Equity Monday: Crypto ticks higher, fintech gets interesting again and fraud is still bad

Here's the rundown for the very last Equity Monday of Q2 2023: Crypto's mini-boom in the last week comes after a brutal few weeks of negative headlines; for the crypto-faithful, it must be a breath of fresh air. Startups: IRL was a digital fraud, Vanta is a unicorn to watch after quick ARR growth and a resulting valuation has grown into, and TreasurySpring is riding a changing macroeconomic climate to rapid fintech growth. As Amazon pledges more investment in India, we're seeing a lot of other big economic pieces move. Other American companies are pledging big dollars to the country as Japan looks to buy one of its domestic chip companies, and American investors are putting capital into their own domestic silicon players. Finally, Apptio is selling to IBM for $4.6 billion. Whew! That's a lot, but we had a good time and will see you back here on Wednesday! All the cool kids are filling out the Equity listener survey. We want to hear from you! 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, one that details how our stories come together 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. Good morning. My name is Alex. It is June 26, 2023. This is our Monday show. We look back at the weekend, look ahead to the week and figure out what is ahead of us. Now, on today's show, we're talking about the crypto mini boom, the fact that IRL was a digital fraud, and a 2022 unicorn that appears to be kicking butt. After that, a flurry of deals in and around Asia to reform the region's economy away from China. It's going to be very interesting, but let's start with the markets.

• 0:46Speaker 00

  Kicking off with the stock market, shares are mostly lower in Asia today with Korean stocks standing out in the green. They are mixed in Europe, where a dramatic few days saw Russia in the wake of its 2022 era invasion of Ukraine, deal with a partial insurrection with one of its paramilitary groups that it uses to project force abroad. The Wagner Rebellion did fizzle out, but does remain top of mind outside of the financial markets today. And here in the US, while stocks are set to fall at the open. From stocks to the silly stock market, what's going on in the world of crypto? Well, turns out finally something happened. For the last couple of weeks, I have noted that the prices prevalent in the major cryptocurrencies have been flat, but this week finally something happened. In the last seven days, Bitcoin is up around 15%

• 1:30Speaker 00

  and ETH is up around 9%. Now, keep in mind, this puts the price of Bitcoin at around $30,000 and ETH around 1900, so nothing that we haven't seen before, but it may still feel like a pleasant surprise to see risk on sentiment after the American securities regulator went after several American companies in the crypto space. Why is this happening? Why the boom? Well, I don't know, but it must be very welcome for crypto folks who have dealt with a stringent and long-running downturn for some time now.

• 1:59Speaker 00

  Next up startups. I moved startup updates earlier in the show today because I wanted to highlight a couple of things. First, late last week, the information reported that IRL, a social service that offered group calendars and chat to users, had 95% fake users and that it was shut down and returned capital to backers. Now, you've probably heard about IRL because it raised hundreds of millions of dollars. That included a mid 2021 CRE C that was worth 170 million by itself. Now, TechCrunch reports that at the time, that was led by SoftBank's Vision Fund II and valued the company at 1.17 billion, or you can do the math, a pre-money valuation of a flat billion. Clearly, fraud is bad, but fraud also tends to become more prevalent

• 2:41Speaker 00

  in boom times. So the fact that IRL, which raised in mid 2021, the peak of the last boom, was a fraud is not that shocking. Just, just don't do frauds. Don't lie because you will get caught and then everyone will mock you and hate you. Second, a much more positive story. Security compliance process company Vanta, which was last valued at 1.6 billion in mid 2022, not 2021, thanks to a $110 million round, has, according to Forbes, quote, "at least doubled its annual recurring revenue every year since its founding to an estimated $80 million." Now, Vanta competes with companies that you've heard of, like Drata, and more or less, compliance is just a big enough business that we are seeing multiple unicorns rise in the space.

• 3:23Speaker 00

  But what's really fun here is that the 80 million ARR estimate gives Vanta a roughly 20x ARR multiple. Mix in a bit more growth and that figure is going to start looking really, really cheap. In short, if Vanta wanted to be aggressive, it could go public this time next year. Now, it won't because founder and investor exit risk tolerance today is basically nil, but it is worth noting that some recent unicorns do appear to have defensible valuations, even if that's not the case for many 2021 era unicorns like, I don't know, IRL.

