for the vast array of water sensing and filtration startups that have flooded the market in the past decade or more (there’s even an entire incubator dedicated to just water technologies).

The sad fact is that water infrastructure in America has largely failed to keep up in large swaths of the country, necessitating this kind of massive capital infusion.

And what’s true for water is also true increasingly true for power. Outages cost the U.S. economy upwards of $70 billion per year, according to the White House. So when analysts compare those economic losses to a potential $100 billion outlay, the math should be clear. For startups that math equals dollar signs.

Calls to build a more resilient transmission system should be music to the ears of companies like Veir, which is developing a novel technology for improving capacity on transmission lines (a project that the Biden administration explicitly calls out in its plan).

The Biden plan also includes more than money, calling for the creation of a new Grid Deployment Authority within the Department of Energy to better leverage rights-of-way along roads and railways and will support financing tools to develop new high-voltage transmission lines, the White House said.

The administration doesn’t stop there. Energy storage and renewable technologies are going to get a boost through a clutch of tax credits designed to accelerate their deployment. That includes a ten-year extension and phase down of direct-pay investment tax credits and production tax credits. The plan aslo calls for clean energy block grants and calls for the government to purchase nothing but renewable energy all day for federal buildings.

Complimenting this push for clean power and storage will be a surge in funding for waste remediation and cleanup, which is getting a $21 billion boost under Biden.

Companies like Renewell Energy, or various non-profits that are trying to plug abandoned oil wells, can play a role here. There’s also the potential to recover other mineral deposits or reuse the wastewater that comes from these wells. And here, too, investors can find early stage businesses looking for an angle. Part of the money frm the Biden plan will aim to redevelop brownfields and turn them into more sustainable businesses.

That’s where some of the indoor agriculture companies, like Plenty, Bowery Farms, AppHarvest could find additional pots of money to turn unused factory and warehouse space into working farms. Idled factories could also be transformed into hubs for energy storage and community based power generation and distribution facilities, given their position on the grid.

“President Biden’s plan also will spur targeted sustainable, economic development efforts through the Appalachian Regional Commission’s POWER grant program, Department of Energy retooling grants for idled factories (through the Section 132 program), and dedicated funding to support community-driven environmental justice efforts – such as capacity and project grants to address legacy pollution and the cumulative impacts experienced by frontline and fenceline communities,” the White House wrote.

Key to these redevelopment efforts will be the establishment of pioneer facilities that demonstrate carbon capture retrofits for large steel, cement, and chemical production facilities. But if the Biden Administration wanted to, its departments could go a step further to support lower emission manufacturing technologies like the kind companies including Heliogen, which is using solar power to generate energy for a massive mining operation, or Boston Metal, which is partnering with BMW on developing a lower emission manufacturing process for steel production.

Critical to ensuring that this money gets spent is a $25 billion commitment to finance pre-development activities, that could help smaller project developers, as Rob Day writes in Forbes.

“As I’ve written about elsewhere, local project developers are key to getting sustainability projects built where they will actually do the most good — in the communities hit hardest by both local pollution and climate change impacts. These smaller project developers have lots of expenses they must pay just to get to the point where private-sector infrastructure construction investments can come in,” Day wrote. “Everyone in sustainability policy talks about supporting entrepreneurs, but in reality much of the support is aimed at technology innovators and not these smaller project developers who would be the ones to actually roll out those technology innovations. Infrastructure investors are typically much more reticent to provide capital before projects are construction-ready.”

Building a better Internet

“Broadband internet is the new electricity. It is necessary for Americans to do their jobs, to participate equally in school learning, health care, and to stay connected,” the White House wrote. “Yet, by one definition, more than 30 million Americans live in areas where there is no broadband infrastructure that provides minimally acceptable speeds. Americans in rural areas and on tribal lands particularly lack adequate access. And, in part because the United States has some of the highest broadband prices among OECD countries, millions of Americans can’t use broadband internet even if the infrastructure exists where they live.”

The $100 billion that the Biden Administration is earmarking for broadband infrastructure includes goals to meet 100 percent high-speed broadband coverage and prioritizes support for networks owned, operated, or faffiliated with local governments, non-profits and cooperatives.

