Big wins for Latin America, climate tech momentum and Rover’s $2.3B sale

Here's what the Equity crew got into today: Self-driving setbacks: Cruise is set to slash its costs in the wake of a safety mess, and greater scrutiny from regulators. Alex hopes that the current set of news items doesn’t slow down the progress of self-driving tech. Webull snaps up Flink: Free trading is not just a business model that is popular in the United States. Webull is taking the Latin American market more seriously with its purchase of Flink. Uber <3’s taxis: What are London’s iconic black cabs doing on Uber’s platform? And how long does it take to go from enemies to frenemies? Rover finds the exit: Who would have guessed that dog walking would be worth $2.3 billion? IPOs are heating back up (a little): With Shein and Reddit targeting the IPO market in the coming months, it’s time to get our S-1 boots back on and prepare for some new debuts. Venture downturns are not death sentences: EU venture funding levels are down, but not out. And what’s going on Down Under? We are back on Monday! Chat then! For episode transcripts and more, head to Equity’s Simplecast website. Equity drops at 7 a.m. PT every Monday, Wednesday and Friday, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. TechCrunch also has a great show on crypto, a show that interviews founders and more! Credits: Equity is produced by Theresa Loconsolo with editing by Kell. Bryce Durbin is our Illustrator. We'd also like to thank the audience development team and Henry Pickavet, who manages TechCrunch audio products. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:10Speaker 00

  Hello and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and the nuance behind the headlines. My name is Alex and I'm joined today by Senior Tech One reporter on the FinTech Beat. It's Mary Anne Azvedo. Mary Anne, hi, how are you?

• 0:24Speaker 01

  Hey, Alex, how's it going?

• 0:26Speaker 00

  Well, I'm still in complete denial of the fact that it's actually now winter and after where socks, but other than that, life's pretty good. Is it cold down in Texas?

• 0:34Speaker 01

  And I wouldn't say cold 60s, but it's been really dreary. So that always kind of, kind of brings me down. I need sunshine. I don't care if it's a little cold, but I need sunshine.

• 0:45Speaker 00

  This is why I think everyone who thinks fall is the best season is insane because fall just kicks you right into winter and that makes me sad. But you know what doesn't make me sad? Kirsten Korosec, who's also with us on this fine Friday. Kirsten, you're in the Sun Belt. Tell me, please God, the weather's better there than it is here.

• 1:01Kirsten Korosec?

  I love the fall, Alex. I hope that's not too triggering for you because this is when we all come out of our little caves because we were hiding in them because it was so hot. And now we're doing all the things. So it's super exciting.

• 1:13Speaker 00

  So you have the inverse of my climate because now everyone here has gone inside because it's now too cold.

• 1:19Kirsten Korosec?

  Yeah, all the festivals are happening now and other news alert. I just finished the last of the Thanksgiving leftovers. There you go.

• 1:26Speaker 00

  Wow, good for you. I'm impressed that you actually managed to keep them that long. Usually after like the third day, I'm like, all right, if I see one more like sweet potato, I'm going to lose my shit.

• 1:34Speaker 01

  Right, that's impressive.

• 1:35Speaker 00

  Shout out to your family. On the show today, my friends, we have a quick cruise update. And then in the deals of the week column, we're going to talk about Weebull buying Flink. What is Uber doing in London and why Blackstone is all about dog walking? Then IPOs are back? Question mark, talk about that. And then we'll wrap up with startup funding in both Europe and then the Australia, New Zealand region. It's going to be a blast. But Kirsten, much to my chagrin, it does appear that investment in one self-driving car company is about to be slashed.

• 2:05Kirsten Korosec?

  Slashed is a good word. We don't know the details yet, but since last time I was here on the podcast, a lot has happened at Cruise. The co-founder and CEO Kyle Vogt, who was on our stage not just three months ago, is gone, resigned. Wow. Some GM executives have come in, some Cruise executives have been promoted and now there's no CEO, but co-presidents and a lot going on. Basically, GM, they just gave an update really about restating their guidance, talking about what the labor deal was going to cost them, which is about in the total of its lifetime, $9.3 billion. Also, restating that they're going to now launch a repurchase, a share repurchase program.

• 2:49Kirsten Korosec?

  And tucked in that news, and actually a lot of questions that they got were about Cruise. And the big thing with Cruise is they are going to take a go-slow approach, a deliberate approach. They use the word deliberate multiple times. And as a result, they're going to cut spending by hundreds of millions of dollars in 2024.

