Silicon Valley's impact on the election and an acquisition making our HeadSpin

To kick off this week's news roundup, Kirsten walked us through Elon Musk’s recent declaration of his intent to move both SpaceX and X’s headquarters out of California to Texas. Whether or not he’ll see those plans through remains to be seen, but of course, the Equity crew had thoughts. We then got into the deals of the week. First up, we talked about Sequoia Capital’s emailing LPs in funds raised between 2009 and 2011 with an offer to buy up to $861 million worth of shares in Stripe. The move is notable for two reasons. For one, it’s evidence that LPs are increasingly antsy for liquidity in this dry IPO market. (2024 thus far has delivered just four venture-backed tech IPOs — Reddit, Astera Labs, Ibotta and Rubrik — in March and April.) The Equity team also discussed how Sequoia’s gesture reflects that the firm is confident not only of Stripe’s future, but in its ability to eventually exit in a way that will reward investors handsomely. Next up, Rebecca Bellan led a discussion as to how Andrej Karpathy, former head of AI at Tesla and researcher at OpenAI, is launching Eureka Labs, an “AI native” education platform. We had a lively discussion on Karpathy’s new initiative and when and how AI is appropriate in the classroom. We closed out the deals segment with Mary Ann’s scoop on PartnerOne’s acquisition of HeadSpin, a company whose founder was sentenced to prison for fraud earlier this year. Employees were upset that they got nothing for their options as part of the buyout, which Marina Temkin this week reported was valued at a mere $28 million. The group then got into an in-depth conversation about Silicon Valley’s involvement in the election this year. Former President Donald Trump this week picked Ohio Senator J. D. Vance as his running mate, as he runs to reclaim the office he lost to President Joe Biden in 2020. Vance, who’s best known for his memoir, “Hillbilly Elegy,” spent years as a venture capitalist before leaving the industry when elected to the U. S. Senate in 2022. We also talked about Andreessen Horowitz’s controversial vocal support of Trump and the startup-related reasons why its leaders are backing the Republican nominee. We wrapped up Equity with a look at Latin America’s startup scene and how it rebounded in funding in the second quarter, boosted by late-stage funding in the fintech sector. It was a great episode, so give it a listen! Equity is TechCrunch’s flagship podcast, produced by Theresa Loconsolo, and posts every Monday, Wednesday and Friday. Subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. You also can follow Equity on X and Threads, at @EquityPod. For the full episode transcript, for those who prefer reading over listening, check out our full archive of episodes over at Simplecast. 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.

• 0:11Speaker 00

  Hello and welcome back to Equity, TechCrunch's flagship podcast about the business of startups. Today is Friday, July 19th. I'm Maryann Azevedo and joining me is TechCrunch Senior Reporter and Editor Kirsten Korosec. How's it going Kirsten?

• 0:26Kirsten Korosec?

  I'm great. I'm just keeping very busy, let's just say, keeping up with Elon and all of his movements right now, including basically his decision to try and move SpaceX and X out of California and into your home state.

• 0:41Speaker 00

  Ah, yes.

• 0:41Kirsten Korosec?

  So more Elon businesses are coming your way, Maryann.

• 0:45Speaker 00

  Not so sure how I feel about that, but yeah, been been an interesting week to watch in Elon's world, indeed. And we'll see if that comes to fruition. Do you think it's really going to happen?

• 0:58Kirsten Korosec?

  Well, if it's anything like what happened with Tesla, the headquarters moved to Austin. They've put a lot of money into that area, building quite a large quote unquote "giga factory," but they still have a pretty large footprint in California. The Fremont factory is there that employs thousands of people. They have offices elsewhere in California. So I suspect that it'll be probably easier to move X, the social media company that's based in San Francisco, out to Texas, as opposed to SpaceX, in which there's real hardware, literal rocketry and design that's going to be happening there. So we'll see. It's probably going to be a hybrid of what he says, is my guess. And we'll see if there's any

• 1:40Kirsten Korosec?

  resistance to that. Both are privately held companies. So the protests and opposition that happened and court cases that happened around the Tesla move likely won't happen with SpaceX and X.

