A $700M SAFE, more IPOs, and how one venture fund is transcending borders
Mar 22, 2024
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This podcast episode discusses a neobank's pivot to B2B, a climate incubator, and cross-border investing. They also cover Saudi Arabia's AI investment push, VCs holding back IPO rush, and Reddit's successful trading debut.
In the podcast, the transition of Onyx from a consumer-focused neobank to a B2B model highlights the regulatory challenges faced by fintech startups aiming to serve community banks.
The discussion on VCs holding the reins on IPOs sheds light on the intricate power dynamics impacting late-stage companies' decisions to go public.
Deep dives
Onyx's Pivoting Strategy: From B2C to B2B
Onyx, a YC-backed company initially focused on digital bank services for high earning millennials and Gen Zers, announced a pivot from B2C to B2B model. Despite initial success, they faced regulatory issues prompting the shift. The move aims to provide banking solutions for community banks using their platform.
Montauk Climate: A Startup Incubator Model for Climate Solutions
Montauk Climate, an incubator launched by Casper co-founder Philip Krim, secured $8.5 million to support climate-focused ventures. The incubator follows a startup studio model to develop ideas before bringing in external managers and venture capital funding. This approach marks a unique endeavor in the climate space.
Ethos Fund Bridging US and Vietnamese Tech Communities
The ethos fund closed its inaugural $12 million fund to invest in early-stage companies bridging the US and Vietnamese tech communities. Targeting third culture founders, the fund supports startups from diverse cultural backgrounds focusing on solving global problems. This initiative enriches cross-border collaborations in the tech ecosystem.
VCs Holding Back IPOs with Investor Control Terms
Late-stage VCs holding significant control over IPOs through standard deal terms like anti-dilution clauses impact companies' ability to go public. This investor control can hinder IPO readiness even for companies showing growth potential but facing resistance due to valuation dilution concerns. The balance of power between investors and founders in exit decisions influences the IPO landscape.
This week we had Mary Ann, Becca, and Alex aboard.
Here's what the crew got into:
Deals of the Week: Mary Ann wanted to talk about Onyx, a neobank aimed at wealthy early-to-middle career adults. It's pivoting to B2B and is not, despite what the Internet said, dead. Alex wanted to discuss Montauk Climate, a climate incubator set up by the former co-founder of Casper and the recent Marc Lore/Wonder deal. The climate isn't doing well, in case you've missed the news. So, projects like this are welcome. And Becca brought Ethos Fund to the table, allowing us to discuss cross-border investing.
The upcoming Saudi AI push: What has lots of capital and is ready to pour it into AI investments? Sure, your local venture scene but also the Saudi Arabian government. Notable venture funds have been flying to the Middle Eastern state to raise capital, but perhaps in the future the capital will come for them.
How some VCs are holding back an IPO rush: A recent Becca investigation unearthed an interesting finding, namely that it may not be the fault of late-stage founders that their companies are not going public. Their backers might actually be the ones holding the door closed.
Oh, and Reddit started trading during our recording slot, and it's doing well!
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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