• 3:10Speaker 00

  Okay, so I want to put these numbers into a little bit of context. Kirsten, a $10 billion buyback is about a quarter of the company, more or less? I think it's worth about 40 billion, so that's an enormous dollar amount. We don't usually see companies buying back such a large percentage of their stock in kind of one announcement. Often, actually, it's just a way to combat share inflation from share-based comp. On the Cruise thing, though, by cutting hundreds of millions of dollars in spend there, is that like a defenestration of their self-driving efforts? Or is that more of a modest cost cut? Can you put that into perspective for us?

• 3:44Kirsten Korosec?

  All right, so here's the perspective. In the third quarter of 2023, Cruise, per the GM's earnings statement, lost $732 million in that quarter. So, you know, that's a couple hundred million dollars a month that they were spending. So if you were then to say they're going to cut spending by hundreds of millions of dollars, well, what are we talking about? Tens of hundreds of millions of dollars, a billion dollars? Or a month's worth of spending? So I think we're not really clear. I'm going to go more towards the greater amount. I see pretty big layoffs operationally. They do not need to have all these people working.

• 4:26Kirsten Korosec?

  They also talked a lot about synergies between software at GM and software at Cruise. So I don't think software engineers are necessarily in the clear either.

• 4:37Speaker 00

  Well, if you cut 250 million from a $2.5 billion a year budget or 3 billion, you're going to enter the double-digit percentage points. 415. Yeah, okay. It's going to be material.

• 4:48Kirsten Korosec?

  Yes.

• 4:49Speaker 00

  So does this mean that I'm not going to get self-driving cars as fast as I was going to before this?

• 4:55Kirsten Korosec?

  Well, yes, that's the very short, very short answer. Right now, Waymo is still plugging ahead in markets like Phoenix and San Francisco. Cruise says that when they do get through two third-party investigations or reviews, looking at safety and how and why things went sideways so quickly, they said when they do decide to relaunch, it'll just be in one city. And so the question, of course, is which city are they going to do? Right now, they do not have permits to operate commercially driverless robotaxis in California. So their headquarters are in San Francisco. Where do they go?

• 5:40Kirsten Korosec?

  I'm kind of putting my money on Texas.

• 5:44Speaker 01

  Unfortunately, you're probably right.

• 5:47Speaker 00

  Surely you mean fortunately, Mary Ann. You love living in the future. It's your favorite thing.

• 5:51Speaker 01

  Yeah, I wouldn't be surprised if it is, Austin. I mean, Waymo has a presence here already too, right?

• 5:56Kirsten Korosec?

  Waymo has had a presence in Austin, but not the same level as Cruise. They're very visible in Phoenix, of course, and in San Francisco, and they were early days in Austin and then kind of retreated for a while and then are coming back in. Austin is up there. Miami is another one that's on my list.

• 6:17Speaker 00

  So essentially, flat cities is what I'm hearing here. Hills bad, flat good if you want self-driving technology. All right, we'll have more about that as we learn. Of course, we're keeping close eyes on all things self-driving because, well, it's a big technology story that has seen billions of dollars of investment. But we have to turn the page over to our deals of the week. And the first one, Mary Ann, is a bit of a surprise. We're talking about an acquisition in fintech, which is cool. We haven't heard about those in a while.

• 6:41Speaker 01

  Yeah, it feels like it's been a minute. Weebull has acquired a Mexican fintech called Flink. And it's, uh, Flink is a stock trading app. I wrote about the company in 2021. And at the time I thought, wow, this is pretty innovative for a Latin American market. They had raised $57 million back in August 2021. Investors include, uh, let's see, the Chainsmokers, uh, VC firm, Excel, Lightspeed Venture Partners. And, um, Flink, Flink began offering Mexicans the ability to buy and sell fractional shares without commissions in New York Stock Exchange listed stocks back in 2020.

• 7:25Speaker 01

  So that was something I think that market, there was a lot of appetite for it. They were hungry for it. As of 2021, the company had 1.6 million users. Unfortunately, I don't have updated numbers, but apparently what they were doing caught the eye of Weebull, who has acquired the company. So yeah, another acquisition in LatAm. Earlier this year, we covered Visa's plans to acquire Pismo, a payments infrastructure company. So I think this is a really interesting trend.

• 7:55Speaker 00

  Okay, but acquiring a, a payments firm to me is a clear business. People do payments and no matter what the economy is and what consumers are up to, payments flow.

• 8:06Speaker 00

  Fractional trading of stocks does seem to be something that was a much bigger phenomenon in the 2000, 2021 era. So my question, Mary Ann, is do you think this is Weebull tactically buying a competitor on the cheap because they want more market access? Or do you think Flink was struggling a bit and Weebull is a soft landing that they're going to use to stay in business?