• 1:51Speaker 00

  Yeah, I guess I guess we'll see. We're also joined today by Senior TechCrunch Reporter on the Transportation Desk, Rebecca Valan. Rebecca, how are you?

• 1:59Rebecca Bellan?

  I'm doing great, Maryann. Thanks. Happy to be here. It is not too hot today in New York City for once. It's overcast. It's lovely. And yeah, I'm also interested in what's gone on with Elon's moves. The X move in particular, what he said on on X about it, trying to get away from the roving violent gangs of drug addicts or something. I'm skeptical whether he, as a billionaire, actually has to deal with any of that. But yeah, San Francisco's definitely changed.

• 2:23Speaker 00

  Yeah, I mean, like I said, never a dull day on Elon land. But we have a packed episode. I'm super excited about it today because we have so many interesting topics to cover. Deals of the week, we'll be looking at Stripe, Andrej Karpathy's new startup, and the latest at HeadSpin. We're also going to be looking at the election year's impact on Silicon Valley. Boy, did we have a lot of news there this week. And then we're going to be taking a look at Lat Am bouncing back. And that's an exciting topic I'm particularly pumped about. But yeah, we started off the week Monday, Stripe's major investor Sequoia did something that was kind of unusual. And it got a lot of attention because I personally haven't heard of anything quite like this.

• 3:07Speaker 00

  The venture capital firm emailed LPs and funds that it raised between 2009 and 2011, very specific timeframe, with an offer to buy up to $860 million worth of shares in Stripe, the fintech giant. And the buyers would be other new Sequoia funds, according to this email that was sent to LPs that was shared by Axios. So this was kind of unusual, and it kind of signaled two things to me. One, obviously Sequoia wants to give its LPs some liquidity. Stripe has been long anticipated to go public, has not yet done so. Earlier this year, it killed all chances of that happening in 2024, when it had conducted

• 3:50Speaker 00

  a tender offer. And so we have no idea, really, when Stripe's going to go public. It's a 15-year-old company. So I think Sequoia's like, hey, we want to give our LPs some returns. Here's one way to do it. Another thing this signaled is of major confidence in Stripe's future. You know, this is a big bet on Sequoia's part. It's also interesting that at least two Sequoia staffers or partners are on Stripe's board. So they must have some inside knowledge, too, that the company's not going public in the relatively near future. Another thing that's interesting here, according to this letter that Sequoia wrote to LPs, Stripe is now valued, or its 409A valuation is now at $70 billion.

• 4:32Speaker 00

  Okay, its valuation has gone up and down over the years. Back in 2021, it was up to $95 billion, went down to, I think it was 50, and then back to 65. So now we're at about 70. So anyway, lots to unpack there. What do you guys think?

• 4:47Kirsten Korosec?

  Well, to me, it's the most interesting part is what the motivation here is. You noted that there was this very specific window of who was targeted. So buyers would be other newer Sequoia funds, according to the email sent to LPs. And so what I'm wondering is, and maybe you have an opinion on this, what is driving this? What you mentioned in the article, which I think is probably where I stand on it, which is, LPs are getting antsy for liquidity in the dry IPO market. So there have been four venture-backed tech IPOs this year so far, kind of a low number. There's Reddit, Asterix Labs, Rubrik, Ibotta.

• 5:27Kirsten Korosec?

  And I'm wondering if this is to assuage, in some way, the LPs because they really want an IPO? And then the other question I have is, does Stripe even need to do an IPO? They've been pretty successful. Do they really need to go public in order to grow and expand? Why not just stay private?

• 5:46Speaker 00

  Well, I mean, earlier this year in its annual letter, Stripe noted that it crossed the 1 trillion total payment volume metric. After seeing a 25% bump in its payment volume last year, claimed that it was robustly cash flow positive last year and expects to be so again this year. So obviously, it's not feeling any major urge to raise more capital, whether it's be an IPO or otherwise. Does it need to go public? Good question. I think the founders seem hesitant to do so, but they may be getting pressure from investors. And this move by Sequoia could be kind of just one way to maybe help ease up on that pressure by saying, hey, here's some liquidity, chill out until we see what happens in the next couple of years.