Attendant with the new cash is a shift in regulatory policy that would open up opportunities for municipally-owned or affiliated providers and rural electric co-ops from competing with prive providers and requiring internet providers to be more transparent about their pricing. This increased competition is good for hardware vendors and ultimately could create new businesses for entrepreneurs who want to become ISPs of their own.

Wander is one-such service providing high speed wireless internet in Los Angeles.

“Americans pay too much for the internet – much more than people in many other countries – and the President is committed to working with Congress to find a solution to reduce internet prices for all Americans, increase adoption in both rural and urban areas, hold providers accountable, and save taxpayer money,” the White House wrote.

 

#agriculture, #america, #articles, #biden-administration, #biotechnology, #blocpower, #brendan-wallace, #broadband, #co-founder, #congress, #construction, #cornea, #department-of-transportation, #education, #electricity, #energy, #energy-impact-partners, #fifth-wall-ventures, #forbes, #greg-smithies, #infrastructure, #joe-biden, #kamala-harris, #los-angeles, #manufacturing, #mobile-devices, #national-science-foundation, #oecd, #plenty, #president, #quantum-computing, #real-estate, #semiconductor, #semiconductors, #steel, #supply-chains, #tc, #united-states, #venture-capital, #venture-capital-investment, #white-house

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Investors Clara Brenner, Quin Garcia and Rachel Holt are coming to TC Sessions: Mobility 2021

The transportation industry is abuzz with upstarts, legacy automakers, suppliers and tech companies working on automated vehicle technology, digital platforms, electrification and robotics. Then there are shared mobility companies from cars to scooters and mopeds to ebikes. And who can forget the emerging air taxi companies?

At the center of this evolving industry are the investors. Simply put: TechCrunch can’t hold an event on mobility without hearing from the people who are hunting for the best opportunities in the industry and tracking all of its changes. That’s why we’re happy to announce investors Clara Brenner of Urban Innovation Fund, Quin Garcia of Autotech Ventures and Rachel Holt of Construct Capital will join us on our virtual stage at TC Sessions: Mobility 2021. The virtual event, which features the best and brightest minds in the world of mobility, will be held on June 9.

p.s. Early Bird tickets to the show are now available – book today and save 35% before prices go up.

Brenner, Garcia and Holt will come on stage to discuss their near and long-term investment strategies, overlooked opportunities, and challenges that face startups trying to break into the transportation sector. They’ll lean on their considerable experience to provide the advice and insight that will help attendees understand the state of the industry and where it is headed.

Brenner is a serial co-founder. She is co-founder and managing partner of the Urban Innovation Fund, a venture capital firm that provides seed capital and regulatory support to entrepreneurs solving urban challenges. Urban Innovation Fund has backed curbflow, Electriphi and Kyte among others. She also co-founded Tumml, a startup hub for urban tech that provided 38 startups with seed funding and mentorship, and hosts events around urban innovation. In 2014, Forbes listed her as one of its “30 Under 30” for Social Entrepreneurship.

Garcia, a lifelong ‘car guy’ with an MS degree in management science and automotive engineering from Stanford University, is managing director at Autotech Ventures. He’s also a board director, board observer and advisory board member to a number of mobility companies including Lyft, Peloton Technology, and Connected Signals.

Garcia has been on the ground floor of startups, notably as part of the initial team at the electric vehicle infrastructure startup Better Place, where he was responsible for partnerships with automakers and parts suppliers while living in Israel, Japan and China.

Holt is co-founder and Managing Partner of early-stage venture firm Construct Capital, which is focused on finding founders that are trying to change foundational industries such as manufacturing and supply chain, logistics and transportation. The company’s transportation-focused investments include ChargeLab. Holt also sits on the board of MotoRefi.

Prior to Construct, Holt was at Uber, where she was one of the company’s first 30 employees. During her 8.5-year stint at Uber, Holt rose through the ranks of the company, including roles running the U.S.  and Canada “Rides” business as well as global marketing and customer support. She was a longtime member of the company’s executive leadership team. Her last position at Uber was leading the company’s new mobility organization, which focused on its e-bike and scooter businesses as well as running its incubator, which funded and developed new products and services.

