Could Reddit’s upcoming IPO reward its power users?

This is our Wednesday show, in which we talk through the week’s leading startup and venture capital news. This is short week, but there’s still a lot to talk about: Loora’s $12 million round is a reminder that AI is going to find purchase in a host of new markets. The company wants to use AI for conversational language training. Sure, humans are good at that, but they are also expensive. Software aims to be more affordable. Dili is building an AI service to help investors handle their due diligence. Given that some accounting and financial work can be described as rote, the concept here makes good sense. The company just closed $3.6 million. Reddit may include a neat way to get some of its power users onto its ownership docket for its upcoming IPO. And from the venture side of the startup coin, Bluestein Ventures has a new foodtech fund, while Partech has put together the largest African venture fund out there. We’ll be back Friday morning! 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

• 0:10Speaker 00

  Hello and welcome back to Equity, the TechCrunch Podcast, where we unpack the numbers and the nuance behind the headlines. This is Alex. Good morning. Today is February 21st, 2024, and welcome to our Wednesday show where we dig into critical startup and venture capital stories from the week thus far. Now, if you were with us yesterday, you're probably asking, "Hey, it's a holiday week. Has enough stuff actually happened to warrant another show?" And the answer is yes, quite a lot has happened, and we are going to talk about it. On the show today, we have AI in language learning, a neat startup that wants to automate due diligence, Reddit IPO news, and then two new venture funds for your notebook. Let's go.

• 0:54Speaker 00

  First on the docket for the startup category, we have a company called Loora. That's L-O-O-R-A. Why is it in the news? Well, the company announced today that it just closed a $12 million Series A. Loora, whose namesake is the Arabic word for language, offers learners several AI-generated conversation subjects and scenarios, think sports, tech, business, fashion, books, TV, that sort of thing. Its round was led by QP Ventures, bringing the company's total raised capital that we know of to about $21.25 million. The thesis behind companies like Loora is that they think that AI can do at scale

• 1:35Speaker 00

  what language teachers can't. Loora itself leans on conversational AI to teach students, and it has built an iOS app that allows people to talk to an AI chatbot that then gives them feedback on their English comprehension. According to one of the company's co-founders, Roy Moore, "The idea for Loora came with their own frustration from learning language, and they think that learning language apps today are geared towards beginner or casual learners, and folks who want a human tutor to get better are a little bit expensive. So they want to split the difference and make a tool that is cheap and available." Okay, I really get that, and I think it's really cool. At the same time, I do wonder if we all learn to speak from digital robots. Are we going to be as good at talking to one another? I don't know.

• 2:20Speaker 00

  I mean, it's cool when humans converse because that's how language kind of came to be. On the other hand, human tutors are costly. And if you want to have better language skills and there's a way to use AI to help more people learn more quickly at a lower price point, I really just can't complain about that. I mean, sure, I am as bummed as anyone that Duolingo recently cut its contractor force and replaced some of those folks with AI translators. But I also think that when you weigh the near term costs and the long term benefits, the trade offs here are pretty clear cut. And I think products like Laura are indicative of what we should expect to see more of in the future from other companies as well. The next startup I have on our list, I believe we talked about back when it was at Y C,

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  but now we have more. And this company is Dilly. It's a platform that attempts to automate key investment due diligence and portfolio management steps for private equity and venture firms using, unsurprisingly, AI. It just put together a $3.6 million funding round from Alliance Strategic Investments, Rebel Fund, Singularity Capital and others. Now, there are obvious risks to using AI to do work that is designed to ferret out potentially negative information that some folks want covered up. But there are also risks to having humans do the same. Look at the historical record. Human due diligence has occasionally missed important things in big deals.

