Pod Insights Equity Podcast Yandex takes a big hit to get rid of Russian assets About this episode This is our Monday show, in which we look back at the weekend and the week ahead. A big thanks to Maggie for stepping back into the Equity seat while Theresa is out today.
Here’s what we got into:
Stocks are mixed around the world as investors digest the possibility of high interest rates persisting for longer.
Crypto price movements seem to have eased in recent weeks in the wake of bitcoin spot ETF launches.
Yandex’s parent to exit Russia: At a huge cost, it turns out. Given Russian sanctions, owning tech assets inside the country is not a good proposition. But when you sell, you will take more than a haircut.
Everbridge is going private: For $1.5 billion, we hasten to add. Not a bad price bump for the 2016-era IPO, but still far from the value it commanded in 2021.
And from Startup Land, Wonder Ventures has two new funds, Naboo raised $8 million, and ProducePay put together $38 million to tackle food waste.
We closed out with this fascinating CNN story about how a finance worker was scammed out of $25M after a deepfaked conference call.
We’ll be back on Wednesday morning!
For episode transcripts and more, head to Equity’s Simplecast website.
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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.
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Transcript 0:11 Speaker 00 Hello and welcome back to Equity, the TechCrunch podcast about the business of startups, where we unpack the numbers and the nuance behind the headlines. This is Alex. Good morning. Welcome to the show. Today is February 5, 2024, and on our Monday podcast, we take a look back at the weekend and then a look at the week that is to come. A small programming note, a big thanks to Maggie Stamets, who's stepping in for Theresa today on the production side. Theresa is out. We'll have her back later this week. But as always, thanks to Maggs for being our backup. On the show today, we have stocks. It is a big, big earnings week. I have all you need to know coming up soon. Then in the realm of crypto, I have
0:53 Speaker 00 pulled out the current scorecard of the Bitcoin Spot ETF race. Then in the news bucket, we have Jan Dux's parent company leaving Russia. Everbridge is going private. Very interesting. Wonder Ventures has new capital. I have several funding rounds. And then to close out, just how many AI startups are there really out there?
1:16 Speaker 00 Starting off, as we always do, with a look at the world of money, and that means stocks. If you spin the globe, shares are mostly lower in Asia today. They are mixed in Europe and set to fall here in the US at the open. What's driving the narrative? Well, interest rates and comparative economic strength. That and whatever the heck is going on with China's economy are leading the world yet again this morning. Now, on the earnings front, it is going to be a packed week. I'm going to give you all the names and then tell you what to care about. On Monday, we will hear from Palantir and Chegg. Tuesday is Spotify, Cognizant, Snap, Freshworks, Tenable, and Sonos. Wednesday brings us Alibaba,
1:59 Speaker 00 Uber, ARM, PayPal, Paycom, Confluent, Rapid7, and GoPro. Then Thursday, we'll have Take Two, Cloudflare, Pinterest, VeriSign.
2:10 Speaker 00 Dynatrace, Affirm, Bill.com, Doximity and Alteryx. Like I said, that's a lot of names. Here's what I'm most interested in. Palantir, how are they doing selling to governments? Chegg, how is the ed tech world dealing with AI? Spotify, what is the state of the global music consumer? Snap, social media and advertisements, lots of data coming there. On Wednesday, Alibaba will tell us quite a lot about the current regulatory climate in China and also the strength of the Chinese consumer. All about chips, Rapid7 is cybersecurity. I always have at least one eye on that. And then Thursday with Affirm and Bill.com, quite a lot of fintech data. So no matter what part of tech you care about, there's something for you this week.
2:59 Speaker 00 Well, if you find money funny, how about some funny money? Yes, my friends, it's time to talk about crypto. The good news here is that things seem to have quieted down with crypto prices moving more modestly in the last week than we saw in the immediate aftermath of the launch of the recent ETFs. Now, in numerical terms, that means that Bitcoin is up just over 3% in the last week to about $43,300 a piece this morning. Ether is up a similar amount to about $2,300 per coin. But all that's whatever, what you want to know is how big are these new Bitcoin ETFs? Now, the two largest Bitcoin ETFs that have come out recently come from BlackRock and
3:41 Speaker 00 Fidelity, well-known names to anyone in the financial world, and they have accumulated $3 billion and $2.6 billion a piece. I can't decide if that number is good or if that number is a little bit weak. Now, if you're a Bitcoin bull, you may have expected $30 billion and $26 billion a piece. And if you're a Bitcoin bear, well, maybe those are pretty strong figures. Regardless, that's where those funds are today. Meanwhile, data from the block indicates that spot crypto trading volumes are fading consistently from recent heights. Now, that could be in perhaps part due to the launch of the recent Bitcoin ETFs, or maybe crypto's recent moment is already on the descent.
