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Stonks, flying burritos and my boss’s boss’s boss’s boss – TechCrunch

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. Want it in your inbox every Saturday morning? Sign up here. What a week. What a month. Are you doing all right? It’s okay if […]

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Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. Want it in your inbox every Saturday morning? Sign up here.

What a week. What a month. Are you doing all right? It’s okay if you are tired. We all are. That’s why we have weekends.

Let’s reflect on what happened this week: Individual traders outraged more professional investors by doing something hilarious, namely taking a trade that made some sense — betting that an atrophying physical retailer was going to continue obsolesce — and inverting it.

By going long on GameStop, investors flipped the script on the smart money. Then all heck snapped free, some stocks got blocked on trading services, Congress got mad, billionaires started to front on Twitter like they were the Common Man, some cryptos surged, including Dogecoin of all things, and as we headed into the weekend nothing was truly resolved. It was weird.

Let’s talk over the lessons we’ve learned. First, don’t short a stock so heavily that you are at risk of having the trade exposed and inverted to your detriment. Second, the fintech startups that TechCrunch has covered for years were more brittle than anticipated, either thanks to reserve requirements or simple platform risk. And third, things can always get dumber.

Evidence of that final lesson came during the week’s news cycle in which it became known that WeWork might pursue a public listing via a SPAC. So much for this year being more serious and normal than 2020.

But let’s stop recapping and get into our main topic today, namely a chat that I had with the person I actually work for, Guru Gowrappan, the CEO of Verizon Media Group (VMG). For those who don’t know, Verizon owns VMG, which in turn owns TechCrunch. VMG is a collection of assets, ranging from Yahoo to media brands to technology products. It does billions in yearly revenue, which should help frame how far above my seat — an excellent perch inside of TechCrunch, but not one that comes with org-chart stature — Guru sits.

Very far away.

But we follow each other on Twitter and after Verizon reported earnings this week, inclusive of some honestly pretty good numbers from VMG that I tweeted about, I got about half an hour of Guru’s time. This meant that I had my boss’s boss’s [etc] boss on the record with zero agenda. How could I say no?

For context, VMG generated $2.3 billion in Q4 revenue, up 11% from the year-ago quarter. Verizon described that as “the first quarter of year-over-year growth since the Yahoo! acquisition.” What drove the result? Per the Verizon earnings call, “strong advertising trends with demand-side platform revenue growing 41% compared to the prior year.”

If you are Guru or, frankly, your humble servant, the growth was welcome after VMG’s revenue had dipped to $1.4 billion in Q2 2020, off 24.5% from its year-ago result.

I had a few questions: Would the recent advertising momentum persist in 2021, something that could impact a host of businesses far beyond the VMG org; how important was it to Verizon that VMG had managed to post year-over-year growth; how he expects to balance commerce revenue and journalism; and what Guru thinks about new media products like the recent rebirth of newsletter tech, something that Substack and Twitter and even Facebook are tinkering with.

Here’s what I learned:

  • Regarding strong advertising performance in the final months of the year during COVID, Guru said that “the core fundamentals [of] the market dynamics have changed so that they’re more permanent,” adding that consumer behavior is now “more digital, more online” than before.
  • The VMG CEO declined to share Q1 2021 expectations in detail, but did note that VMG is aiming to “continue [its] momentum.”
  • Part of that momentum comes from subscription products, which Guru cited as a win: “If you look at one of the trends that happened due to COVID, consumers [are] moving to more trusted content and want to spend more time and money on consuming subscription-based products […] TechCrunch/Extra Crunch grew almost 196% year-on-year.”
  • My read of his answer to where we are today is that it’s not a bad time to be in the online media game, which isn’t something that has been true much in the past few years, looking around the remains of the journalism industry.
  • Regarding VMG’s home inside of Verizon — something that I’ve thought about after the Buzzfeed-HuffPost deal — I asked Guru if VMG’s recent financial performance made our company more attractive to Verizon, and if we have proven the bet that we were trying to make. This, by the way, is the sort of question that is pretty easy to write down, but slightly harder to ask when you are talking to someone who could terminate you at will. Anyway, Guru said “completely” in response. The VMG CEO summarized the Verizon CEO as saying that the media business is “core” to Verizon, and that our parent company “will continue to invest in the media business while we continue to deliver on our promise.” So sign up for Extra Crunch.
  • Guru said VMG won’t exchange revenue for credibility when it comes to promoting e-commerce across its platform: “At no point will we trade dollar value in a transaction for trust; there’s no way. […] The editorial team keeps me honest,” he said, adding that he stays out of changes that might upset journalistic balance. That was good to hear.
  • And finally, are there new media products that VMG may want to emulate, or buy? Guru was generally bullish on personalization, but declined to dish that VMG is about to buy Substack or anything like that.

