How are founders positioning themselves for the next 4 years?
Jan 24, 2025
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The hosts discuss TikTok's rocky return amid legal challenges and a major $500 billion data center project called Stargate. They delve into the tricky acquisition of Divi Homes, revealing shareholder pitfalls and the implications for the PropTech sector. The conversation shifts to the intersection of politics and innovation, as founders navigate the changing startup landscape influenced by the new administration. Finally, they explore the IPO market for 2025, highlighting the strategies companies are considering in their fundraising efforts.
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Quick takeaways
The Biden administration's fluctuating stance on TikTok illustrates the complex intersection of politics and technology affecting startups' futures.
Founders are leveraging newfound access to government resources in the Trump administration's tech-friendly environment, impacting their strategic decisions for growth.
Deep dives
TikTok's Ongoing Legal and Political Drama
The recent developments surrounding TikTok highlight the intricate legal and political landscape affecting the platform. Despite a law intended to enforce a divestment or ban on TikTok, the Biden administration signaled it would not enforce these measures, allowing TikTok to resume operations shortly after it briefly went dark. Trump's continued involvement included promises to sign an executive order to give TikTok more time, which reflected the fluctuating responses from different political figures regarding the app's future. The uncertainty raises questions about potential deals for TikTok’s ownership, especially with mixed sentiments among Congress members regarding its operations, making the stability of the app’s future precarious.
Massive Data Center Project Stargate
OpenAI is collaborating with SoftBank, Oracle, and other tech partners on an ambitious $500 billion data center initiative called Stargate. The complexity of building data centers in the United States was emphasized by OpenAI's CEO, who expressed enthusiasm about the project signaling a new era for U.S. infrastructure development, specifically regarding generative AI. However, this project sparked a debate among industry leaders, particularly between Sam Altman and Elon Musk, highlighting concerns over the financial backing and sustainability of such expansive undertakings. As data center projects proliferate, the question remains whether there is sufficient demand to warrant the investment, amid worries about potential overbuilding in the sector.
Divi Homes Acquisition and Its Implications
Divi Homes, a rent-to-own startup, is being acquired for $1 billion by Brookfield Properties, but the deal has raised eyebrows due to the company's significant debt and previous valuation. Many shareholders may receive little to nothing from this acquisition, as a letter from the co-founder indicated that most funds would be redirected toward debt repayment rather than shareholder payouts. This situation exemplifies broader challenges in the PropTech space, especially as rising interest rates have negatively impacted similar ventures. The lack of profitability for shareholders underscores the harsh realities startups face in achieving returns on investments, leaving many questions about future operations and customer experiences post-acquisition.
Startups Navigating a New Political Landscape
Founders are adjusting their strategies as they navigate the new political climate under the Trump administration, which appears more receptive to startup engagement compared to previous shifts in leadership. Various startups, particularly in defense and technology, are seeking opportunities to leverage access to government figures and resources that were less available under the prior administration. The atmosphere in Washington is characterized by significant interaction between startup founders and influential policymakers, providing a platform for ideas and pitches that could impact the future of their industries. This dynamic has created a new landscape where political affiliations and access play crucial roles in the success and growth of emerging companies.
Today, on TechCrunch’s Equity podcast, hosts Kirsten Korosec, Margaux MacColl and Anthony Ha are digging into the latest tech and startup news from inauguration week in the U.S., including the new administration’s approach to startups and the potential transparency challenges that come with it.
Listen to the full episode to hear about:
TikTok’s rapid return and whichapps are waiting in the wings – just in case.
What is Stargate, and why are OpenAI, SoftBank, Oracle and others committing $100 billion to the project?
Why some shareholders are walking away from Divvy Homes’ acquisition with nothing.
Equity is TechCrunch’s flagship podcast, produced by Theresa Loconsolo, and posts every Wednesday and Friday.
Subscribe to us onApple Podcasts, Overcast, Spotify and all the casts. You also can follow Equity on X and Threads, at @EquityPod. For the full episode transcript, for those who prefer reading over listening, check out our full archive of episodes here.
Credits:Equity is produced by Theresa Loconsolo with editing by Kell. We’d also like to thank TechCrunch’s audience development team. Thank you so much for listening, and we'll talk to you next time.