Rachel began her career at Bain & Company, advising companies in the private equity, financial services and healthcare industries. She was ranked No. 9 on Fortune’s 40 under 40 and was named by Fast Company as One of the Most Creative People in Business.

We can’t wait to hear from this investor panel at TC Sessions: Mobility on June 9. Make sure to grab your Early Bird pass before May 6 to save 35% on tickets and join the fun!

#articles, #automotive, #autotech-ventures, #better-place, #board-member, #business, #canada, #china, #clara-brenner, #construct-capital, #e-bike, #economy, #entrepreneurship, #events, #executive, #fast-company, #financial-services, #forbes, #innovation, #israel, #japan, #lyft, #manufacturing, #motorefi, #peloton-technology, #private-equity, #quin-garcia, #rachel-holt, #stanford-university, #startup-company, #supply-chain, #tc, #tc-sessions-mobility, #techcrunch, #transportation, #uber, #united-states, #urban-innovation-fund, #venture-capital

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As the SPAC frenzy continues, questions arise about how much the market can absorb

Another week and the biggest story in a sea of big stories continues to center on SPACs, these blank-check companies that raise capital through IPOs expressly to acquire a privately held company and take it public. But some industry watchers as starting to wonder: Is this party just getting started, with more early guests still trickling in? Have we reached the party’s peak, with the music still thumping? Or did someone just quietly barf in the corner, a sure indicator that it’s time to grab one’s coat?

It certainly feels like things are in full swing. Just today, B Capital, the venture firm cofounded by Facebook cofounder Eduardo Saverin, registered plans to raise a $300 million SPAC. Mike Cagney, the fintech entrepreneur who founded SoFI and more recently founded Figure, a fintech company in both the home equity and blockchain space, raised $250 million for his SPAC. Even Michael Dell has made the leap, with his family office registering plans this afternoon to raise a $500 million blank-check company.

Altogether, according to Renaissance Capital, 16 blank-check companies raised $3.4 billion this week, and new filers continue to flood into the IPO pipeline, with 45 SPACs submitting initial filings this week (compared with 10 traditional IPO filings). Perhaps it’s no wonder that we’re starting to see headlines like one in Yahoo News just yesterday titled, “Why some SPAC investors may get burned.”

Interestingly, such headlines could help puncture the SPAC bubble. So argues INSEAD professor Ivana Naumovska in a new Harvard Business Review piece that’s ominously titled, “The SPAC Bubble is About to Burst.”

Naumovska points to research showing that when more people adopt a practice, it will become increasingly widespread due to growing awareness and legitimacy. (See Clubhouse.) But when it comes to something that’s more controversial — which it could be argued that SPACs are — outsider concern and skepticism also grows as the practice becomes more widely used. Thus are born headlines like that one in Yahoo Finance.

Naumovska has studied this phenomenon before, focusing on earlier reverse mergers that, as she notes, “surged in the mid-2000s, outnumbering IPOs in some years, and peaked in 2010, before falling off a cliff in 2011.” She says she and fellow researchers collected a plethora of data on the use of reverse mergers and market responses to them, including how the media evaluated such vehicles. Of the 267 articles published between 2001 and 2012, she says, 6 were positive, 148 were neutral, 113 were negative.

Notably and unsurprisingly, the negative articles grew as the number of reverse merger transactions involving firms with relatively low reputations increased. Then again, the same thing happens whenever the “IPO window” is open. Great companies go public, then good companies, then half-baked companies that think they might just blend in with the others. Except that the media picks up on these companies, as do regulators, and with investors, regulators, and the media feeding off one another’s signals, the party typically comes to a screeching halt.

Anecdotally, much more of the coverage around SPACs right now remains positive to neutral. If business reporters are privately skeptical of SPACs, they are reserving judgment, possibly because save for some highly concerning cases —  like when the electric truck startup Nikola was accused of fraud — there isn’t much to criticize yet.