• 6:28Kirsten Korosec?

  So essentially buying them a little bit of time and seeing.

• 6:31Speaker 00

  I think so.

• 6:32Kirsten Korosec?

  And what do you think is the reason for buying the time? Is it to see how the IPO market or economic conditions play out, or even, you know, waiting until after the election and seeing what happens? Or is there something else going on that they would need this extra time?

• 6:49Speaker 00

  I don't, I think it's just a combination of factors. I think, like we said, Stripe doesn't necessarily need the money. IPO market has been dry and maybe, you know, the company doesn't feel like it's the best time to go public. So I feel like it's just a combination of factors. And I still think that a Stripe IPO will happen at some point, but it's just obviously not happening as quickly or as, as soon as people might have hoped or expected. We'll see what happens. I mean, everyone, of course, is always paying attention to what Stripe is doing. But yeah, by this move by Sequoia was definitely something that was unusual and I personally have not seen happen, not seen any other venture firms do. Well, Rebecca, you covered, switching topics here, you covered an interesting startup in the AI space. Can you tell us more about that?

• 7:33Rebecca Bellan?

  Yeah, so it's, I feel like it's almost a stretch to call it a startup at this point because we know so little. But Andrej Karpathy, who was, he's a well-respected AI researcher. He's known for being the former head of AI at Tesla, as well as being a co-founder and former researcher at OpenAI. So he left OpenAI in February, I believe. And then earlier this week, he announced on social media that he's launching something called Eureka Labs. And he calls this, quote, "a new kind of school that is AI native," which, for those who don't know, AI native means it's built up with AI at its core. So the details he provided are kind of sparse. The post on social media, say, and also on Eureka's kind

• 8:14Rebecca Bellan?

  of bare bones new website, says, I mean, he talks about some vision of scaling AI teaching assistants that can help students alongside teachers. And teachers would still kind of design courses, but they would have this AI assistant support. He also said that it's kind of confusing because it's like, okay, so the product is this AI teaching assistant. But wait, he said the first product is an AI course called LLM 101N, which he describes as an undergraduate level class that will guide students in training their own AI assistant. And that course material will be available online, but it will run in digital and physical cohorts. And I don't know, it's a little, I'm a little confused about it. I have a lot of questions which we can talk about, but it does link into

• 8:57Rebecca Bellan?

  Karpathi's background and history. So before joining OpenAI, he was a professor at Stanford. He's continued to be an educator. Today, he leads an online course called Neural Networks Zero to Hero, which helps students learn how to build neural nets from scratch in code. And he also, you know, pretty regularly posts lectures on AI and LLMs on his YouTube channel. So yeah, I think people are interested in this because they're interested in him. What do you think, Kirsten?

• 9:20Kirsten Korosec?

  Well, yes, of course. I mean, his name means a lot in the AI world and sector, and his background suggests that it would make a lot of sense for him to get into ed tech. But I do have the same question as you, which is, what are we going for in terms of business model here? It seems like a two-track. And my theory, working theory here, is that he knows that there is a baked-in interest and appetite for people to learn about LLMs. And so that might be his first course as he develops this other piece, which I actually find the most interesting, which is these AI assistants that would actually act, it sounds like almost acting as a tutor or a teacher's aide in a classroom. And there

• 10:04Kirsten Korosec?

  is some evidence, I believe that in your story, you cited a Georgia State University study that found AI teaching assistants helped some students get better grades. Of course, with the massive caveat here that the AI teaching assistants, we would want to make sure that they're not giving incorrect information to students. That is a huge concern. But to me, this is my working theory as far as what this startup is going to be. Start with where there's demand right now, which is teaching upper level, and then start to build out what is going to be a much larger task.