Oh and I asked if VMG is going to sell, or otherwise divest, any other media properties in the wake of the HuffPost-BuzzFeed decision. Guru said that the Verizon CEO said that the broader company is “fully committed” to the media business, and that that won’t be “built upon divestment.” Instead, he said, it will be built “upon investing and growing,” adding that there are “no plans to sell any additional properties.” As I like my health insurance, that was nice to hear.

I understand that the above is not a standard sort of Exchange entry, but one thing that I will always try to do is take the conversations that come my way thanks to my job, and bring them to you.

Now, back to venture capital.

Market Notes

GameStop was your entire Twitter feed this week but there is other stuff you need to know. Alfred, a US-based fintech raised $100 million on Tuesday, to pick an example. The company fuses digital intelligence and humans to help users manage their financial lives. Neat.

And adding to our recent data-focused coverage of 2020 venture data — including a dive into the African VC market — investing group Work-Bench put together a look at how NYC’s enterprise tech scene performed in the second half of last year. This is the exact sort of data I would parse for you during a more regular week. But since we had this week, you have to do it yourself.

Sticking to data, Hallo, a startup that helps companies recruit more diverse candidates, dropped a sheaf of data in its “Black Founder Funding Q4 2020” report. Read it. If you don’t have time, I’ll give you the headline stat that both caught my eye and depressed my heart: “Hallo’s research found that out of the 1,537 companies analyzed [in Q4 2020], 40 were led by Black founders.”

And this week I got to yammer with Microsoft after it reported earnings. Saving most of that for a later date, two things were clear: The cloud world still has oodles of growth ahead of it, which is good news for a large chunk of the startup software market. And if you wanted more data on Teams’ growth to better understand why Salesforce bought Slack, wait another quarter.

Various and Sundry

Closing out, in August of 2014 I came up with the idea for a burrito cannon food delivery service. You would push a button in an app, and it would deliver a burrito to your office sans the need for you to make choices. Then Postmates actually built a burrito cannon into its app, which was both hilarious and fun.

Fast forward to 2021, and Postmates is now part of Uber. And it is back with the return of the burrito cannon:

I did not anticipate that my lazy, stupid idea would help get an NFL star, over a half decade later, to sprint down a field as an industrial-scale potato cannon shot a Mexican delight in his direction. But it’s 2021 and this is where we are.

Evidence, I think, that all my startup ideas are brilliant,

Alex

By going long on GameStop, investors flipped the script on the smart money. Then all heck snapped free, some stocks got blocked on trading services, Congress got mad, billionaires started to front on Twitter like they were the Common Man, some cryptos surged, including Dogecoin of all things, and as we headed into the weekend nothing was truly resolved. It was weird.

Source: https://techcrunch.com/2021/01/30/stonks-flying-burritos-and-my-bosss-bosss-bosss-boss/

stonks,-flying-burritos-and-my-boss’s-boss’s-boss’s-boss-–-techcrunch

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Tiger Global in talks to back BharatPe at $2.5 billion valuation – TechCrunch

Indian fintech startup BharatPe is in advanced stages of talks to raise about $250 million in a new financing round led by Tiger Global, two sources familiar with the matter told TechCrunch. The new round, a Series E, is valuing the three-year-old New Delhi-headquartered firm at a pre-money valuation of $2.5 billion, sources said, requesting […]

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Indian fintech startup BharatPe is in advanced stages of talks to raise about $250 million in a new financing round led by Tiger Global, two sources familiar with the matter told TechCrunch.

The new round, a Series E, is valuing the three-year-old New Delhi-headquartered firm at a pre-money valuation of $2.5 billion, sources said, requesting anonymity as the matter is private. The round hasn’t closed, so terms may change, sources cautioned.

BharatPe, which prior to the new round had raised about $233 million in equity and $35 million in debt, was valued at about $900 million in its Series D round in February this year, and $425 million last year.

Indian news outlet the CapTable first reported about the talks between Tiger Global and BharatPe and said the round would value the startup at over $2 billion. BharatPe declined to comment.

BharatPe operates an eponymous service to help offline merchants accept digital payments and secure working capital. Even as India has already emerged as the second-largest internet market, with more than 600 million users, much of the country remains offline.