4:25 Speaker 00 Next up, my favorite part of the show, what I call big news that matters. And there's no big news that matters more this morning than Yandex exiting Russia. Let me explain. Yandex N V, which is the Dutch parent company of the eponymous Russian internet giant, is selling the last of its remaining Russian businesses at a massive discount. And of course, this news follows geopolitical pressures that emerged from Russia's invasion of Ukraine two years ago. What is the value of that transaction, which will include the sale of all of Yandex N V's businesses in Russia and several neighboring markets? Well, it's 475 billion rubles. And no, don't get out your calculator. I've done the math for you.
5:08 Speaker 00 It's 5.2 billion USD. And that's about half the value of those assets, according to an average share price set in January. Now, why is there this massive discount? It's actually due to a rule imposed by the Russian government, which stipulates that any sale of Russian assets by a parent company that is incorporated in a country deemed, quote, "unfriendly to Russia," will be subject to a mandatory discount of at least 50%. And as you can kind of guess, Yandex N V is a Dutch company. It's based in the Netherlands. The Netherlands is part of the EU, and the EU has put sanctions on to Russia and therefore falls into that unfriendly category. The context here, I think that matters for everyone listening, is not really about
5:52 Speaker 00 one transaction and the Russian market. But instead, for anyone investing in Russia, you might have to do some extra math because suddenly now, when you sell something, you only get half the money at most. Not that a lot of VCs were trying to invest in Russia since that war started, but I think this effectively puts the final nail in that coffin. War, it turns out, is bad for startup investment.
6:19 Speaker 00 How do you start your Monday morning? With coffee, perhaps. Everyone should have a nice cup. But the way that I like to start my Monday mornings is with a big transaction. And thanks to Everbridge, I have one. Now, Everbridge is a critical event management software company, and it's going to go private in a $1.5 billion all cash deal that we'll see taken over by Tom Bravo. Now, if you don't know Everbridge, let's back up a little bit. The company was actually founded back in 2002 and was initially known as 3N Global. What does it do today? According to TechCrunch, Everbridge helps governments and enterprises from across the industrial spectrum respond to emergency situations.
6:59 Speaker 00 And that was a good enough business to take Everbridge public back on the NASDAQ in 2016. Its shares hit an all time high in, guess what year? 2021. That was when Everbridge was worth up to $6.4 billion. However, since then, things have changed and the company's valuation has hovered around plus or minus the $1 billion mark for the past six months. Now, is this a 50% premium? From $1 billion to 1.5%? Sounds like it, but TechCrunch reports that, and I quote, "Looking at the volume weighted average share price over the past three months, the deal represents a 32% premium." So about a third. That's not quite half, but it's still relatively hefty.
7:43 Speaker 00 PE take privates are going to be something to watch this year because capital could become cheaper with falling interest rates and many software companies have worked to generate more cash in recent quarters. The combination could be quite second. My question is whether or not the same PE appetite will extend to late stage startups that have also greatly worked on their cash consumption. If not, it's all eyes on IPOs and well, that's not looking too great to start the year.
