The pandemic effect is slowing:
Welcome to The TechCrunch Exchange, a weekly startup and market newsletter. The pandemic effect is slowing.
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Our work this week started in China, dug into the activity of African startups, dealt again with China, dived very deep into the ecosystem of Latin American startups and ended with a second look at it. Robinhood IPO. In other words, not much was happening at all!
You might have been surprised to see Amazon stocks fall off a cliff on Friday. After all, the company posted huge revenue gains to just over $ 113 billion in the quarter. And AWS, his public cloud company, seemed to be doing well.
But investors expected more growth and priced the Seattle-based eCommerce player accordingly. When Amazon missed its revenue expectations and forecast third-quarter 2021 growth “between 10% and 16% from third quarter 2020,” investors backed out.
But as some in the financial press point out, it’s not just Amazon that is going after investors. Etsy and eBay also fell this week. It appears investors are expecting a period of turbocharged e-commerce growth thanks to the COVID-19 pandemic to at least slow, and may in fact be over. This means that valuations are going to be reset at a multitude of companies, startups included.
Not that all businesses slowing down after the early stages of the pandemic are suffering, Duolingo had a strong opening week as a public company despite slowing growth. But delta variant or not, investment classes change their market framework. We would be smart to keep that in mind.
It’s the products, stupid
Something that stuck with me this week is how much Robinhood has been a game-changer when it comes to consumer investing. Of course, this week has been mostly devoted to the company’s IPO and its somewhat relaxed early trading performance. But, buried in its last S-1 / A deposits is further evidence of Robinhood’s cultural impact.
At the top of the unicorn claims invested by American consumers are a pair of statistics. They look like this:
Dang, you think, that’s a lot of funded accounts and monthly active users. But again, these are the numbers for March 31, 2021. They are out of date. In the same file, Robinhood said its June 30 quarter saw its funded accounts grow to $ 22.5 million. That is 25% growth in a single quarter!
Naturally, a few things happened in the second quarter of this year that won’t happen again, but it‘s still a crazy result.
First Robinhood investor Jan Hammer of Index commented on the public offering of its investment, saying the company is part of the work being done by tech companies to shake up financial services. Companies like Robinhood, he writes, are “not just a new coat of paint for the same old financial products.”
I think this is correct. And the fact is quite overwhelming for the incumbents still in the market with dated websites and average quality mobile experiences. Can you imagine a Gen Zer trading Robinhood or eToro or M1 Finance for, I don’t know, John Hancock? The toothpaste, as they say, does not go back into the tube.
How could Fidelity and Vanguard convince Robinhood users to switch to their services? Will they be able to do so, or has a whole generation of investors totally ignored the players in traditional finance? Robinhood Bulls must think so, and I don’t really find myself fighting the prospect.
I don’t know how Robinhood will perform over the next few quarters, but it seems – given Robinhood’s MAU numbers, M1’s AUM numbers and so on – that fintech startups have stolen several steps from your trusty 401 vendor ( k). A market that I’m sure fintechs will soon dig deeper into.
Learn more about Africa
Coming back to Africa, how about some data from July? Our exploration of the continent’s strong performance in the first half of 2021 ended in June, so let’s add some data. According to Africa’s observation publication The Big Deal, African startups raised $ 308 million in 71 deals in the quarter. That’s an execution rate of about $ 3.7 billion. Or in simpler terms, African startups are still on track for their best year in venture capital raising.
Kisses, and get vaccinated.