Equity Monday: China hates crypto, and the Vision Fund's vision lives on

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines. This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here. Our live show is this week! And we're very excited about it! Details here, and you can register here. It's free, of course, so swing by and hang with us. Back on theme, we had a lot to get through this morning, so inside the show you can find the following and more: The Chinese cryptocurrency clampdown is a big damn deal: With lots of the nation's mining capacity heading offline, there's a scramble to relocate rigs and generally figure out what a crypto market sans China might look like. In the wake of the news, the value of cryptocurrencies fell. As did shares of Coinbase this morning in pre-market trading. Facebook's Clubhouse rival is out. The American social giant follows Spotify into the live-audio market. You have to give it to modern software companies, who thought that they could be both leading tech shops and Kinko's clones at the same time? Revolut is unprofitable as hell but increasingly less so. That could be good news for fintech as a whole. Amber Group raised $100 million; Forto raised $240 million. See you this Thursday at the live show! 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

• 0:00Speaker 00

  Equity is brought to you by Extra Crunch, that prodigious tech ranch paywall you keep running into. You can break through that paywall at a steep discount if you use the promo code Equity. If you do, you'll get access to our best stuff and you'll make Equity look really good internally at the same time. Enough of that, let's start the show.

• 0:26Speaker 00

  Good morning and welcome to Equity's Monday episode, our weekly primer where we catch up on the news and of course, explore the numbers behind the headlines. It is June 21st of 2021 and I am back. Yep, this is Alex after a nice week off. I learned how to kayak and even took a couple of naps. So if I owe you an email or a DM, sorry about that, but I needed to recharge. It's good to be here. To start this week, the cryptocurrency markets are having a hard time due to geopolitical issues and American stocks are set to rise at the open despite declines in Asian stocks and a generally mixed European trading day. Also, remember that we are recording Equity live this week on June 24th at 2:00 PM Pacific

• 1:08Speaker 00

  Time, which is 5:00 PM Eastern or 9:00 PM GMT. It's a free show, so please show up and heckle us as we try to bring that old live show energy to the virtual world. There is a link to register in today's show notes. If people like this and it's a good time and all that, we'll do more of these here and there. Of course, it's more fun to show up at Disrupt and do it in person and see everybody, but this is the next best thing and frankly, I think it's going to be a blast.

• 1:34Speaker 00

  Now, the big story this weekend in tech was the shuttering of cryptocurrency mining operations in China. The short gist of the story is that the Chinese province of Sichuan told power companies to stop providing juice to crypto mining operations and sans electricity, of course, you can't run computers that then mine Bitcoins, so ugh, it's bad. China has long been a hub for cryptocurrency mining, due in part to excess electricity in some regions like Sichuan, which is known for its hydroelectric power generation. Some crypto miners had hoped that by using lower costs, lower carbon power, they might dodge a rising tide of anti-crypto government sentiment in the country. And the answer to that was no. Sitting where we are today, the idea that the Chinese government would allow a crypto economy to flourish feels naive, you know, what were we thinking?

• 2:18Speaker 00

  Especially as the Chinese Communist Party cracks down on the country's technology industry more broadly. China's government is also working on a digital version of its own currency, which could grant the country's autocratic leadership the ability to exert even more control over its economy. And of course, crypto, which is decentralized by nature, kind of clashes with the Chinese government's goal of more and more control over both its population and their economic activity. Now, this is not just a China story, of course, the impacts of China's shuttering huge swaths of its crypto mining activity are being felt around the world as crypto prices generally fell since the Sichuan news broke. Bitcoin is under the $33,000 mark and you can buy Ether for less than 2K and frankly, every major crypto is off by double-digit percentage points in the last week. It's a mess. Coinbase,

• 3:03Speaker 00

  an American crypto unicorn that recently went public, is off around 3% in pre-market trading this morning. Coinbase acts as a kind of comp for many private crypto-focused startups, so we can infer that the crypto startup market is having a somewhat rough time from a valuation perspective in the last couple of days. Now, closing off this particular little section of our show, all of this crypto news comes after venture capitalists poured $17 billion into crypto companies so far this year, according to PitchBook data. Bloomberg reports that that figure is, quote, "by far the most in any single year and nearly equal to the total amount raised in all previous years combined." Whoops.