• 8:26Speaker 01

  I could be wrong, but I would go more with the former. I think, uh,

• 8:30Speaker 00

  Okay.

• 8:30Speaker 01

  Weebull's already in, let's see, eight other, well, actually nine markets, or eight, sorry, eight markets besides Mexico, um, US, Hong Kong, Singapore, Indonesia, Australia, South Africa, Japan and the UK. So this gives it an entry into the Mexican market without having to start from scratch. They've got, uh, an app that's already, you know, known there, that's proven, been around for years, trusted apparently, which I think is big, especially in LatAm, where trust is, is a, I think even bigger deal than say somewhere like the US. And so I think Buying a company that's already there, already got millions of users, or we don't know exactly, but over a million users, seems like a good strategy for entering a market.

• 9:16Speaker 00

  Yeah, I like it.

• 9:17Kirsten Korosec?

  Mary Ann, you mentioned that it was an interesting trend, and I'm wondering if you called back to another acquisition, but are you, are these the only two, or are you starting to see more fintech M and A, I guess, in Latin America?

• 9:32Speaker 01

  Yeah, I would say usually three makes a trend. So we really need like maybe one more to full, call it a full blown trend. But, but I think considering the fact that we haven't seen that much M and A in the fintech space this year, this is notable. I mean, two fairly decent, decent sized acquisitions. We don't know how much Weibo paid for Flink, but I mean, if they raised a $57 million Series B in 2021, it's really not so much about the, I think, cash amount of the deal. It's just significant to me that the company is entering the Mexican market. They chose to acquire a company there. Obviously, they thought it was doing well enough and had good enough technology to buy it. Visa buying Pismo was a big deal. They could have bought a payments infrastructure

• 10:15Speaker 01

  company from anywhere in the world, including the US, chose to buy a Brazilian company. So I think these are really big ones for LatAm, and I wouldn't be surprised if we do see another one in the relatively near future.

• 10:27Speaker 00

  And then just as a last note, Weibo is not the one that was going to go out VS back. That was eToro. And then I think they ended up raising private capital after that didn't go through. So if you're thinking about, oh my God, which trading app is this? It's not that one. It's the other one.

• 10:42Speaker 01

  Right.

• 10:42Speaker 00

  I really do think that we need to go ask all the, all the fintech companies to rename themselves to be something a bit more obvious because eToro and Weibo are both bovine inspired names, which is a bit in the weeds for my taste. All right, moving on. Kirsten, London, Black Cabs, never thrown up in one, have taken them. Why are we talking about them?

• 11:02Kirsten Korosec?

  Well, congrats for never throwing up inside of Black Cabs. I won't ask you about other countries and cabs. But yes, Uber has basically locked in another partnership, I guess you could call it, although this one is kind of funny. If you, if you read our, our coverage of it, Black Cabs, iconic in, in London, don't seem super thrilled with it. So Uber is working with Black Cabs. Basically, if you go to London, you open up the Uber app, now you're going to see London's Black Cabs on there. And This is part of a trend that is happening. We were talking about trends earlier. There's more than three now. I think we can call it a trend. And it's very interesting to me because when Uber launched as a ride-hailing service, I've written this before, the company was more

• 11:47Kirsten Korosec?

  pariah than partner to the taxi industry. Now 12 years later, it kind of seems like it's going in the other direction. Uber is continuing to make deals with taxi fleet owners. Just earlier this year, there was a partnership with Los Angeles Yellow Cab and its five partner taxi fleets in Southern California. So we're starting to see this more and more capturing of a business that I never thought would happen.

• 12:11Speaker 00

  So can we just talk about how more pariahs than partners is like the understatement of the century?

• 12:17Speaker 01

  Yeah, I would agree with that. And I would also like to say that those cabs are beautiful. I mean, they're really pretty.

• 12:24Speaker 00

  Should we help Americans who don't know what we're talking about? Because when Uber launched in America, it was black cars, right? That was the thing. It was essentially town cars. And so it was a more luxury option. In London, black cabs are a specific, not just color of cab, but also like it's a specific size of car. And if you, if you see a picture, you'll know what we're talking about. They're designed to have a really small turning radius. They can fit in some hotels roundabout. It's a whole cultural thing. And so to see them possibly work with Uber, it kind of blew my mind, frankly. It's, it feels like the devil teaming up with St. Peter or something.

• 12:56Kirsten Korosec?

  Yeah. And actually, if you read the spokesperson for the Licensed Taxi Drivers Association.

• 13:01Speaker 01

  That's what I was gonna refer to as well.