• 10:39Speaker 00

  Yeah, I saw, I think, I don't remember the university, but maybe it was in Georgia too, actually, where they were actually having, I guess, kind of like AI teaching assistants. And I mean, I don't know, the whole thing, I'm really skeptical. I just have to say, something about it just doesn't sit 100% with me. So while I think this is fascinating and while I see that this could be the future of education, especially in higher education, I'm still kind of skeptical about all of this.

• 11:10Rebecca Bellan?

  Yeah, I mean, there's certainly something like an ick factor to this kind of commoditization of education. It's like, everything can be solved with capitalism, whereas like, oh, maybe, maybe we should just make public school systems better and pay teachers more. I don't know. Just a thought.

• 11:23Speaker 00

  Yeah.

• 11:24Rebecca Bellan?

  But, you know, again, like going touching on Kirsten's point about the business model. It's like, I'm gonna, I'm just gonna go off the picture that he chose to include with social media, which is like clearly an AI-generated image. And it's this, if you haven't seen it already, I, I suggest you look it up. It's like solar punk vibe, like a spaceship looking school with like students walking around, like solar panels on the floor everywhere, and like a girl with like three hands, which I thought was really funny.

• 11:51Speaker 00

  I don't know. It's just.

• 11:52Rebecca Bellan?

  Yeah, I don't know what this is. But, I mean, speaking of, speaking of like, you know, AI and ed tech, like, will this work? Last month, another ed tech platform raised 15 million called Magic School AI, and they have like a double thing. So that for, for teachers, which I know many teachers and they're already kind of doing this. They're like, you know, using it to build lesson plan and question prompts and quizzes and stuff. And it's just helping with their workflow. They're burnt out. And then for students, they have kind of this AI tutor that does summarization, tutoring, math review, et cetera. So I think we're gonna see more of this. But then at the same time, ed tech has seen like serious lows this year. Crunchbase data has found that startups in education have pulled in just over a billion dollars in funding, and it doesn't look like a rebound

• 12:35Rebecca Bellan?

  is coming. To give you a sense of scale here, 2021, the same sector saw over $20 billion invested. So.

• 12:41Speaker 00

  It's a big drop. It's a big drop in the post-COVID pandemic era.

• 12:45Kirsten Korosec?

  I can think of one way, though, to boost funding in this area of ed tech, and that's to add AI.

• 12:52Kirsten Korosec?

  Into your pitch and an AI layer because AI is getting quite a bit of funding this year and seems to have no ceiling. So we saw that with Duolingo adding in an AI feature and putting my prediction hat on, I'm very much expecting other ed tech existing startups to start promoting and pitching AI feature or AI assistance or new startups like Eureka Labs popping up.

• 13:20Speaker 00

  Yeah, I think you're right. And I am intrigued by Magic School AI because anything that can help teachers be more productive and make their lives easier, I am all for it. Well, let's end our deals of the week with a look at a scoop that I had last week about a startup called Headspin. So Headspin, for those of you who are unfamiliar, is a company that helps other companies test and monitor their apps across various geographies and devices. It made headlines over the past few years because its founder, Manish Lechwani or Lequani, was sentenced to 18 months in prison earlier this year after pleading guilty to two counts of wire fraud and one count of securities fraud. He pretty much lied to investors inflated what the company's revenue actually was and he got

• 14:05Speaker 00

  put in jail. So the company got new leadership, actually a new CEO a few years back and has been, I think, trying really hard to turn itself around, but unsuccessfully so. And the scoop was that a private equity firm called Partner One bought Headspin last month and they would not share financials. What we heard, and my colleague Marina Temkin's going to be publishing another story about this, is that the sale was cens on the dollar. Even though the private equity firm denied this, what we're hearing from our sources is that that is true, that it sold for far less than $117 million that it had raised over time. I think at one time it was valued at $1 billion. So anyway, you'll have to

• 14:49Speaker 00

  read these stories for all the juicy details. But oh, sorry. Another interesting thing about this that really just kind of made me sad is, is all the employees that had stock options were basically screwed because their stock options were canceled, according to a letter that was sent to employees. And this happened in a really kind of messed up way from a source that I heard from a former employee. Who told me, oh, we got an email that said, hey, great news. We're getting acquired. Yay, by a private equity firm. We're going to have a new home. And then like 10 minutes later, oh, but you know, all your stock options were canceled because they're underwater. So it's like, oh, wow. Okay. Good news for who exactly?