That’s partly because these things appeared so abruptly that public shareholders are still trying to understand them.

The argument that most investors have for creating a SPAC — which is that a lot of so-called unicorn companies are ready to be publicly traded — resonates, too, given how bloated the private market has become.

It’s also impossible to judge many of the SPACs raised over the last six months, as they have yet to announce their targets (they have two years from the time they raise funds from investors to zero in on a company or else have they have give back those IPO proceeds).

In the meantime, some of the merger deals that critics have long expected would begin to unravel have not, like Virgin Galactic, the space tourism company that kicked off SPAC mania when it went public in the fall of 2019.

Sir Richard Branson founded the company in 2004 in order to fly passengers on suborbital trips to space, but even after putting off plans yet again to attempt a rocket-powered flight to suborbital space last week, its shares — which have more than doubled since January– remain in the figurative stratosphere. (The company, which reported almost no revenue last year, is currently valued at $12 billion.)

Other offerings haven’t gone quite as smoothly. Clover Health, a health insurance company that, like Virgin Galactic, was taken public via a SPAC organized by famed investor Chamath Palihapitiya, is “facing a confluence of existential threats” to its business, as observed in a deep dive by Forbes.

Among others that are “digging into Clover’s business practices, including how the company incentivizes doctors and patients to buy its insurance and use its technology,” are the The Department of Justice, the Securities and Exchange Commission and influential short-sellers. (Clover has rebutted the allegations, but it is reportedly still facing at least three class-action lawsuits that have been filed over the company’s failure to disclose ahead of its IPO that the DOJ was investigating the company.)

“I don’t get it,” said skeptic Steve Jurvetson last month in conversation with this editor of the SPAC frenzy. The veteran venture capitalist, who sits on the board of SpaceX, said there are “some good companies [being taken public]. Don’t get me wrong; they aren’t all fraudulent.” But many are “early-stage venture companies,” he noted, “and they don’t need to meet the forecasting requirements that the SEC normally requires of an IPO, so [SPAC sponsors are] specifically looking for companies that don’t have any operating numbers to show [because they] can make any forecasts they want . . .That’s the whole racket.”

If many agree with Jurvetson, they hesitate to say so publicly. Ed Sim of Boldstart Ventures in New York is one of few VCs in recent months who to say outright, when asked, that they aren’t considering raising a SPAC at any point. “I have zero interest in that honestly,” says Sim. “You can come back to me if you see my name or Boldstart [affiliated] with a SPAC two years from now,” he adds, laughing.

Many more investors stress that it’s all about who is sponsoring what.

During a call yesterday with Kevin Mayer, the former Disney exec and, briefly, the CEO of the social network TikTok, he noted that there are “many fewer public companies now than there were 10 years ago, so there is a need for supplying another way to go public.”

Mayer has a vested interest in promoting the safety and efficacy of SPACs. Just yesterday, along with former Disney colleague Tom Staggs, he registered plans for a second a SPAC, after it was announced earlier this month that their first SPAC will be used to take public the digital fitness specialist Beachbody Company.

Still, Mayer argued that not every SPAC should be judged by the same yardstick. “Do I think it’s overdone? Sure, everyone and their brother is now getting to a SPAC, so yeah, that does seem a bit ridiculous. But I think . . . the wheat will be separated from the chaff very, very soon.”

It might have to happen if SPACs are to endure. Working against SPAC sponsors already are numbers that are starting to trickle in and that don’t look so great.

Late last week, Bloomberg Law reported that based on its analysis of the companies that went public as a result of a merger with a SPAC dating back to Jan. 1, 2019, and for which at least one month of post-merger performance data is available, 14 out of 24 (or 60%) reported a depreciation in value as of one month following the completion of the merger, and one-third of the companies reported a year-to-date depreciation in value.

The number of securities lawsuits filed by SPAC stockholders post-merger is also on the rise, noted the outlet.

Certainly, SPACs — more recently heralded as a lasting fix for a broken IPO market — could still prove durable rather than vehicles whose demise will come as the quality of offerings invariably sinks.

