The pandemic effect is slowing – TechCrunch

by Joseph K. Clark

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This week’s work kicked off in China, dug into African startup activity, dealt with China once again, took an intense dive into the Latin American startup ecosystem, and wrapped with a second look at the Robinhood IPO. In other words, not much was going on at all!


You may have been surprised to see Amazon’s stock fall off a cliff Friday. After all, the company posted substantial revenue gains to just over $113 billion during the quarter. And AWS, its public cloud business, seemed to tick along nicely.

But investors had expected more growth and had priced the Seattle-based e-commerce player accordingly. When Amazon missed revenue expectations and projected Q3 2021 growth of “between 10% and 16% compared with third-quarter 2020,” investors let go of its stock.

But as some in the financial press note, it’s not just Amazon that’s taking stick from investors. Etsy and eBay also fell this week. It appears that investors are anticipating that a period of turbocharged growth in e-commerce thanks to the COVID-19 pandemic is slowing at least and may be over. That means valuations will get reset at various companies, startups included.

Not that every company slowed down after the pandemic’s early phases suffered, but Duolingo managed an intense opening week as a public company despite slowing growth. But delta variant or not, the investing classes are changing their market framing. We’d be wise to keep that in mind.


It’s the products, stupid.

This week, something stuck in my teeth is how much Robinhood has changed the game regarding consumer investing. This week was mainly about the company’s IPO and its somewhat relaxed early trading performance. But, buried in its final S-1/A filings is new evidence of Robinhood’s cultural impact. A pair of statistics is at the top of the U.S. consumer investing unicorn filings. They look like this:

Dang, you are thinking, that’s a lot of funded accounts and monthly active users. But then again, those are March 31, 2021, numbers. They are out of date. In the same filing, Robinhood indicated that its June 30 quarter saw its funded accounts tally grow to 22.5 million. That’s 25% growth in a single quarter! Naturally, a few things were going on in the second quarter of this year that won’t happen again, but it’s still a bonkers result.

Early Robinhood investor Jan Hammer of Index commented in the wake of his investment’s public offering, arguing that the company is part of work being done by tech companies to shake up financial services. He wrote that companies like Robinhood are “not just a fresh coat of paint for the same old financial products.”

I think that is correct. And the point is pretty damning of incumbent players still in the market with dating websites and medium-grade mobile experiences. Can you imagine getting a Gen Zer to swap out Robinhood or eToro or M1 Finance for, I don’t know, John Hancock? As they say, the toothpaste is not going back into the tube.

How might Fidelity and Vanguard convince Robinhood users to move to their services? Will they be able to, or has an entire generation of investors completely skipped traditional finance players? Robinhood bulls must think so, and I can’t find it in me to fight the perspective.

I do not know how Robinhood will perform in the coming quarters, but it does feel — given the MAU numbers from Robinhood, AUM figures from M1, and so forth — that fintech startups stole several marches on your trusty 401(k) provider. A market that I am sure the fintechs will soon dig more deeply into.

More about Africa

Circling back to Africa, how about some July data? Our exploration of the continent’s strong H1 2021 performance stopped in June, so let’s add some data. Per the Africa-watching publication, The Big Deal, African startups raised $308 million across 71 deals in the quarter. That’s a run rate of around $3.7 billion. Or, in simpler terms, African startups are still on pace for their best year ever when it comes to raising venture capital.

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