• 15:29Kirsten Korosec?

  Okay, I have a couple of questions. Congrats on the scoop. It's always great to chase those things down. I know we're still waiting on a few more details about the deal itself, but maybe you can give me some insight on two things. What was the morale and sort of the state of the company leading up to the sale? And based on maybe some of the folks you're talking to, what does it look like moving forward? Because oftentimes, when private equity buys a company and people get very scared and they assume that they will either be sold off for parts, potentially rebooted. But as you noted, the new CEO had been trying to turn the company around, but hadn't quite got there. So where, where was the company right before that sale? Was it successful at all?

• 16:13Speaker 00

  Yeah. So unfortunately, I can't share all those details just yet because that story hasn't been published. I wouldn't say it was successful. I think, you know, it did have some revenue, not as great as it would have liked, I'm sure. One, the source that I talked to, the former employee said that they thought that the former C-level executives, especially this CEO that took over, did a good job of getting the company out of the hole that the former CEO created, but that overall, they didn't think the company was managed in the best way, that they were kind of trying to catch every new customer and didn't really have a good, clear vision of what the company was. And then Partner One, for its part, basically said HeadSpin itself was a victim of all of this and not the culprit.

• 16:55Speaker 00

  And so they said that they've got a new management team at HeadSpin now, and it's composed of leaders from another one of Partner One's companies called Evolving Systems. So they actually

• 17:07Speaker 00

  Let go the C-level execs that were at Headspin when they bought it, gave them, quote, "very generous packages," and replaced them with leaders from another one of their portfolio companies to try to keep the company going.

• 17:20Kirsten Korosec?

  Yeah, which is certainly a strategy we've seen definitely in the past.

• 17:24Rebecca Bellan?

  I have a question. Who is this Manish? What was his background? Like, often, you know, founders come to a company and then they end up leaving the company, and they don't necessarily have business acumen. They just, you know, are good at making a product. So I don't know if you know much about this founder's background and how, you know, how he managed to commit wire fraud and securities fraud.

• 17:43Speaker 00

  Yeah, I mean, it's pretty horrifying. I really don't know a lot about him before this. It just looks like he was trying to inflate the valuation for a while, just trying to get more money. And the DOGA, when they complained about him, said that in materials and presentations to potential investors, he reported false revenue, overstated key financial metrics, maintained control over operation sales, record-keeping, including invoicing. Yeah, I don't know. I don't honestly know what his background was, but he didn't get away with it. Oh, wait. Sorry. Apologies. As we were talking about this, so he's not like a newbie. He had sold a mobile cloud business to Google, and then he wound up co-founding Headspin after Yahoo

• 18:24Speaker 00

  co-founder Jerry Yang introduced him to Brian Colwell, a former Palantir Inc. engineer. So, so, I mean, he actually had a successful track record. I mean, who knows how ethical he was with that other entity, but he managed to have a successful exit there. I don't know what happened when it came to Headspin, but he got caught.

• 18:45Rebecca Bellan?

  Interesting.

• 18:46Speaker 00

  Yeah, it is interesting. And, you know, honestly, I just, I feel bad for these employees. The former employee that I talked to said, you know, they just, there were a lot of people that had worked there for nine or 10 years, even through all the mess with the former CEO, and worked really hard through everything, and were very disappointed naturally to get nothing for their options. But, anyway, we've got to take a break now, but when we come back, we're going to be taking a look at the election year's impact on Silicon Valley. Lots to unpack there, so stay with us.

• 19:22Kirsten Korosec?