In the meantime, given the rate at which SPACs are being formed, as well as the some of the companies in their sights — some of them still in the prototype phase — the question of whether this phenomenon is sustainable is one that more are beginning to ask.

As for Professor Naumovska, she thinks she knows the answer already.

#chamath-palihapitiya, #clover-health, #ed-sim, #eduardo-saverin, #forbes, #ipo, #kevin-mayer, #michael-dell, #richard-branson, #spac, #tc, #venture-capital, #virgin-galactic

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The only take about the future of media is that media is the future

Hello and welcome back to Equity, TechCrunch’s venture-capital-focused podcast, where we unpack the numbers behind the headlines.

This week we — Natasha and Danny and Alex and Grace — had more than a little to noodle over, but not so much that we blocked out a second episode. We try to stick to our current format, but, may do more shows in the future. Have a thought about that? equitypod@techcrunch.com is your friend and we are listening.

Now! We took a broad approach this week, so there is a little of something for everything down below. Enjoy!

Like we said, it’s a lot, but all of it worth getting into before the weekend. Hugs from the team, we are back early Monday.

Equity drops every Monday at 7:00 a.m. PST and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

#a16z, #bolt-mobility, #cruise, #equity-podcast, #fintech, #forbes, #fundings-exits, #gps, #hims, #microsoft, #plaid, #rivian, #startups, #tripactions, #venture-capital, #wattpad

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Spotify CEO Daniel Ek pledges $1Bn of his wealth to back deeptech startups from Europe

At an online event today, Daniel Ek, the founder of Spotify, said he would invest 1 billion euros ($1.2 billion) of his personal fortune in deeptech “moonshot projects”, spread across the next 10 years.

Ek indicated that he was referring to machine learning, biotechnology, materials sciences and energy as the sectors he’d like to invest in.

“I want to do my part; we all know that one of the greatest challenges is access to capital,” Ek said, adding he wanted to achieve a “new European dream”.

“I get really frustrated when I see European entrepreneurs giving up on their amazing visions selling early on to non-European companies, or when some of the most promising tech talent in Europe leaves because they don’t feel valued here,” Ek said. “We need more super companies that raise the bar and can act as an inspiration.”

According to Forbes, Ek is worth $3.6 billion, which would suggest he’s putting aside roughly a third of his own wealth for the investments.

And it would appear his personal cash will be deployed with the help of a close confidant of Ek’s. He retweeted a post by Shakhil Khan, one of the first investors in Spotify, who said “it’s time to come out of retirement then.”

During a fireside chat held by the Slush conference, he said: “We all know that one of the greatest challenges is access to capital. And that is why I’m sharing today that I will devote €1bn of my personal resources to enable the ecosystem of builders.” He said he would do this by “funding so-called moonshots focusing on the deep technology necessary to make a significant positive dent, and work with scientists, entrepreneurs, investors and governments to do so.”

He expressed his desire to level-up Europe against the US I terms of tech unicorns: “Europe needs more super companies, both for the ecosystem to develop and thrive. But I think more importantly if we’re going to have any chance to tackle the infinitely complex problems that our societies are dealing with at the moment, we need different stakeholders, including companies, governments, academic institutions, non-profits and investors of all kinds to work together.”

He also expressed his frustration at seeing “European entrepreneurs, giving up on their amazing visions by selling very early in the process… We need more super companies to raise the bar and can act as an inspiration… There’s lots and lots of really exciting areas where there are tons of scientists and entrepreneurs right now around Europe.”

Ek said he will work with scientists, investors, and governments to deploy his funds. A $1.2 billion fund would see him competing with other large European VCs such as Atomico, Balderton Capital, Accel, Index Ventures and Northzone.

Ek has been previously known for his interest in deeptech. He has invested in €16m in Swedish telemedicine startup Kry. He’s also put €3m into HJN Sverige, an artificial intelligence company in the health tech arena.