• 13:03Kirsten Korosec?

  Yes. Yeah. What was your thoughts about that, Mary Ann?

• 13:06Speaker 01

  Well, let me read the quote out loud so that in case the story is not pulled up for everyone. The trade group spokesperson said, "The group was not interested in sullying the name of London's iconic world-renowned black cab trade by aligning it with Uber. It's poor safety record and everything else that comes with it." So ouch.

• 13:25Kirsten Korosec?

  Yeah.

• 13:27Kirsten Korosec?

  So the question is, who's winning here in this? And clearly Uber is looking to capture more business. It likely will be helped initially by the fact that all new drivers who do opt for this will benefit from zero commission, meaning they don't have to share a commission with Uber in the first six months. And then eventually that will kick up to what the usual range is, which is around 20% to 30%. So is this going to be a short term win? And after six months, everyone drops Uber? Or do they, do they stick with it? And then that's what Uber wants. They want that stickiness.

• 14:04Speaker 01

  Yeah.

• 14:05Speaker 00

  Uber also wants to drive more GMV to pull revenue from to keep its growth story going. So, you know, I suppose in a sense Uber showed up and broke all the rules and managed to build a huge business and really kicked the stuffing out of taxi drivers around the world. And now here they are making peace with what's left the industry. So I, it feels poetic in a way, in a kind of twisted way.

• 14:25Speaker 01

  Sure. I will, I will say that last year, when I was in San Francisco for Disrupt, I took a taxi maybe two or three different times during the course of the trip. And honestly, it was cheaper than an Uber, easier to get than an Uber, and an overall pleasant experience. So.

• 14:45Speaker 00

  So I had, Marion, you know, the, the last thing I want to do is to call bullshit on anything that you would ever say, because I adore you, but seriously. But you're referring to the, the post Uber San Francisco taxi world, and they have changed their behavior.

• 14:59Speaker 01

  Right.

• 15:00Speaker 00

  For example, one, one time when I was a lad in SF, looking to get across the city, I hailed a cab, as you do, and the cab pulled up with doors locked, rolled down the window a part of the way, went, "Airport?" And I went, "Nope." And he stopped. And that was the taxi experience in San Francisco. So I'm glad it works now. I'm glad Uber has competition, but it didn't work and it wasn't a functioning system. So I don't want to say that Uber breaking the rules and getting away with it is good per se, but certainly I think we're in a better, more healthy transport environment now than we were.

• 15:32Speaker 01

  Fair point.

• 15:33Speaker 00

  So I guess I am saying it's good.

• 15:34Speaker 01

  Yeah, fair point.

• 15:35Speaker 00

  Okay. Speaking of fun things, my deal of the week is all about dogs. My favorite thing and somehow also private equity. So if you don't know, there's a couple of companies out there that do dog walking, dog care services. One is Rover, one is Wag, the latter of which I believe raised from the SoftBank Vision Fund way back in the day. Anywho, Rover, which is public, is being sold to Blackstone for $2.3 billion. And so when I saw this news, I had totally forgotten that the company existed. Mary Ann, when was the last time you thought about Rover?

• 16:05Speaker 01

  I don't even remember, to be honest with you. And I didn't even know it was a public company.

• 16:09Speaker 00

  Okay, that's even worse than I thought. Kirsten, I know you're more of a cat person than a person on the correct side of the pet divide, but is Rover in your world at all?

• 16:16Kirsten Korosec?

  Uh, no, Rover is not in my world. And, you know, I don't know why, because this is kind of a big deal. I should have been very well aware of this.

• 16:25Speaker 00

  Yeah, okay, good. Actually, I'm kind of glad that I wasn't the only person behind because I was like, oh shit, that's right, that company. Anyway, so I did a little dive and I looked into it and, uh, you know, this is kind of a cool deal. Turns out normally private equity deals are a little bit boring, but in the case of Rover, the company dropped Q3 numbers relatively recently. Their revenue was 66.2 million, up 30% year over year, which honestly, pretty freaking good. They had GAAP net income and lots of adjusted EBITDA, and they raised their guidance. And I went ahead and looked into their cash flow, generating cash, buying back shares, just generally being a pretty solid public company, a small one, to be clear, but I like it.

• 17:06Kirsten Korosec?

  I gotta say, as someone who covers all these future of transportation companies that have like zero revenue and then never report GAAP, it was really nice to see like a GAAP net income number here. Like this is new for me.

• 17:18Speaker 01

  I agree. It's, it's refreshing and good, good for Rover. I think, yeah, that's awesome. It seems like a great deal for the company. And I mean, $2.3 billion, not bad.