Among those outside of the reach of the internet are merchants running small businesses, such as roadside tea stalls and neighborhood stores. To make these merchants comfortable with accepting digital payments, BharatPe relies on QR codes and point of sale machines that support government-backed UPI payments infrastructure.

The startup, which serves more than 6 million merchants, said it had deployed over 50,000 PoS machines by November of last year, and enables monthly transactions worth more than $123 million. It does not charge merchants for universal QR code access, but is looking to make money by lending. Grover said the startup’s lending business grew by 10x in 2020.

On Friday, India’s central bank RBI granted an in-principle licence to Centrum Financial Services to set up a small finance bank. Centrum Financial Services has collaborated with BharatPe for the license, according to local media.

This is a big one! @bharatpeindia and Centrum at the final leg of a its Small Finance Bank license after receiving its ‘in-principle’ license.

First fintech in the offing to get a banking license in India! Changing face of fintech!https://t.co/d84GEM4NzH

— Osborne Saldanha (@os7borne) June 18, 2021

The startup is additionally also working to launch two new B2C apps, one of which will enable credit on QR UPI, another source familiar with the matter told TechCrunch. The new products will launch as soon as this month, the source said.

BharatPe operates an eponymous service to help offline merchants accept digital payments and secure working capital. Even as India has already emerged as the second-largest internet market, with more than 600 million users, much of the country remains offline.

Source: https://techcrunch.com/2021/06/18/tiger-global-in-talks-to-back-bharatpe-at-2-5-billion-valuation/

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Golden Gate Ventures forecasts a record number of exits in Southeast Asia – TechCrunch

Despite the pandemic’s economic impact, Southeast Asia’s startup ecosystem has proven to be very resilient. In fact, a new report from investment firm Golden Gate Ventures predicts a record number of exits will happen in the region over the next couple of years, thanks to factors like a maturing ecosystem, more secondary buyers and the […]

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Despite the pandemic’s economic impact, Southeast Asia’s startup ecosystem has proven to be very resilient. In fact, a new report from investment firm Golden Gate Ventures predicts a record number of exits will happen in the region over the next couple of years, thanks to factors like a maturing ecosystem, more secondary buyers and the emergence of SPACs.

The firm’s comprehensive “Southeast Asia Exit Landscape Report 2.0,” is a followup to a previous report published in 2019.

Here are some highlights from the latest report, along with additional insight from Golden Gate Ventures partner Michael Lints, its lead author. For both reports, Golden Gate Ventures partnered with business school INSEAD to survey general and limited partners in the region. It also draws on Golden Gate Ventures’ proprietary database, which dates back to 2012 and tracks information like the time between funding rounds and fundraising success rates, as well as public databases, reports and expert commentary from the New York Stock Exchange.

The overall exit landscape

Despite the pandemic’s economic impact, tech proved to be resilient globally (for example, there were a number of initial public offers in the United States at record prices). While Southeast Asia’s tech ecosystem is relatively younger, Lints told TechCrunch its resiliency was driven by companies founded years ago that suddenly saw an increase in demand for their services because of the pandemic.

“We’ve built infrastructure over the past eight to nine years, when it comes to e-commerce, logistics, some on the healthcare side as well, and when the pandemic happened, people were suddenly stuck at home,” Lints said. He added “If you look at the pickup for most of the e-commerce companies, they at least doubled their revenue. For last-mile logistics companies, they’ve increased their revenue. There was a lot of pickup on the digital healthcare side as well.”

While tech fared well compare to many other industries, one downside was that the COVID-19 pandemic caused overall global venture capital investment to decline. Southeast Asia’s startup ecosystem was not immune, and had less exits, but it still did relatively well, with $8.2 billion invested in 2020, according to a report by Cento Ventures and Tech In Asia.

It’s important to note that more than half of that funding was raised in very large rounds by unicorns like Grab, Go-jek and Traveloka, but Cento Ventures found there was also an increase in investments between $50 million to $100 million for other startups. These are usually Series B and C rounds, which Golden Gate Ventures says creates a strong pipeline for potential exits over the next three to four years.

“If you go back even just two years, the amount of B rounds that are happening now, I’ve never seen that number before. It’s a definite increase,” said Lints.

Investments are also continuing to flow into Southeast Asia. According to the report, there was $6 billion of funding in just the first quarter of 2021 (based on data from DealStreet Asia, PWC and Genesis Ventures), making it the strongest start to a year in the region’s history.