#articles, #artificial-intelligence, #balderton-capital, #biotechnology, #business, #daniel-ek, #economy, #energy, #entrepreneurship, #europe, #forbes, #founder, #kry, #machine-learning, #northzone, #private-equity, #spotify, #startup-company, #tc, #telemedicine, #united-states

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As it delists, Rocket Internet’s ill-fated experiment with public markets is over

It was all supposed to be so different. When Rocket Internet IPO’d in 2014 it was the largest tech company floatation in Europe for 7 years. A year later it had lost $46m and it’s valuation had dropped by 30%. Since then the German start-up factory behind internet companies such as Delivery Hero, Zalando and Jumia has languished, in part because the reason for it’s existence – to provide growth capital for ‘rocket-fuelled’ startups – has ebbed away, as the tech market was flooded with capital in recent years. Today the company said it was delisting its shares from the Frankfurt and Luxembourg Stock Exchanges for just that reason.

Rocket’s market value has fallen from its high of 6.7 billion euros ($8 billion) on the day of its IPO on the Frankfurt Stock Exchange to just 2.6 billion euros and is now offering investors 18.57 euros ($22.23) for each of their shares, lower than Monday’s closing price of 18.95 euros.

The company said it was “better positioned as a company not listed on a stock exchange” as this would allow it to focus on long-term bets.

In a statement, the company said: “The use of public capital markets as a financing source as essential [sic.] parameter for maintaining a stock exchange listing is no longer required and adequate access to capital is secured outside the stock exchange. Outside a capital markets environment, the Company will be able to focus on a long-term development irrespective of temporary circumstances capital markets tend to put emphasis on.”

Delisting, it said, will also reduce operational complexity when setting up new companies, “freeing up administrative and management capacity and reducing costs”.

Its investment division, Global Founders Capital, and CEO Oliver Samwer, will retain their stakes of 45.11% and 4.53% respectively, meaning the virtual shareholder meeting on Sept. 24 ask for shareholder approval to delist will be largely a formality. It has also launched a separate buyback program to secure 8.84% of its shares from the stock market. Although the decision to de-list makes sense, smaller shareholders will be burned, especially as Rocket is using its own cash for the buy-back.

The bets Rocket took, however, have of course paid off. For some. According to Forbes, Samwer and his brothers and co-founders Alexander and Marc are worth at least $1.2 billion each.

The Berlin -based firm became quickly known as a “clone factory” after Samwer famously conceded during his PHD that Silicon Valley had got innovation wrong by comping up with new ideas, and the ‘innovation’ would simply be to make existing models more efficient. The fact those existing models were usually dreamt up by other people never seemed to phase him.

Almost like clockwork Rocket produce clones of various guess for Amazon, Uber, Uber Eats and Airbnb. Its defence for this rapacious strategy was that it was simply adapting proven models for other markets.

Rocket would say it was merely adapting proven models for untapped local markets. Of course, the kicker was usually that the company would either scale faster globally than the original US-based startup, thus forcing some kind of acquisition, or that it would have its clones IPO faster. It did however produce some big, global, companies, even if they were not particularly original, including e-commerce firm Zalando, food delivery service Delivery Hero and meal-kit provider HelloFresh .

There have been successes. Jumia, the African e-commerce company, listed in April last year and when Rocket sold its stake earlier this year, it contributed tp Rocket’s net cash position of €1.9bn at the end of April.

But it has not benefitted from the recent stock market rally for tech companies, as it is overly exposed to e-commerce rather than pandemic-proof companies like Zoom .

For nostalgia sakes, here’s that interview I did with Oliver Samwer in 2015, just one more time.

#airbnb, #alexander, #amazon, #berlin, #ceo, #companies, #delivery-hero, #e-commerce, #europe, #food, #forbes, #frankfurt, #global-founders-capital, #hellofresh, #internet, #jumia, #kicker, #listing, #marc, #oliver-samwer, #retailers, #rocket-internet, #tc, #uber, #zalando, #zoom

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Vista Partners founder calls for a fintech revolution to help pandemic-hit, minority-owned small businesses

The head of what is arguably private equity’s most successful technology investment firm — Vista Equity Partners — made a rare appearance on Meet The Press to discuss the steps that the country needs to take to help minority-owned businesses recover from the economic collapse caused by the COVID-19 epidemic.