• 17:30Speaker 00

  So I wasn't going to bring this up, but Charlie Munger passed away this week. And if you don't know Charlie, he was kind of Warren Buffett's right-hand man, number two, bestie, working partner. And one of his best quotes was about how EBITDA is just short for bullshit earnings. So I figured I'd

• 17:47Kirsten Korosec?

  I would agree with Charlie.

• 17:49Speaker 00

  R I P Charlie, one of the funniest guys.

• 17:52Kirsten Korosec?

  Yeah, I agree with Charlie there. I do wonder though, so valued at 2.3 has, you know, they're profitable. That's great. They're seeing growth in income, growth in revenue, I should say. How much room is there in the market to keep growing? Like, that, I guess, is a question mark for all of us.

• 18:11Speaker 00

  I mean, clearly, the Blackstone thinks there's some room to keep growing because, you know, they're probably going to load it up with some debt and then take dividends out of it and expect you to kind of service that debt for them. That's what I'm presuming happens in transactions of this nature. But the company just seems nice and durable. It's almost like a small but surprisingly robust company. And so I'm more curious, like, if this is a guide point for us to think about, like, if you want to sell the private equity for what is effectively a 10x current run rate multiple, 9.5, whatever, this is what you gotta do. Profitability, cash flow generation, and pretty solid growth. I'm just shocked that Rover is the one showing us how to get to a 10x revenue multiple, you know?

• 18:54Kirsten Korosec?

  Yeah. And how is WAG doing, though?

• 18:58Speaker 00

  Oh, not well.

• 18:59Kirsten Korosec?

  Right. So what's Rover doing that, yeah, what's it doing that WAG isn't?

• 19:04Speaker 00

  It will take longer for me to look up WAG's latest numbers because I didn't memorize them before this, but I will say that WAG's market cap, according to Google Finance, is roughly equivalent to Rover's revenue last quarter.

• 19:16Kirsten Korosec?

  Oh, wow.

• 19:17Speaker 00

  So that puts the different fortunes into place. I do want to bring up one more thing, though. We are seeing a lot of other companies work towards profitability. So when we talk about Rover doing well and being profitable, that's still not the norm for everybody. Kirsten, can you just tell us about TIR? Because it's kind of sad.

• 19:32Kirsten Korosec?

  Yeah, let's really quickly dive into this one. Tier Mobility is a German micro mobility operator. They are laying off another 22% of their workforce. The whole aim here is to cut costs. Micro mobility has proven to be a tough business. People like riding the scooters, but it's real hard to make money off of it. Interestingly, though, Tier had been one of the biggies, the one that was expanding and doing well. And it seemed to, you know, really have nailed it in terms of Europe. They had acquired Spin from Ford and then sold it not too long ago to Bird of all companies, which is fascinating to me. So Tier has been cutting for a while.

• 20:17Kirsten Korosec?

  This is another attempt. So to me, the question is, are they as lean as they can be? Can they turn this around into 2024?

• 20:25Speaker 00

  Yeah. And so when we talk about Rover doing well or other interesting startups that are seeing cool M and A transactions, keep in mind, that's not everybody. There are still some companies that are trying to cross the chasm, as it were, right now. And there's still a lot of pain ahead for some companies. When we get back, the return of the IPO market and why 2024 could be a very hot period for my favorite type of transaction. But before we get there, my dear friends, a short break.

• 20:52Speaker 00

  Next year could bring back a lot of tech IPOs. And there are a couple of names already on our list, but they don't want to end up in the bargain bin over at Shein because they want to price well. Mary Ann, we have two companies, one in the world of clothing, one in the world of social media. I'm stoked.

• 21:06Speaker 01

  Yeah, I mean, honestly, we kind of knew that Shein's IPO news was coming. We didn't know exactly when they filed confidentially to go public here in the U.S. Now Rita on our team had reported in mid-November that the company was seeking a $90 billion valuation and a potential U.S. IPO. That would be up from the $64 billion it was valued at earlier this year. We don't know yet. How much it will be valued at when it goes public, but those are some ballpark figures. I was a little bit more surprised to hear about Reddit. Now Reddit's been trying to go public for a while now, right? Since 2017, the company said-

• 21:49Speaker 00

  At least.

• 21:50Speaker 01

  At least, right? Said it aimed to go public by 2020. They filed privately, I think it was late 2021. They even hired like Goldman Sachs and I can't remember who else, JP Morgan maybe, and don't quote me on that. And then now they're looking at going, potentially going public in the first quarter of 2024.

