EC News Analysis

Kanye joins the ranks of arrogant billionaires buying their own echo chambers • ZebethMedia

By zebethcontrolPosted on October 18, 2022Posted in EC News Analysis, kanye west, parler, social media, Startups, Twitter, VentureNo Comments

After a whirlwind month of spewing racism, antisemitism and just straight oddities, Ye, the rapper formerly known as Kanye West, announced his intention to buy right-wing extremist “free speech” platform Parler. Coincidentally, we’re sure, the app’s CEO is George Farmer, who is the husband of Kanye’s new best friend, conservative political pundit Candace Owens. In announcing the deal yesterday, Parler’s parent company said that Kanye made “a groundbreaking move into the free speech media space and will never have to fear being removed from social media again.” “The proposed acquisition will assure Parler a future role in creating an uncanceable ecosystem where all voices are welcome,” the company wrote in a statement. The deal is expected to close this upcoming quarter. The financial aspects of Kanye’s acquisition of Parler have not been disclosed. In the past, billionaires and racists could just say whatever they wanted, knowing the class they wished to oppress wouldn’t call them out in fear of retaliation or harm. These are not those days. With his agreement to buy Parler, Kanye represents yet another conservative billionaire attempting to wield control and influence over social media platforms, using the notion of free speech as a guise to continue fomenting hate speech and ginning up right-wing ideologues.

Q3 data reminds us that venture debt is not a Hail Mary

By zebethcontrolPosted on October 13, 2022Posted in EC News Analysis, EC venture capital, pitchbook, slowdown, Startups, Venture, venture capital, venture debtNo Comments

Venture debt was never meant to be used to bail a company out of financial trouble. And yet, when venture capitalists started to pull back from equity investing earlier this year because frothy market conditions made them realize that valuations were too high, it became a topic of discussion again. Across the industry, from founders to investors to reporters, the rhetoric among many was that we’d see a drastic rise in venture debt this year. But why would lenders want to loan cash to businesses that are being abandoned by their investors due to questionable financials — especially in a turbulent market? Well, they don’t. And despite people thinking they would, Q3 data from PitchBook shows that venture debt will likely see fewer deals and less loan volume this year than during last year’s robust equity market.

The Muse buys Fairygodboss as roll-up acquisitions come to VC

By zebethcontrolPosted on October 12, 2022Posted in Acquisitions, consolidation, EC News Analysis, EC venture capital, roll up, Startups, the muse, VentureNo Comments

Not every startup can reach its full potential — or survive — on its own. Venture capital puts a lot of emphasis on startups reaching unicorn status or exiting through an IPO, largely because such successes are crucial to making the venture model work. But this makes it easy to overlook the fact that many companies would see more success if they were acquired or combined with other startups. Kathryn Minshew, the co-founder and CEO of recruitment and job application marketplace The Muse, started thinking about this a year ago when her startup had been around for a decade. After a year of floating the idea of consolidation to other targeted recruitment platforms, her company, which helps users find jobs based on company culture and what they value, made its first acquisition. The New York-based startup announced this morning it has acquired Fairygodboss, a recruitment platform aimed at women and working mothers. The purchase price was undisclosed, and parties declined to comment on it, but a source familiar with the transactions said it was a mix of cash and stock. Fairygodboss is producing about $10 million in yearly revenue, which infers the purchase price was presumably favorable. Minshew said this will likely be the first transaction of many for The Muse because the recruitment tech space is in dire need of consolidation.

Could corporates be good matchmakers for startups and VCs?

By zebethcontrolPosted on October 9, 2022Posted in cloudflare, EC News Analysis, EC venture capital, Enterprise, StartupsNo Comments

Cloudflare last week announced a $1.25 billion funding program for startups that build on its software, Cloudflare Workers. But this isn’t a corporate venture fund and that sum is not company money. Rather, it’s an initiative in which the cloud infrastructure company curates a group of its startup customers and presents them to venture capitalists, each of which committed $50 million to back companies building on Cloudflare Workers. The list of 26 venture funds includes big players like NEA and Boldstart and smaller firms like Pear VC. Cloudflare CEO Matthew Prince told me that number has continued to grow since the project was announced in September. The reason this is interesting is that while public companies have been drastically increasing their presence in startup funding in recent years, it’s largely been through one of two playbooks: Companies were either setting aside a sleeve of capital on their balance sheet to back startups in adjacent or complementary sectors to their own, or they were launching an accelerator program. This strategy from Cloudflare feels fresh. And if successful, it could prove to be a pretty smart bet. The program essentially helps funnel money to its customers, thus securing their need for the platform, while also attracting startups to consider building on Cloudflare over other platforms — without Cloudflare having to spend anything. It’s worth noting companies entering this program, regardless of whether they get pitched to VCs, do get multiple software features for a year for free. But will a corporation like Cloudflare be a good matchmaker? Prince seems to think so — he told me that the idea for the program came from the company’s conversations with venture capitalists.