A failed acquisition usually triggers the same set of questions: What does this mean for early stage startups in the industry? Will there be a chilling effect that will hurt the ratings? Will VCs stop funding this category? What will the release environment look like in the future?
This week gave that narrative a bullish twist. Visa and Plaid announced they have reached a mutual agreement to no longer pursue a merger. The $ 5.3 billion deal had been antitrust scrutiny by the DOJ and eventually ended amid these regulatory challenges.
Both Fintech VCs and startups reacted to the failed deal with aggressive optimism about Plaid's future as an independently owned fintech startup.
The most common topics?
- Plaid's price right now is far in excess of $ 5.3 billion, so now that he's a free bird he'll be pursuing a much larger output
- Plaid will go public through the SPAC because it is responsible for its own destiny.
- And my favorite: one day, Plaid will buy Visa.
In an interview with ProWellTech, Plaid CEO Zach Perret didn't give too many details about the future (and if a SPAC is involved), but said he has a new "clarity" for the future.
The fact that fintech is bullish on the future of fintech is not surprising enough. I will say that while a deal can never make or break an industry, a failed merger can certainly bring out the current market temperature. Startups Weekly readers will remember last week's issue of how P & G's decision not to acquire Billie could damage DTC's exit opportunities. Fintech seems indifferent and, indeed, celebratory. The only argument I have received, via Twitter DM, is that it could set a bad precedent for big fintech mergers.
"Or maybe ... companies learn from this and try to make riskier acquisitions early in a company's lifecycle because they know that if they let the company get too big they will lose the chance." Essaid branches, founder of Finmark, told me.
In 2021 alone, a $ 5.3 billion breakup and a Department of Justice investigation could be considered a blessing. Rock on, 'Plaid for X' startups.
Before moving on, be sure to follow me Twitter for me bad jokes is startup coverage early on. You can also always contact me at [email protected]
Columbus is the new Miami which is the new San Francisco
I hope the sub-hed has given you a headache, because that's exactly what the debates about where is the best place to start a company do. The rise of Work From Anywhere has encouraged VCs to leave San Francisco for markets like Miami or Austin in search of the next unsung hero of their wallets.
For investors, however, the financial benefit of moving to an emerging market may not be evident within months but years. Adventure is a long game (at least most of the time).
Here's what to know Drive Capital, a Columbus, Ohio-based venture capital firm founded by two former Sequoia investors, now has over $ 1.2 billion in assets, according to Silicon Valley director Connie Loizos. But before having emerging companies like Root and Olive AI, Drive had to play the unusual role of investing in a region with no key investment infrastructure.
Etc: Founding partner Chris Olsen explained how they got their roots:
"We had to spend a lot of time in universities and put new seed managers into business and help them raise money and build all this infrastructure from scratch so that the next entrepreneur is out here. [versus moves away]and it works. In our first year, we had an inward interest of 1,800 [startups], then it's gone to around 3,000 and now to around 7,000, which is more than I've heard from other venture capital firms in California. And I don't think it's because we're great. I think it is more [a reflection of the] ladder of opportunities that are here now. One of the things we'd like to see most is that more venture capitalists come here, because there are definitely more opportunities than we can invest. "
The CFO Tech Stack
If you want to start a business, go to a startup and see where employees are still using an Excel spreadsheet. The best products are the ones fueled by frustration, right?
Here's what to know to Editor-in-Chief Danny Crichton: For a trio of Palantir alumni, 15 collective years at the now public government tech firm showed a huge tech gap for CFOs. So, they started Mosaic, a techstack to help financial officers communicate and do their jobs better.
Etc: Co-founder Bijan Moallemi describes the mistake made by other platforms:
"Everyone wants to be strategic, but it's so hard to do because 80% of your time is extracting data from these disparate systems, cleaning it, mapping it, updating your Excel files and maybe 20% [your time] is actually taking a step back and understanding what the data is telling you. "
The future of consumer hardware startups beyond Peloton
Are wearables still exciting? Will consumer hardware ever be easier to build? What was the strategy that made Peloton so successful?
These and other questions are answered in the latest Extra Crunch survey focused on consumer hardware, which brings together VCs from SOSV, Lux Capital, Shasta Ventures and others.
Here's what to know: Everyone is studying Peloton's recipe for success. But the big question for consumer hardware startups is whether the boom in the home fitness market is translating into other use cases.
Etc: SOSV's Cyril Ebersweiler noted that disrupting supply chain distribution during COVID-19 was difficult for category startups, but the need for innovative solutions has never been clearer.
"Everyone is waiting for new and amazing experiences, and I imagine we have all experienced the shortcomings or the magic of some IoT products in the on-site shelter. [orders]. Spatial and environmental technologies that work well (audio or video) will be required, while "Holographic Skype" will invade families thanks to Looking Glass ".
Also: In another investor survey, five VCs assessed the future of cannabis in 2021.
Pop goes to the public market
We had another noisy week of private startups going public at a very warm reception on Wall Street. The most opulent story of the week was definitely Affirm's debut, which doubled its already increased price when it officially started trading.
Here's what to know, for our resident IPO reporter Alex Wilhelm, who writes The Exchange:
Etc:Around ProWellTech
Extra Crunch Live will be back in a big way in 2021. We'll be interviewing the VC / founder duos about how their Serie A offerings fared, and Extra Crunch members will have the chance to get live feedback on their pitch deck. You can check our plans for ECL in 2021 right here or click this form to submit your submission. Episodes air every Wednesday at 3pm ET / 12pm PT beginning in February.
And if you're feeling very generous, take this survey to help shape the future of ProWellTech
For the whole week
Seen on ProWellTechGlassdoor: the best tech companies to work for in 2021
Signal's Brian Acton talks about the explosion of growth, monetization and outrage over WhatsApp data sharing
Two-year NUVIA sells to Qualcomm for $ 1.4 billion
Loop sneaks up on making auto insurance fairer
Nuclear fusion technology developer General Fusion now has Shopify and Amazon founders backing it
Seen on Extra CrunchLessons from Top Hat's takeover spree
12 "flexible VCs" that operate where fairness meets profit share
Dear Sophie, what is the new minimum salary required for H-1B visa applicants?
Equity (and an Equity bonus)
The news keeps coming, so let's keep recording. This week, the trio talked about the Plaid-Visa affair, but also about the next big gamble of the Palantir mafia. In the early news, I covered a fintech accelerator spinning in an edtech accelerator and a new startup hailing from Austin that makes auto insurance fairer. We also discussed SPACs for a while and Danny was ... optimistic?
Listen to our episode, follow the pod on Twitter and, if you wish, tune in to our Equity bonus episode just released today. It's an episode entirely devoted to the flurry of e-commerce payments and financing that came out this week.
Until next week,