This bodes well for the possibility of mergers and acquisitions in 2021. The report found that there were less exits in 2019 and 2020 than in 2018, but not just because of the pandemic—many startups wanted to remain venture-backed for longer. Golden Gate Ventures expects M&A activity will pick up again. In 2021, it forecasts acquisition deals worth more than $30 million, large mergers and an increase in SPACs.

What’s in the pipeline

Golden Gate Ventures predicts that a total of 468 startup exits will happen between 2020 and 2022, compared to the 412 forecast in the previous edition of its report. This is due to more late-stage private equity investors, including secondary buyers, SPACs and a welcoming public market.

Lints said secondary buyers will include a mix of family offices, conglomerates and venture funds that want a higher allocation in a company or to pre-empt a forthcoming round.

“What I think is interesting is some of the later-stage funds, so private equity funds, and not only ones that are in Southeast Asia, but even foreign ones, are now looking to get a position in companies that they assume will be able to raise a Series D or Series E over the next few years. That’s something I haven’t seen before, it’s relatively new in the market,” he added.

Golden Gate Ventures expects M&A activity to continue being the main way Southeast Asian startups exit, potentially accounting for up to 80% of deals, followed by secondary sales (15%) and IPOs (5%).

In fact, there was a record number of M&A deals in 2020, despite the pandemic. Golden Gate Ventures estimates that 45 deals happened, especially in e-commerce, fintech, media, adtech and social networking, as larger companies acquired startups to grow their tech stacks.

More companies going public will create a cascading effect through Southeast Asia’s ecosystem. The report forecasts that companies like Gojek and Trax, who have already made several high-profile acquisitions, will continue buying startups if they list publicly and have more liquidity.

Series B and C deals

While there will be more exits, there are also more opportunities for companies to raise larger later-stage rounds to stay private, if they want to—a sign of Southeast Asia’s maturing ecosystem, said Lints.

As the pandemic unfolded in 2020, the number of pre-seed and seed deals fell. On the other hand, the report found that it became quicker for startups to raise Series B or C rounds, or less than 21 months on average.

“If you look at typical exits between 2015 to 2017, you could argue that some of those exits might have been too early because the company was still in a growth trajectory, but there was hardly any follow-on funding for them to expand to a new country, for instance, or build out a new product,” said Lints. “So their only revenue to raise money was to be acquired by a larger company so they could keep building the product.”

“I think now you’re able to raise that Series C round, which allows you to expand the company and stay private, as opposed to having to drive towards an exit,” he added. “I think that shows the maturity of the ecosystem now and, again, it’s a huge advantage because founders have these amazing things they want to build, and now actually have the capital to do so and to really try to compete, and that has definitely been a big change.”

Another good thing is that the increase in later-stage funding does not appear to be creating a pre-seed and seed funding gap. This is partly because early employees from mature companies that have raised massive rounds often branch out and become founders themselves. As they launch startups, they have the benefit of being familiar with how fundraising works and a network. For example, a significant number of alumni from Grab, Gojek and Lazada have gone on to found companies.

“They seem to be raising a lot faster, and I think the second thing that’s happening across the board is we’re seeing more scouts putting really early checks into companies,” said Lints. “My assumption is if you look at the Series A pipeline, which is still pretty long, that has to come from a large number of pre-seed and seed deals.”

Funds want to cash out

Another factor that may drive an increase in exits—especially M&A deals—are funds that have reached the point where they want to cash out. Golden Gate Ventures’ 2019 report forecast that the first batch of institutional venture funds launched in 2010 to 2012 will start reaching the end of their lifecycle in 2020. This means the general partners of these funds are exploring exit opportunities for their portfolios, leading to an increase in secondary and M&A deals.

This in turn will increase the number of secondary markets, which have typically been low in Southeast Asia. The original investors won’t necessarily push for portfolio companies to sell themselves, but instead look at secondary buyers who might be keen on mergers and M&A deals.

“The thing we’ve seen over the last 18 months is there’s been a larger pickup in the secondary markets, where later-stage investors, in some cases family-owned businesses or family offices, are looking to get access to deals that were started eight, nine or 10 years ago. You’ll see the cap tables of these companies change, and that does mean the founders will have different shareholders,” said Lints.

“These are typically for companies that are performing well, where you can foresee that they will be able to fundraise within the next 12 months. For the ones that are in a more difficult position, I think it’s going to be tricky,” he added. “When you have a portfolio of companies as a fund, that doesn’t necessarily mean that you can sell all 20 of them, so I think for some founders, the impact will be that they will need to make a decision to continue the business and buy back the shares their investors are holding, or are they going to liquidate the business or look for a trade sale.”