• 3:41Speaker 00

  All right, enough looking backwards. Let us talk about today. Now, the big news this morning is that Facebook's Clubhouse competitor has rolled out. The American social media giant follows other technology players in releasing live audio-focused features in the wake of Clubhouse's early 2021 growth spurt. Now, various data sources have shown a deceleration in at least the growth of Clubhouse in recent months. And, you know, if that decline is due to generally falling consumer interest or rising competition or a blend of the two, it's not really clear, but certainly more major players showing up isn't great for Clubhouse. Now, Spotify launched its own Clubhouse competitor called Green Room last week, as I'm sure you recall. You know, thinking about this, what Facebook will do with live

• 4:23Speaker 00

  audio long-term is less clear than what Spotify might. The music streaming service, of course, has been working on building out its podcasts and other kind of non-music content for years. Facebook, in contrast, is, I don't know, less well-known for its music and podcasting chops. And that's an understatement, I think. Also this morning, Revolut, a European neo-bank filed some financial results that are worth our time. TechCrunch, of course, has a full write-up if you want more, but the company that has raised over $900 million, according to Crunchbase data, had some pretty interesting numbers that we should digest. Now, according to TechCrunch reporting, in 2020, Revolut had revenues of $361 million. That's converted currency-wise, but don't worry about it. And now, that figure was up 57% compared to 2019's revenue of $229

• 5:07Speaker 00

  million. Not bad. Gross profit was $170 million, and the company's non-adjusted operating loss reached $277 million last year. Now, at this point, normally, we would kind of make fun of the company for losing so much money, but if you look at the company's quarterly breakdown, its losses have been decelerating recently, and it's almost a break-even company as of Q4 of last year. Could Revolut become profitable this year? That will be a big moment for neo-banks. We'll see.

• 5:35Speaker 00

  All right, turning to funding rounds this morning, there are two that you need to know about. The first deals with crypto. Oddly enough, I was kind of surprised to see this one. The news is that Amber Group, a Hong Kong-based cryptocurrency trading startup, said on Monday that it has raised $100 million in a Series B funding round at a pre-money valuation of about $1 billion, according to TechCrunch. And that's about 10 times its last private valuation, so quite a good up round for the company. China Renaissance led the deal, which included Tiger Global, D.C. Ventures, among a host of other firms. The company, quote, "serves both institutional and individual investors, offering them algorithmic trading, among other tools," according to T.C. reporting. It's somewhat strange to see Amber Group raise this amount of capital as cryptocurrencies struggle to hold on to a bull market that led to a huge appreciation in the value of various digital

• 6:20Speaker 00

  assets, as well as a boom in investor interest. But we're kind of on the other side of this particular crypto cycle, and so this is a lot of optimism late in the game. And Amber is based in Hong Kong, where China is cracking down on anything that wouldn't fly in mainland China, so it probably won't help it stay clear of a changing domestic regulatory environment. One to keep an eye on. And Forto, that's F-O-R-T-O, raised $240 million in a round led by SoftBank's Second Vision Fund. The round values the company at about $12 $12 billion. Now, this deal stood out for a couple of reasons. The first is that yes, we are seeing Vision Fund II quite a lot lately. Now, Vision Fund II is no Vision Fund I in terms of, I don't know, breaking the entire venture capital world, but surely the Japanese telco

• 7:03Speaker 00

  conglomerate is still very active in the private capital markets. And second, Fordos Business is something that we should keep tabs on. The company works in the supply chain software space, providing code to help companies move things around the world in an efficient and hopefully cost-effective manner. You could view the company's latest deal then as investor belief that global trade is not set to slow, and that's bullish. And it's nice to close today's news cycle on something positive.

• 7:30Speaker 00

  All right, closing today, don't forget that our live show is June 24th. That's this week. It's going to be fun. You can come and take part. You can heckle us. It is as free as roadkill and twice as tasty. It's going to be an absolute blast. Also, don't forget that we are, of course, on Twitter at EquityPod. I'm on Twitter as at Alex. If you want to say hello, I'll see you soon. Bye.