Monday, Feb 28, 2022 • 10min

Equity Monday: Fintech consolidation could be picking up

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Every Monday, Grace and Alex scour the news and record notes on what’s going on to kick off the week. This weekend was yet another that was full of news from Ukraine, which meant that the tech market was slightly quieter than usual. But not so quiet that we didn't have lots to chat about.

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(1)

Alex Wilhelm

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Alex Wilhelm

00:25

Hello and welcome back to

Equity

, the

TechCrunch

podcast where we unpack the numbers and the new ones behind the headlines. My name is Alex, it is Monday morning, it is early, and we have had a very busy weekend. There is a lot to talk about for our kind of kick off today, but it is February 28th 2022 the last day of the second month of the first quarter. So let's take a look at the markets and see what the damage is.

00:50

So, what is going on in the world of the stock market? Well, in

Russia

, the market is closed. So we don't know, but in

Asia

stocks are mixed, in

Europe

stocks are down but nothing too crazy. In the

United States

stocks are set to open lower, but we have seen a lot of ups and downs in the last couple of trading sessions, so don't trust the pre-print, keep an eye on American equities as they trade throughout the day.

01:10

Turning to crypto looking at this, the majors are off a little bit in the last 24 hours, but nothing really too crazy. We've seen some gains in crypto in the last seven days, so call it kind of an unch.

01:23

The first section of news we're gonna talk about today, of course, deals with

Ukraine

. It is the leading story around the entire globe because, well, we're seeing what happens when a nation tries to take another one in the modern era. I spent much of the weekend watching news in the country as

Ukraine

fought back against

Russian

invasion. We are learning the military and non-military cost, which is to say the economical price essentially of trying to steal another nation while the rest of the world says hell no.

01:48

So what do you need to know this morning? Well,

Russia

is increasingly in economic exile. The ruble has fallen very sharply against the dollar for example, and as mentioned above, the

Russian

stock market is closed.

01:58

The Times

The New York Times,

has a great headline here talking about how the rubble is crashing and how

Russia's

economy staggers under sanctions. Essentially, you could argue that the world should have been faster and quicker to the gun with its sanctions fair enough, but certainly they are having an impact today and that does impact the tech industry of

Russia

, such as it is.

02:16

So, according to D-Site, a

Russian

data company,

Russian

startups raised about a billion dollars in the first half of 2021, up from about 300 million in the same period of 2020. So not the world's largest startup market, but certainly one that is growing and is being impacted.

02:31

Social media companies and news are also in the mix as

Russia

tries to bully Western tech companies like Facebook and Twitter into not moderating their own platforms and

Russia

tries to leverage the same platforms for propaganda purposes.

02:42

Fortune also reports that more than 100 and 25 startups have offices in

Ukraine

. So expect to see some spillover from geopolitics into our startup world this week. Now, look all of that's important to companies and so forth, but we're not trying to diminish the reality of war, people are being killed, families are being torn apart, and a nation is under siege.

03:03

But we are going to cover the news from our own perspective, our own kind of rim it if you will, which is the technology industry and startups so that we can pull together this morning. Of course, we hope the war ends very, very soon and that

Russia

f- off.

03:16

So usually at this point in the show, we talk about big tech, you know, what's meta up to? What's

Apple's

latest device? But today a little bit different. We're talking about big tech from the perspective of politics over the weekend, the

Republican Party

here in

America

met in

Florida

to have a chat amongst itself, and big technology was in the crosshairs, there were lots and lots of complaints about what big tech at least in theory does the normally pro big business party has decided that tech has too much power. The question now is what will happen?

03:43

There's two things really, on one hand, there is a regulatory push in the American congress and on the other hand, there's an effort to build a sort of parallel internet of companies that have a more quote conservative bent. So for example, we have

TRUTH Social

from the

Trump Media & Technology Group

though it's struggled when it launched the other day essentially showing a lot of technology issues.

04:03

Then there's

Rumble

, the putatively conservative YouTube rival, which is apparently so far as I can tell a right wing grievance echo chamber. Both, by the way, I'll point out the

Trump Media & Technology Group

and Rumble are going public via

SpaceX

04:15

My question is, how many people really want a platform that just has kind of one thing? And that's what these are appearing to be whenever I go and take a look at them, I don't really know if I need more

Hannity

in my life. You know, I don't wake up and go, you know what I need is more of that.

04:29

So we are seeing criticisms of big tech in an attempt to build companies to combat these quote big tech platforms. Just so far, I'm going to say its kind of lame, but the commentary over the weekend did highlight the fact that this still resonates as an idea and a concept with a big chunk of the American population.

04:45

So if you live in a country elsewhere in the world that has a conservative, liberal split amongst your political parties. Good news. You might get your very own Rumble. Congratulations.

Break

Speaker 3

05:37

Christine Hall from

TechCrunch

has a great notes up on a company called Weee! Weee! With an exclamation point. Coming off a year where we use monthly active users grew by about 100 and 50% the Ethnic E-Grocer Weee! Report, has secured a $425 million series E and that means that it has now raised more than $800 million and according to Larry Liu, the co-founder and CEO over at Weee!, the company's goal is to "become the primary source for food at home".