SPAC opportunities

The biggest SPAC news in Southeast Asia was Grab’s announcement it will go public in the United States following a $40 billion SPAC deal. Lints expects more Southeast Asian companies to take the SPAC route when going public. Not only does the process give them more flexibility, but for startups that want to list in the U.S., working with a SPAC can help them.

“My guess is with New York allowing direct listings, I think more and more people will shy away from the traditional IPO route and look at what is the fastest and most flexible way to list on a stock exchange. For Southeast Asia, listing has never been easy, so I think SPACs will definitely open the floodgates,” said Lints.

Barriers not only include regulatory filings, pre-IPO roadshows and high costs, but also “concern whether the international retail investor or public markets actually understand these companies in Southeast Asia,” he added. “If you have a very strong sponsor team that is running the SPAC, they can be super helpful in positioning the company, doing the marketing and getting interest from the market as well.”

Both the Singapore Exchange and Indonesian Stock Exchange are preparing to allow SPACs in an effort to attract more tech listings.

Lints said this will allow companies to consider a dual listing in Southeast Asia and the U.S. for larger returns. “A dual listing would be an amazing option and I think through the avenue of SPACs, that makes a lot of sense.”

While tech fared well compare to many other industries, one downside was that the COVID-19 pandemic caused overall global venture capital investment to decline. Southeast Asia’s startup ecosystem was not immune, and had less exits, but it still did relatively well, with $8.2 billion invested in 2020, according to a report by Cento Ventures and Tech In Asia.

Source: https://techcrunch.com/2021/06/15/golden-gate-ventures-forecasts-a-record-number-of-exits-in-southeast-asia/

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Jeff Bezos’ Blue Origin auctions off seat on first human spaceflight for $28M – TechCrunch

Blue Origin has its winning bidder for its first ever human spaceflight, and the winner will pay $28 million for the privilege of flying aboard the company’s debut private astronaut mission. The winning bid came in today during a live auction, which saw 7,600 registered bidders, from 159 countries compete for the spot. This was […]

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Blue Origin has its winning bidder for its first ever human spaceflight, and the winner will pay $28 million for the privilege of flying aboard the company’s debut private astronaut mission. The winning bid came in today during a live auction, which saw 7,600 registered bidders, from 159 countries compete for the spot.

This was the culmination of Blue Origin’s three part bidding process for the ticket, which included a blind auction first, followed by an open, asynchronous auction with the highest bid posted to the company’s website whenever it changed. This last live auction greatly ramped up the value of the winning bid, which was at just under $5 million prior to the event.

This first seat up for sale went for a lot more than what an actual, commercial spot is likely to cost on Blue Origin’s New Shepard capsule, which flies to suborbital space and only spends a few minutes there before returning to Earth. Estimates put the cost of a typical launch at someone under $1 million, likely closer to $500,000 or so. But this is the first, which is obviously a special distinction, and it’s also a trip that will allow the winning bidder to pretty much literally rub elbows with Blue Origin founder Jeff Bezos, who is going to be on the flight as well, along with his brother Mark, and a fourth passenger that Blue Origin says it will be announcing sometime in the coming “weeks,” ahead of the July 20 target flight date.

As for who won the auction, we’ll also have to wait to find that out, since the winner’s identity is also going to be “released in the weeks following” the end of today’s live bidding. And in case you thought that $28 million might represent a big revenue windfall for Blue Origin, which has spent years developing its human spaceflight capability, think again: The company is donating it to its Club for the Future non-profit foundation, which is focused on encouraging kids to pursue careers in STEM in a long-term bid to help Bezos’ larger goals of making humanity a spacefaring civilization.

You can re-watch the entire live bidding portion of the auction via the stream below.

As for who won the auction, we’ll also have to wait to find that out, since the winner’s identity is also going to be “released in the weeks following” the end of today’s live bidding. And in case you thought that $28 million might represent a big revenue windfall for Blue Origin, which has spent years developing its human spaceflight capability, think again: The company is donating it to its Club for the Future non-profit foundation, which is focused on encouraging kids to pursue careers in STEM in a long-term bid to help Bezos’ larger goals of making humanity a spacefaring civilization.

Source: https://techcrunch.com/2021/06/12/jeff-bezos-blue-origin-auctions-off-seat-on-first-human-spaceflight-for-28m/

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