  Well, the big news this week, in a week that was already filled with so much news, where we see tech and the presidential election kind of bopping into each other, really slamming into each other, is Trump's pick for his vice president on the ticket, and that's J.D. Vance, who isn't, let's say, a longtime VC. He had a short stint compared to others, but certainly is connected to Silicon Valley. So we've had some coverage there, and we actually have a reporter on the ground at RNC. Margot's been feeding us lots of interesting tidbits. But the interesting thing that I want to get both of your, I guess, feedback on is, this week, we have a number of people, very high profile in the startup world,

• 20:07Kirsten Korosec?

  coming out in support of Trump and their reasons why. We've got Andreessen coming out and backing Trump. You know, of course, J.D. Vance. We have John Lonsdale. We have Elon Musk. All these folks coming out, and many of them actually tied to sort of that PayPal mafia, in which Peter Thiel is famously a part of as well. And Thiel and Vance are also very connected. So I think it's important to note this story that Marina actually wrote about, Andreessen Horowitz co-founders explaining why they're supporting Trump. And this is interesting, because these are certainly been loyal to the Democratic Party, and there's been a tipping point.

• 20:51Kirsten Korosec?

  They talked about this on the Ben and Mark episode, a podcast that he co-hosts with A16Z co-founder Ben Horowitz. And they start off by talking about how they didn't want to pick a side. But there are some key factors. One, Trump's support of cryptocurrency. Also, the stance on AI. They're feeling that the Biden administration wants to over-regulate AI. And probably the biggest reason was this Biden proposal, and I want to emphasize "proposal," to tax unrealized capital gains, which they feel would directly impact the world in which they exist in, which is all about startups. So my question for you two is, sort of, is this surprising to you?

• 21:33Kirsten Korosec?

  And what about the rest of the folks in Silicon Valley? There's plenty of other VCs who haven't necessarily come out with their own political support. Is the entire Silicon Valley sector moving towards Trump? Or are these just a few high-profile examples?

• 21:49Rebecca Bellan?

  Well, I mean, first of all, touching on your first question, I'm not necessarily surprised. I think Andreessen said that this was the final straw, the unrealized capital gains tax, and that it would really hurt startups. And while I agree that it probably would hurt many startups, right? Because my understanding is that there's a $100 million threshold here, right? So you're taxing unrealized capital gains for, it only applies to those with $100 million in wealth.

• 22:14Kirsten Korosec?

  Right, which, just to jump in really quickly, sorry. I just want to make one quick point. That $100 million, that sounds like a lot of money, like who would even ever hit that threshold? But I think in the world of deep tech and autonomous vehicles and in companies that have a lot of valuable assets, like hardware assets and IP, to me, it's not clear like how easily you would hit that cap.

• 22:34Rebecca Bellan?

  Yeah, I don't think it's really like as dire as Andreessen suggests. And also, this is a proposal. It's only one part of it. And I really just think it was a bit of posturing from Biden, right? Like, it's not necessarily that that would have made it into the 2025 tax plan. And I think that it kind of is throwing the baby out with the bathwater. And also, it's a little disingenuous. Like, probably what they're more concerned with is, you know, taxing the high wealth individuals in general and not just for unrealized capital gains. And, you know, also another thing that Andreessen had said was that Trump doesn't want to regulate big tech and he doesn't want to tax rich people.

• 23:14Rebecca Bellan?

  So like, obviously, we're seeing that Lena Kahn at the FTC is really pushing against big tech monopolies. And I think VCE doesn't like that, or at least Big VC doesn't like that. And for me, I think that it's important for American innovation to not have monopolies because when you have these monopolies, then you have, you know, often worse products, fewer products, even though if one company is offering a lot of products that looks like choice and you don't have as much innovation. So that's kind of what I'm feeling at the moment.

• 23:46Speaker 00

  I think also Trump has appealed to a lot of folks in Silicon Valley or the VCs because he signaled that he'll be friendly to crypto and AI investment. Like, for example, doesn't, it's not pushing for artificial intelligence regulation. These are kind of hot topics still, even though crypto is not, you know, where it was a couple of years ago, these are still hot topics. Even Mark Cuban came out publicly to say that he feels like Silicon Valley's bet on Trump is really totally a Bitcoin play, which I thought he was pretty bold to say. So I think I'm also not surprised by this, but I think what I am surprised by is just kind of the sheer number of VCs that are coming out, speaking out in favor of Trump and how vocal they're being. Yeah, so we're gonna have to move on, but Kirsten, I think you wanted to say one more thing before we switch gears.