Robert F. Smith is one of the worlds wealthiest private equity investors, a noted philanthropist, and the richest African American in the U.S.  Days after announcing a $1.5 billion investment into the Indian telecommunications technology developer Jio Platforms, Smith turned his attention to the U.S. and the growing economic crisis that’s devastating minority businesses and financial institutions even as the COVID-19 epidemic ravages the health of minority communities.

Calling the COVID-19 “a pandemic on top of a series of epidemics”, Smith said that the next round of stimulus needs to support the small businesses that still remain underserved by traditional financial institutions — and that new financial technology software and services can help.

“We need to continue to rally as Americans to come with real, lasting, scalable solutions to enable the communities that are getting hit first, hardest, and probably will take the longest to recover with solutions that will help these communities thrive again,” Smith told NBC’s Chuck Todd.

Smith called for an infusion of cash into community development financial institutions and for a new wave of technology tools to support transparency and facilitate operations among these urban rural communities that aren’t served by large banking institutions. 

In all, the first round of the Congressional stimulus package poured $6 trillion into the U.S. economy through authorizations for the Treasury to issue $4 trillion in credit and $2 billion in cash payouts to various industries. The average size of those initial loans was just under $240,000, according to a post-mortem assessment of the Payroll Protection Program written by Lendio chief executive Brock Blake for Forbes

Blake’s assessment of the shortcomings of the PPP echoes Smith’s own criticism of the program. “Many of these small communities — urban, rural — aren’t being banked by the large institutions,” Smith said. Instead they’re working with community development financial institutions that in many instances weren’t approved lenders under the Small Business Administration and so were not able to distribute PPP money and make loans to their customers.

“We have to take this opportunity to reinvest in our business infrastructure in these small to medium businesses. In our banking infrastructure so that we can actually emerge out of this even stronger,” Smith said. “We have to invest in technology and software so that these ‘capillary banking systems’ are more efficient and they have more access to capital so they can engage with these businesses that are underbanked.”

In many instances this would amount to the construction of an entirely new financial infrastructure to support the small businesses that were only just beginning to emerge in minority communities after the 2008 recession.

“We need to get this average loan size to $25,000 and $15,000,” said Smith. To do that, community banks and development finance institutions are going to need to be able to access new fintech solutions that accelerate their ability to assess the creditworthiness of their customers and think differently about how to allocate capital and make loans. 

In some ways, Smith is echoing the call that fintech executives have been making since the PPP stimulus first started making its way through the financial system and banks began issuing loans.

“We would be remiss if we didn’t take a significant portion of capital to reinvest in the infrastructure of delivering capital back into those businesses and frankly reinvest in those businesses and give them technology and capability so there’s more transparency and visibility so there’s an opportunity to grow [and] scale,” said Smith. “I don’t want to see us go back to the same position where we were so we have these banking deserts.”

The head of Vista Equity Partners has even tasked his own portfolio companies to come up with solutions. As Barron’s reported last week, Smith told the Vista Equity portfolio company Finastra to develop technology that could help small lenders process Paycheck Protection Program loans for small businesses in underserved communities.

“In the process, it became apparent how unbanked these most vulnerable communities are, and we felt it was imperative to help build out permanent infrastructure in those banks so that they can build long-term relationships with the U.S. Small Business Administration beyond PPP,” Smith told Barrons.

As of last week, 800 lenders had processed 75,000 loans using the software that London-based Finastra developed for U.S. small lenders. Those loans generated $2.2 million in processing fees for the fintech company, proving that there’s money to be made in the small ticket lending market. And even as Finastra is reaping the rewards of its push into small business lending services, Vista Equity and Smith are donating the same amount to local food banks, according to a spokeswoman for the private equity firm, Barron’s reported.

 

#bank, #banking, #economy, #finance, #financial-infrastructure, #financial-technology, #forbes, #head, #lendio, #london, #money, #tc, #u-s-small-business-administration, #united-states, #vista-equity-partners

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