• 3:56Speaker 00

  And finally, TechCrunch reports that London-based Treasury Spring, all one word, has raised a $29 million Series B. What does it do? Well, it helps other companies manage their cash. In a higher interest rate environment, getting max yield for your money is not just good business, it's good stewardship. And frankly, after the implosion of both Silicon Valley Bank and First Republic, cash management is no longer something that a startup might want to do. It is something critical. TechCrunch reports that some Treasury Spring customers are putting millions into the startup's care, which is really, frankly, a great way to build AUM or assets under management quickly. With 250 customers and another 100 onboarding, I gotta say it, not bad. Well done.

• 4:39Speaker 00

  Finally, chips, India and China. I want to collect a couple of stories here together, so please just roll with me. Starting off, TechCrunch reported the following today, and I loosely quote, "Amazon plans to more than double its investment in India in the next seven years. They will join a roster of other high-profile American giants wrapping up commitment to the South Asian market after meeting with Prime Minister Narendra Modi this week. The e-commerce group has invested about $11 billion into India thus far and plans to pour another $15 billion into the country by 2030." Now, that $15 billion number is an extension of money previously committed, but did give India another solid headline this week. And Amazon is absolutely not alone. Other reports are out there that Micron

• 5:22Speaker 00

  Technology and Applied Materials are also going to invest more in India, albeit from a chips perspective, instead of e-commerce. Sticking with chips and Asia for the moment, the Japanese government is taking JSR Corp. private. JSR's board has endorsed the deal, saying that the deal is worth a 41% premium of its last price. Who's taking it private? Well, it's the JIC or the Japanese Investment Corp. Now, what does JSR do? Well, a couple of things, but the deal is mostly being hailed as a chips-focused transaction. An investor, Dex, said that selling to the JIC will enhance the global competitiveness of the Japanese semiconductor sector, and frankly, yes, it will. And finally, one more chip story. Apollo, the private equity group that owns Yahoo, TechCrunch's parent company, is investing

• 6:06Speaker 00

  between $1 and $2 billion into Wolfspeed, an American chips company, to help it expand. So why did we package all of that together? Well, first up, US-India economic and technology ties are no small affair. They show that the US wants to expand its economic ties to India, a key counterweight to China from both a corporate perspective and a geopolitical perspective. Second, every country is really busy at the moment with chip security. This comes in both state-led forms, tax breaks and so forth, and investor reactions to government plans to bolster support for domestic chip production and research. India is going to get a bunch of American corporate investment. Japan is going to take control of its own domestic chip companies, and everybody wants to make their own silicon.

• 6:50Speaker 00

  The other way to think about this is that the through line here is China. There's a lot of concern in the market about China invading Taiwan and crippling or stealing its chips industry. So please expect more countries and more companies to keep investing both cross-border and domestically to ensure that every country has their own chip security.

• 7:08Speaker 00

  And finally, IBM is buying Apptio TechCrunch reports for $4.6 billion in cash. TC says that Apptio sells a "platform to track how and where data lives in hybrid environments and how it's being used, in particular, how that tallies up in terms of financial and resource costs." I don't actually know what that means, other than data, data, money, money, money, cost. Anyways, Vista Equity Partners bought Apptio for $1.94 billion back in 2018, and we will chime in more about the deal, including hopefully the revenue impacts about IBM. But anyways, look, it's deal making. It's 2023. Yay.

• 7:46Speaker 00

  All right, that is our show for this fine Monday morning, everybody. Don't forget, we are back on Wednesday. We are back on Friday. You can keep up with the show at twitter.com/equitypod. Also, check out Chain Reaction, Found, and the TechCrunch Podcasts from the larger TechCrunch Podcast Network. And if you're still here, you're still listening, that means you like equity. Thank you. So please go to bit.ly/equitypodsurvey, capital E, capital P, capital S. Drop us your notes. We want to know what we're doing well, where we can do better. That means we need to hear from you. All right, we'll talk to you soon. See y'all Wednesday. Bye. Equity is hosted by myself, editor in chief of TechCrunch Plus Alex Wilhelm, and TechCrunch senior reporter Mary Ann Azevedo. We are produced by Teresa Locan Solo,

• 8:28Speaker 00

  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.