Alex Wilhelm

06:03

Now it has been a couple of years since

TechCrunch

dug into what the company was doing. So in case you're behind, let me catch you up.

06:09

Founded in 2015, Weee! Offers over 10,000 locally sourced and hard to find Chinese, Japanese, Korean, Vietnamese, Filipino, Indian and Latin offerings for customers, essentially if you have a cultural cuisine that you like to make? Well, they might have the ingredients for it.

06:24

The new round comes about a year after Weee! raised a $316 million series D that was last March, so March 2021 and the new $425 million round does push Weee! valuation to $4.1 billion. That's a lot of money, notably the money came from

Softbank

VisionFund

to which led the deal.

06:43

And we have seen, I think

VisionFund

two rounds being a little bit smaller than

VisionFund

one rounds, but here's one that's quite large, so maybe that data point that we thought we understood was actually just a temporary lull in how big of a Czech

VisionFund

to is willing to write.

06:56

All right, moving on FPL Technologies, an Indian startup that operates OneCard, is set to double its valuation to about $1.5 billion in a new financing round. Now, whatever, there's a lot of companies in

India

, a lot of unicorns in

India

, so what? Well, OneCard is going to double its valuation a month after it disclosed its prior funding round. Now this is according to

TechCrunch

reporting are reminiscing three different sources. So this is not confirmed yet, but it should be very soon.

07:23

Singapore's

Temasek

is going to be leading the round, we believe, and it should be a more than $100 million EBET. So, what is OneCard? Well, is a mobile first credit card, no annual fees, no joining fees. As usual, bringing credit cards to the Indian market. And it also operates a thing called one score, which helps customers kind of get and understand their credit.

07:43

I think it's overall pretty cool. Good to see more rounds out of

India

, expect to see that one closed shortly. Oh, and then one more tiny one here just for me. Better Dairy has raised a $22 million series A. If you are lactose intolerant, you know how bad fake cheese is, as it exists today, there's a pizza store near where I live that has like almond cheese. Let me tell you doesn't taste like almonds, doesn't taste like cheese.

08:05

So I am absolutely here for Better Dairy making, at least in theory a better fake cheese product, lower our carbon footprint, save our stomachs, Better Dairy series A, let's see what they can do with it.

08:18

Wrapping up our news coverage today we're going to discuss Zip which is a BNPL company. BNPL eloquent stands for "Buy Now, Pay Later". It is a market in the Fintech world that has seen explosive growth both here in

the

United States

and around the world. BNPL is essentially a way to offer consumer credit or installment loans if you will at the point of sale, very big in the E-Commerce world.

08:38

You have of course heard of a firm and probably

Afterpay

Klarna

anyways Zip is going to buy its rival

Sezzle

for about $491 million according to

The Sydney Morning Herald

. Now Zip is an Australian company, fair enough. It's also listed down there.

Sezzle

is an American company but is listed in

Australia

and I went ahead and check their stock prices this morning.

Sezzle

has lost most of its value in recent quarters, after peaking in kind of the mid 2021 time frame.

09:05

Zip has also had a similar pattern, its value, it went up, and then it went down. Essentially the pandemic really boosted the value of a certain set of companies, BNPL companies were one of them, and then they've kind of come back to earth since then.

09:16

Now, according to

The Sydney Morning Herald

, the announcement comes as it reports a $214 million loss for the second half of last year and the company's CEO Larry Diamond kind of said, "yeah, you know, people do want to see profitability". So this deal is being pitched as a way to bring Zip to profitability by 2024, fair enough. Now we're going to dive into this a little bit more over on this site, but after seeing the

Afterpay

block deal and the

Sezzle

, Zip deal, which is hard to say that five times fast.

09:44

We are seeing more BNPL consolidation. Now obviously the world wasn't gonna stay as fragmented as it was when there were 64 billion different companies out there all pushing various geography or sector focused, BNPL solutions. But the point of consolidation does appear to have come sooner than I expected.

10:00

What's going on? Well, I do think we've already kind of seen the reason, which is that as the value of BNPL companies goes down, they get cheaper to buy, and they get cheaper to smush together. So why not more consolidation now?

10:12

A little bit of context there. Affirmed, the American BNPL giants thought shares appreciate all the way up to $176.65 per share at their 52-week-high. What are they worth now? Yes, come on say a number, there you go, it's actually $39.

10:28

Were you close? If you weren't close, you're probably on the high side, and that's because oh my gosh, how did it lose nearly all of its value? Well it's not alone and as it was reprised, so were its rivals, and so perhaps we'll see more BNPL consolidation which means lots of fodder for us to write about anyways, congrats to Zip and

Sezzle

, hopefully this saves your market valuation.

10:48

And that is all the time we have this fine morning. Do not forget you can follow Equity over on Twitter where we tweet under the handle Equitypod also where we do our Twitter spaces if that's your jam, you can follow me on Twitter where I tweet under the handle Alex, and we will talk to you soon. We have a great show coming to you this Wednesday and Friday.

11:04

And then next week, so the first kind of full week of March, if you will, we're going to have another live show on Thursday, this time of course, we don't expect a war to kick off, so we'll do the actual show. We'll see you then found his live this week on Thursday. If that's your jam, support our sister podcast Equities out, talk to you soon, bye.

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