• 22:07Speaker 00

  Kirsten, what's the, what's your bet on if they actually do go public next year? Cause I don't want to jinx it, but also I'm really hopeful.

• 22:14Kirsten Korosec?

  I feel like in my world, it's when every time Lime says that they're gonna, you know, they're almost ready to go public. It's kind of the same. I'm wondering though, with Reddit, what has prompted it, the company to delay it so many times? Is it market timing or more internal debates? You know, is this an internal structural issue in which there's maybe some, I don't want to like say that there's infighting or anything like that, but is it happening internally? Or is it because they just don't feel like the market is the right time?

• 22:48Speaker 00

  Well, it's an advertising based business.

• 22:51Kirsten Korosec?

  Right.

• 22:52Speaker 00

  So my guess is, is very much more on the market timing and the company's results. I mean Reddit is even amongst unicorn private tech companies that we expect to go public next year old. Reddit is not a new thing. It was, it's already been bought and sold in its life. So to me, I really doubt there's any lack of alignment between the company and its owners about what it wants to do. It's just trying to get it out at a price that everyone kind of agree on. So if there is dissent Kirsten, my guess would be that it's a question of how much of a haircut people are willing to take in exchange for faster liquidity.

• 23:25Kirsten Korosec?

  Yeah, I wonder why they didn't do it earlier when market conditions were so great. I'd have to go back in the archives and look at the condition of the company, I suppose.

• 23:36Speaker 00

  I think the problem there is back when people could go public, they could also just raise a huge pile of money from anybody that walked. And so like, unfortunately, just the sheer amount of capital that was available meant that some companies missed the IPO window. And, you know, just for example, Reddit's Series F from August of 21, according to Crunchbase, was worth $410 million. So if you can raise several IPOs worth of cash without having to do the work, why would you go public? You know, it's like getting to redshirt your college football, oh shit, this analogy is not going to work out. It's like having more time, I guess. I shouldn't make football analogies on the show.

• 24:15Kirsten Korosec?

  I will say that maybe Reddit has dropped us a clue that they are really serious this time because they have refreshed the logo.

• 24:24Speaker 01

  Yeah.

• 24:26Speaker 00

  Mary Ann, do you remember the big Reddit blow up from earlier about the API?

• 24:30Speaker 01

  Kinda.

• 24:31Speaker 00

  Okay, well, as a big Reddit user, I noticed that. And at the time, I really thought that was gonna hurt them because people were so mad.

• 24:40Speaker 01

  I remember a lot of anger.

• 24:41Speaker 00

  Oh, yeah. And, you know, there was some merit to the complaints and there was some merit to the company's arguments. But interestingly enough, that has entirely blown over as far as I could tell. So maybe Kirsten's timing point can be predicated on the community getting over that.

• 24:55Speaker 01

  It's possible. Yeah, now, now it's all coming back to me. Okay, right, right, right. The developer community got really upset about, okay, I remember that. Isn't it crazy how things seem to blow over quicker than you would think in this world of tech? It's crazy. Like, sometimes things happen and you think, oh, man, are they ever going to come back from this? And then like, months later, it feels like ages ago.

• 25:16Speaker 00

  Unlike better.com's stock price.

• 25:19Kirsten Korosec?

  Didn't.

• 25:22Speaker 00

  Apart from being mean about that, I think you're actually right, Mary Ann. And I think actually what we're seeing is kind of like cultures compress, like the cycles are now much shorter. And so there's, it's not attention span per se. It's, I think it's our ability to have fast communication on a global basis that allows things to come and go more quickly.

• 25:41Speaker 01

  Yeah.

• 25:42Speaker 00

  Back when you had to communicate via telegraph, fashion's changed more slowly, you know? But now that we have fast fashion and so forth, I think there's just, everything's just accelerated. So maybe we shouldn't be surprised at how fast Reddit did get over that.

• 25:53Speaker 01

  I guess not. I'd say one last thing, and I know we probably need to move on. One thing that I do find interesting here is your point, Alex, about the company was able to raise over $400 million. And that's probably why it did not go public previously. I find it, I don't know if ironic is the word, super interesting that in this current environment, that it's opting to go public because obviously it probably can't raise large sums of cash right now. So I think that's, that's really interesting.

• 26:23Speaker 00

  Well, profitable or unprofitable it is, but you make a good point. I mean, Kirsten and I could bore anyone on the show about how IPOs were once, back in the day, fundraising mechanisms, right? Now they're just essentially like a coronation for a multi-billion dollar tech company when they deign to go out. But in the old days, it's how you raised money. So maybe they did need money. I don't know. I'll just say like, when this S1 does come, we're all going to stop what we're doing and only read that for a while. Kirsten, before we move on, on the Shein IPO, we know that the company is doing tens of billions in revenue, is at least modestly profitable last year. What's your expectation for that company when we do get to see the results?