• 3:46Speaker 00

  But I suspect that many tasks in the diligence world are rote and not that creative. So using AI or machine intelligence more generally just makes good sense. And Dilly isn't the only dog barking up this particular tree. Gardner predicts that by 2025, more than three quarters of VC and early stage investor executive reviews will be informed by AI and data analytics. Expect to see more of this rather soon. But Dilly claims to have built some pretty neat tech to help its business stand out from other efforts and, I would say, avoid being commoditized. Dilly co-founder Stephanie Song told TechCrunch that her company has, and I quote, "Built custom indexing and retrieval pipelines tuned for specific documents to

• 4:29Speaker 00

  provide its models with high-quality context." Why does that matter? Well, it means that Dilly can rip data out of unstructured documents, which is pretty cool, and does delete tasks for humans. The proof here will be in the revenue pudding, but I appreciate what Dilly is doing and the small joke that its name contains. Up at the top, I promised you Reddit IPO news, and I am here to deliver. The Wall Street Journal reports that Reddit intends to reserve a chunk of shares in its upcoming IPO for 75,000 of its most active users. Okay, a couple of things here. First, the fact that this sort of story is coming out is indication that Reddit really is making progress towards going public.

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  No BS this time, it will probably do it. I'm going to say an 80% chance. Essentially, this is a smoke and fire situation. If we're seeing stories come out about the Reddit IPO process, it means the Reddit IPO process is actually moving forward. Second, that we're not done seeing bits of innovation in the IPO process. After the SPAC meltdown, you might think that innovation in the act of going public is a bad idea, but what tech companies often have that their peers might, outside of the industry, are dedicated users who make for good, if non-traditional IPO investors. So let's let Reddit run this experiment before we judge it. It may be that core users of a service are even better initial public shareholders than

• 5:55Speaker 00

  institutions. Conventional wisdom says, no, no, they're not. But then again, who cares what conventional wisdom says? We are expecting a Reddit S1 in March, which is just around the corner. And no, I am not jumping up and down in my chair demanding that March get here sooner. Before we talk venture capital news, I have one more note on a startup for you. And it's a company called Bioptimus. It's like bio and optimus smushed together with one O. And TechCrunch writes that it wants to apply everything we've collectively learned about AI models over the past few years with a narrow exclusive focus on biology. The company just raised $35 million and is a spinout from a company called Algen, but it wants to build foundational AI models for biology.

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  I just have to say that sounds awesome. What a great place to apply new technology so that we can better understand how we live and how we can live better. I dig it.

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  Before I send you off onto your workday, I have two venture capital stories for you. And the first one is about food tech. And now we have seen venture capital flows into food tech investments slow along with the overall venture capital industry, but Bluestein Ventures is not letting that fact slow it down. The Chicago-based early-stage venture capital firm closed on 45 million in capital commits for its Fund III. So you know that I love this because it's early stage, it's Chicago, and I love to eat. Now founded back in 2014, Bluestein Ventures is actually a bit of a family affair. It's co-managed by Andrew Bluestein and the Bluestein family office anchored its first couple of funds. What's notable about this third fund is that it includes external capital as well.

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  And to close us out, Partech has closed its second Africa fund named Partech Africa II. It's a 280 million euro vehicle or just over $300 million. And this news comes just one year after it reached its first close. TechCrunch reports that at its size, Partech Africa is the largest venture capital fund dedicated to African startups, and it actually raised more than it had originally hoped for. It had targeted 230 million euro, so ended up 50 million euro to the good. And it's good that it raised more because Africa needs the capital. It has seen a notable decline in venture capital activity since the 2021 era startup boom. The good news is that Partech Africa intends to back over 20 companies with initial investments

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  ranging from 1 million to $15 million.

• 8:29Speaker 00

  And that is our show for this ever so lovely Wednesday morning. If you need even more from your friends here at Equity, well, we are Equity Pod over on X and Threads, and even TechCrunch Pods over on TikTok. My name is Alex. I'm Alex over on X. We have two sister shows, of course, Chain Reaction and Found. Give them a listen. We're back on Friday. I'll talk to you then. Bye.

• 8:52Speaker 00

  Equity is hosted by myself, Alex Wilhelm, and TechCrunch Senior Reporter, Mary Ann Azvedo. We are produced by Teresa Locan Solo with editing by Kell. 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.