8:13 Speaker 00 So have you heard about a thing called Wonder Ventures? It turns out that TechCrunch considers them to be a fixture in the pre-seed investment scene of LA and Southern California. And according to our own notes, it is backed nearly all of LA's unicorns that we know about. And the fund is back in the news because it has hired lots of people, including Valentina Rodriguez and Taylor Bolhak, and it has landed fresh new capital. So Wonder Ventures has 102 million in new commitments that's going to land in two different funds. This includes a $57 million pre-seed fund, AKA Fund 4, and a $45 million late-stage opportunity fund. A lot of early-stage firms will raise a pre-seed fund, and they have a separate bucket of money
8:56 Speaker 00 they can use to do follow-ons for Series As, Bs, and Cs that don't quite fit into their thesis for the smaller fund. It's a little bit of fun mechanics, but this isn't too abnormal. What I think matters here is that it's good to see more early-stage funds coming together because they actually fund the big names of tomorrow. It's kind of like foundation-stage capital, if you will. And even more importantly, it's nice to see that smaller funds are still able to raise today. A $57 million fund is not that big when we think about the big names in venture, but it actually matters because it can write those very early small checks. What we have seen, however, are a lot of later-stage or bigger venture capital funds invest
9:37 Speaker 00 earlier where they're less price-sensitive, but that has distorted early-stage investing at least somewhat. So it's good to see Wonder actually raise a smaller fund because it implies the model is still viable.
9:53 Speaker 00 Elsewhere in startup land, I have a couple more funding rounds for you. The first one is from a French company called Naboo that TechCrunch reports was created just a couple of years ago and is, quote, "trying to create a modern online experience for company seminar planning," just raised $8 million. I absolutely love the idea here, but the concept of fancy retreats just feels more 2021 to me than 2024. 21 was the era of big things, lots of money, optimism. And then 2024, I've been told, is the era of cost savings and efficiencies. So the idea behind Naboo just feels slightly temporarily offset. But then again, that could just be indication of how far behind the times I already am.
10:38 Speaker 00 Next up is a company called Produce Pay, which wants to "eliminate the economic and food waste caused by the volatile and fragmented nature of today's global fresh produce supply chain." Those are the words of the company's CEO, Pat McCullough, when he recently raised new capital. Now, how much funding did the company just put into its own pockets? $38 million in a Series D that was led by Syngenta Group and saw participation from a number of other venture capital firms, including Highgate Private Equity, G2 Venture Partners, Common Fund, lots and lots of names. The food waste space is big, and there are a lot of startups trying to attack it from several different angles. But it also feels like a problem
11:22 Speaker 00 that people have been working on for a very, very long time. And I don't know if that's indication of encouraging progress, i.e. more people are trying because there's success to be found, or failed effort, and everyone's just kind of taking another crack and then falling apart. But Produce Pay, really, is doing quite well. TechCrunch writes that its revenue grew 76% last year, while trade volume on its platform nearly tripled. That's quite impressive. Produce Pay, well done.
11:52 Speaker 00 And to close out our startup coverage, I have pulled a quote from a recent Strictly VC event that was held by TechCrunch EIC Connie Loises. Talking to two Kleiner partners, they said that, quote, "more than 80% of the pitches they are seeing lately involve AI." Is that a lot? Maybe it's not enough. Mamun Hamid, a partner over at Kleiner, points out that, and I quote, "To be fair, if you were building a company in 1996 and you didn't mention the internet, you'd be out of your mind, right? In the same vein, not mentioning AI or utilizing it would be a missed opportunity." Well, that's a pretty good point. Perhaps, therefore, all startups must be AI companies today because, God forbid, you were trying to build a startup in 96 without the internet.
12:35 Speaker 00 And to close us out entirely today, in the tech chatter zone this weekend was news that, according to CNN reporting, and I quote, "A finance worker at a multinational firm was tricked into paying a..." $25 million to fraudsters using deep fake technology to pose as the company's CFO in a video conference call. Clearly here, the details matter. It's not going to be quite as simple as that one sentence makes it seem, but it's really not a good sign here that fraudsters are already this advanced and can effectively copy your CFO and paste them into your browser. One reason why returning to office might work is that you cannot yet fake
13:16 Speaker 00 a person in the flesh, but you can in a video call. This one's going to bounce around all week long.
13:26 Speaker 00 That is our show for this ever so fine Monday morning. If you need even more equity between now and Wednesday, when our next show comes out, we are Equity Pod over on X and Threads. And if you need even more of my voice, well, I'm Alex over on X. We also have two sister shows, Chain Reaction and Found, one focused on all things crypto, one focused on founder's stories and how those people built what they did. All right, we'll talk to you soon. Bye, everybody. 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 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.
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