• 27:02Kirsten Korosec?

  Well, first of all, I think that there is probably a lot of risk factors there that I'm interested in combing through on the S1. So that's probably top of my list. And also fast fashion, I've mentioned this before, there have been other giants of fast fashion that we don't hear about as much anymore. And while Shein is huge and seems to dominate everything right now, I kind of wonder, you know, how big it can get and how, how long it can sustain itself. Plus some of the environmental risk factors, labor, things like that. That's what I am really interested in.

• 27:38Speaker 00

  Yeah. If you want to learn more about that, we don't have a lot of more time, but look up what's going on in Xinjiang with Uyghur possible forced labor and cotton getting its way into the Chinese textile industries. It is worth your time. That's a hell of a note to end that segment on. Let's talk about something that's a little bit happier. European startups. Mary Ann, the headline from Ingrid London on our site is that European startup funding is going to roughly halve this year to 45 billion, according to Atomico. I read that and I was very sad. And then I looked at the chart and turns out it's going to be better than it was in 2020. So on one hand, down. On the other hand, eh.

• 28:12Speaker 01

  Right. Yeah. At first glance, you read the headline and you think, hmm, this doesn't look good. But it's actually more positive overall for that market than you would expect. Ingrid reported that the overall total value of the European tech ecosystem returned to its 2021 record of 3 trillion after dropping 400 billion in value in 2022. So that's actually, I think, very good news. I think it's also very interesting that in Europe, the median valuations are considerably lower than those of their US counterparts, like between 30 and 60% lower. So I just feel like it's just a more realistic market overall. Yeah. Kirsten?

• 28:52Kirsten Korosec?

  Yeah, I'm just wondering what is driving that rebound? I think her story sort of gets into that a little bit. Is this a lot of follow on? Is this fresh capital? What's happening?

• 29:02Speaker 01

  Yeah. She said that the rebound was supported by the continual influx of new companies starting and raising private capital for the first time. And a majority of follow on capital deployed into the ecosystem has been through flat rounds or up rounds, which is interesting because I feel like we're seeing more down rounds here in the US.

• 29:19Speaker 00

  Yeah. I mean, every time we say flat is the new up, I feel like the market then immediately improves. So we look silly. But I'm very impressed with the total dollar amount and the fact that the European ecosystem is once again worth 3 trillion, or as we might say, three trily. The flip side of that is, that means that the entire European tech ecosystem is worth as much as one American company.

• 29:40Speaker 00

  I mean, not to be rude, but I mean, like, you know, I mean, it's at once impressive and at once also surprising, given the density of talent, open capital markets, rule of law. Like, you know, this is why I'm really excited about France and AI. There's a lot of stuff going on in AI startups in France right now, because wouldn't it be cool for Americans to have some competition from the old continent? You know, I think it'd be good.

• 30:01Kirsten Korosec?

  First to address the most important thing you said is that I will never say trilly.

• 30:07Kirsten Korosec?

  There will always be trillion, because it's never going to be that familiar of a number to me to just be that, you know, on such casual terms with trillion. But to your point, the median valuations for European startups have remained considerably lower of their US counterparts, specifically between 30% and 60% lower. But my experience in Europe has been there is an appetite. Every time we've done an event there, every time I've met up with startup founders, there's an incredible appetite to learn to start their company. And so I have seen an uptick in activity, and I'm waiting for it to really bloom. And maybe, maybe AI will be what we have been waiting for.

• 30:52Speaker 01

  Maybe, I mean, maybe. I think to your point, Alex, is that, you know, I was, I was so impressed with the number of like returning to the 2021 numbers in terms of total value. But to put it into context, only seven unicorns were set to emerge this year in Europe. That's it.

• 31:09Speaker 00

  Okay, okay. But, but hear me out. What if seven is the right number?

• 31:17Speaker 01

  Which it could be, but I think it just kind of puts it all into context. Like, it's, it's just a much smaller ecosystem, which doesn't mean that it's not good and not great, or not great quality. Please, I do not, you know, and that's not the point I'm trying to make. I'm just saying, I don't think I realized until I read this story, how smaller of a startup world, I guess, there is in Europe than I expected. But it kind of reminds me a little bit of La Am, where you're talking about the enthusiasm. I feel like markets like these, where maybe they're not as big, but the

• 31:53Kirsten Korosec?