• 24:30Kirsten Korosec?

  Yeah, I do think that there is one interesting wrinkle in this that I'm really curious to see how it plays out, which is in the past, the VP pick JD Vance has signaled support for antitrust actions and some of Lena Khan's suggestions around going after big tech. So what I'll be curious to see is how that plays out and sort of the mental gymnastics that might have to be involved in order to support some of those pieces, which seem to be in conflict with some of what Silicon Valley wants, while also, you know, supporting what Silicon Valley wants. And maybe, maybe it's all political theater

• 25:11Kirsten Korosec?

  and posturing. We're gonna have to wait and see. But it's, it is a curious little piece there where we see JD Vance at least supporting what has been couched as a very sort of progressive democratic policy.

• 25:23Rebecca Bellan?

  Just jumping in there really quick, I don't think it's gonna take much mental gymnastics for JD Vance because hasn't, you know, he was pretty much a never Trumper in the past and I think called Trump Hitler or said he was like Hitler. So he's, he's clearly very comfortable reversing on his stance there. And so is Trump. Trump was very, I think he was anti crypto. He was definitely anti TikTok and now he's switched his stance on that. So yeah, there's definitely like a wooing of Silicon Valley. And just one more thing, I know we have to move on, but I really wanted to, well, the first thing that occurred to me when I heard all these VCs saying that they're backing Trump is what about energy tech? What about clean tech? Like, there's been so much investment in that over the past few years, and it seems like that could be really in danger. Trump's policies in terms of energy, like, one of the main points from the Republican Party is to cancel the electric vehicle mandate, cut costly in birds and regulations.

• 26:07Rebecca Bellan?

  Vance has called the Inflation Reduction Act the dumb IRA. And if there is rollbacks to the IRA, that could threaten around $369 billion in clean energy initiatives. The private sector, as of today, has promised $246 billion of investment largely because of a lot of these public sector initiatives into clean energy manufacturing. And just to give you some quick numbers, that's bringing 45,000 jobs to America. And 76% of those jobs and that investment is based in Republican districts, according to a recent clean economy tracker from Atlas Public Policy. So, yeah, I think that for those who believe that climate change is real and for those

• 26:48Rebecca Bellan?

  who, and those VCs who are backing climate tech, clean tech startups, I think that that's something to really consider.

• 26:55Speaker 00

  Yeah, I mean, it's going to be an interesting few months here for sure. And, you know, we'll be tracking it. So we're going to wrap up today with a look at Latin America. Now, Latin America, funding there to startups boomed in 2021, especially led by the fintech space where there was sore need of innovation. Then things dropped dramatically over 2022, 2023. Well, the last quarter, we saw a little bit of a rebound. According to Crunchbase, South and Central America raised $791 million and reported seed through growth stage financing during the second quarter. That's up 25% from the first quarter and up 17% from a year ago. There seemed to be a resurgence in late-stage deal-making. Well, there are actually four very large rounds in the fintech space, of course, keeps

• 27:40Speaker 00

  coming up. One was Sellcoin, a Brazilian provider of banking tools for businesses, closed on $120 million Series C in June. Clip in Mexico City secured $100 million in a June financing. We had a couple of other big deals. Aplazio secured $70 million in equity funding in May. And then also I covered this week, Matera, a payments infrastructure company, secured $100 million from Warburg Pincus. And then the information reported that Cloudwalk is reported to be raising up to $400 million at a valuation of at least $4 billion. That's in addition to a few other rounds that have been happening. So. This is good to see. I've long been a fan of the Latin America startup scene. I feel like it has a ton of potential.