  Passion and the like enthusiasm is just off the charts.

• 31:58Speaker 00

  That's really interesting. So the other data to put the seven unicorns such emerge in Europe this year for 2023, it was 48 last year and 108 in 2021. My thought is probably 10 of those a year were actually worth it. So seven this year feels a little low, but not catastrophically. Here's a question, though. If we compared, like, let's just say aggregate venture capital invested in Europe per year and compare that to Asia right now, how they stock up? I don't actually know offhand. I wish I looked that up beforehand, but you know, I'm kind of curious if the EU is, if it's number two and Marianne feels that way about it, that actually makes me feel like the world's even more weighted towards the US in venture capital terms than I, I thought.

• 32:41Kirsten Korosec?

  Right.

• 32:42Speaker 00

  Because it did seem to get much more global in the last five years, in a good way. I don't know. But we also have our eyes on other parts of the world, including those bits that involve very, very long flights down and far away and across the international date line and over the hill and through the wood. To Australia we go, Kirsten.

• 32:57Kirsten Korosec?

  Yeah, some might say down under, right? We, we conducted a couple of investor surveys, an Australian investor survey and a New Zealand investor survey. And we're very lucky in that one of our reporters is actually based in New Zealand and is, as we speak, in Melbourne, talking to a bunch of startup founders and digging in deeper into what this investor survey sort of revealed. What they revealed was some sober valuations that will lead to an increase in mature startup acquisitions, strategic mergers and joint ventures across the region. What I am hearing, though, from our reporter Rebecca Bellan, is that while

• 33:38Kirsten Korosec?

  Sydney is 100% the hub of activity, there's been a lot of uptick in activity in Melbourne and its population is on track to actually overshadow Sydney by, I believe, 2032, which puts that city in a kind of an interesting place for startups and sort of a hub of startups.

• 33:58Speaker 00

  So if I can't say Trilly, why do you get to say Melbourne? It's Melbourne, right?

• 34:06Kirsten Korosec?

  Well, the proper way of saying it is Melbourne.

• 34:08Speaker 00

  I just, I just had Google tell me and it says Melbourne.

• 34:13Kirsten Korosec?

  Oh, that's a very American accent.

• 34:14Speaker 00

  Oh, Americans not right. I thought we always were.

• 34:17Speaker 01

  Really?

• 34:18Kirsten Korosec?

  I guess we're gonna have to agree to disagree.

• 34:22Speaker 00

  How much money is flowing through Australia and New Zealand? Because we do know about some big Australian companies that have done well. Canva, of course, is an example, zero with an X. So there's a good history of success down there. But I'm curious, like, how much money really is moving? Should we, like, pay attention to it weekly or check in more like quarterly?

• 34:40Kirsten Korosec?

  I think we should check in to it quarterly. And one area I think that we should keep, or two areas, actually, I think that we should keep an eye on. One, on the positive side is climate tech. There's a lot of activity around climate tech in both regions. And on the converse or downside, fintech investments are seeing a dip. So, which I think, Mary Ann, you could speak to, probably reflective of like the greater fintech ecosystem. But these are two areas. Will this continue in 2024? I predict we're going to see more climate tech startups in that region. I could see it even becoming a hub of activity. And I'm not sure if fintech is going to continue down. What do you think?

• 35:24Speaker 01

  Yeah, I mean, I think in Europe also, climate tech is gaining momentum as well. So that's, that's really interesting to me that in Europe and in Australia, New Zealand, it's, it's like really getting investor interest. Not shocked about the fintech dip.

• 35:40Speaker 00

  Well, I'm not either. That's sad to say. But another sad news, we have to say good day to everyone on the show today because we are right up against our time window. Kirsten, as always, thank you so much for joining us and bringing your expertise. And Mary Ann, we're going to be back next week on Monday and on Wednesday and on Friday because the great wheels never fall off the equity wagon. And if you need to stay up with us and want to know how we are both rocking and rolling along, we are EquityPod over on Twitter and Threads. I refuse to call X. And with that, we're out of here. Thank you both. Bye, everybody.

• 36:09Speaker 01

  Bye.

• 36:09Kirsten Korosec?

  Bye.

• 36:12Speaker 00

  Equity is hosted by myself, editor in chief of TechCrunch Plus, Alex Wilhelm, and TechCrunch senior reporter, Mary Ann Azvedo. We are produced by Teresa Locan Solo with editing by Kel. Bryce Durbin is our illustrator. And a big thank you to the audience development team and Henry Pickavet, who manages TechCrunch Audio Products. Thank you so much for listening and we'll talk to you next time.