• 28:24Speaker 00

  It's different than here in the US. The founders don't have the capital as easily inaccessible to them as founders here. They work really hard in a different way. They're more capital efficient. For one, they operate, I think, more lean. And, you know, again, the need, just a sheer need for innovation, especially in financial services, is massive. So I was, for one, pleased to see a rebound in the region.

• 28:49Kirsten Korosec?

  What was most interesting to me here was so many of them were Series C, really large, really large raises. I would have maybe expected to see more on like the seed rounds and more activity on that. But we're actually seeing companies get past that really critical seed and Series A stage, where we see them kind of enter into that valley of death and kind of come out the other side. Do you have any either anecdotal or hard, like quantitative evidence that explains why this is happening on these sort of late-stage deal making?

• 29:27Speaker 00

  I mean, I think there's just a maturation in the market. I mean, the companies here may be growing, they're kind of more like, you know, the slow and steady wins the race. That's what I feel like, you know, maybe they didn't have the crazy spikes in valuation that we saw here in the US, but they've been growing steadily. A lot of them, like I said, are very capital efficient and have revenue to support their valuations and raises. So I feel like it's just, you know, the companies were just kept plugging away. And, you know, they're used to volatility in Latin America. So they weren't as affected by, you know, the economic, global economic environment. They were just this kind of as business as usual for them the past few years, I think. So it's a combination of factors. New banks doing amazingly well.

• 30:08Speaker 00

  I think it surpassed Itaoh, another company or another bank in the, in the region, to be the most valuable digital bank or bank in all of Latin America. They're, they're acquiring like crazy, just doing really, really, really well. So I still feel like Latin America is just a region to watch. If I were an investor, I'd be putting my money there for sure.

• 30:28Rebecca Bellan?

  I have a question in terms of, you know, when I think about Latin America, I think, okay, emerging market, it makes sense that, you know, investors are starting to look towards emerging markets as places with lots of potential customers. Are these companies that you listed that have recently raised rounds, these fintech companies, are their customers all based in Latin America as well? Or they're building global products?

• 30:48Speaker 00

  Yeah, that's a good question. I haven't analyzed it to that extent. I do know that Matera is looking to penetrate the US market. It's looking to sell its software here within the US because we are so behind Brazil in instant payments. I mean, Brazil is like way far ahead of us with pics. I mean, you've got street vendors that accept payment via pics on people's mobile phones. We don't have that even here in the US. So, you know, it's very interesting to me that Brazil is just so far ahead of us. So I do think some of these companies are looking to penetrate the US market. But I also think a lot of them are just very active in their own market, which is pretty huge in and of itself.

• 31:26Rebecca Bellan?

  Yeah, it reminds me a lot of Australia's fintech market has done really well as well. And I think a lot of that is because, yeah, there's less capital, there's greater need to kind of be innovative and try new things. And digital payments, I think, took off there as well, you know, faster than it did or earlier than it did in the United States.

• 31:44Speaker 00

  Right, yeah. So we'll just, of course, as always, keep watching this space. We're going to have to wrap it up today. But never fear, Equity will be back on Monday. Until then, you can find me on X at Bay Area Writer. And Kirsten, where can our listeners find you?

• 31:58Kirsten Korosec?

  At Kirsten Corasek on all social media platforms, Threads, X, LinkedIn.

• 32:04Speaker 00

  And Rebecca, what about you?

• 32:05Rebecca Bellan?

  I'm on X at Rebecca Bellan. And then I'm on Threads newly at Rebecca Bellan underscore writes. I think like, I hope someone doesn't have my actual at Rebecca Bellan, but I couldn't do it for whatever reason. So that's me.

• 32:18Speaker 00

  And you can find Equity under the handle EquityPod on X and Threads. And don't forget to check out our sister show Found, which dives deep into the stories behind startups with the founders who built them. Thanks for listening. Bye.

• 32:33Speaker 00

  Equity is produced by Teresa Loconsolo with editing by Kel. Bryce Durbin is our illustrator. And we'd like to give a big thanks to our audience development team and Henry Pickavet, who manages TechCrunch Audio Products. Thanks so much for listening and we'll talk to you next time.