Welcome back to The Biomedarticles Exchange, a weekly newsletter for startups and markets. It is inspired by what the day of the week is Exchange column digs in, but it’s free and made for your weekend reading. Would you like it in your inbox every Saturday? Register here.
Our work this week started in China, delving into African startup activity, revisiting China, delving very deeply into the Latin American startup ecosystem and ending with a second look at the Robinhood IPO. In other words, it wasn’t really busy!
You may have been surprised that Amazon stock fell off a cliff on Friday. After all, the company posted tremendous revenue growth to just over $ 113 billion in the quarter. And AWS, its public cloud business, seemed to be doing fine.
But investors had expected more growth and priced the Seattle e-commerce player accordingly. When Amazon missed its sales expectations and forecast growth of “between 10% and 16% compared to the third quarter of 2020” for the third quarter of 2021, investors let go of its stock.
But, as some in the financial press note, it’s not just Amazon that is distancing itself from investors. Etsy and eBay also fell this week. It seems that investors are expecting a period of rapid growth in e-commerce to at least slow down and even be over thanks to the COVID-19 pandemic. This means that ratings are being reset on a wide variety of companies, including startups.
Not that every company that slows down after the early stages of the pandemic is suffering, Duolingo has had a strong opening week as a publicly traded company despite the slowdown in growth. But delta variant or not, the asset classes are changing their market structure. We’d be wise to keep that in mind.
It’s the products, stupid
Something that stuck through my teeth this week is how much Robinhood has changed the game in terms of consumer investment. Sure, this week was mostly about the company’s IPO and its somewhat laid back early trading performance. But buried in the final S-1 / A files is new evidence of Robinhood’s cultural influence.
At the top of the US consumer investment unicorn filings are two statistics. They look like this:
Hell, you think that’s a lot of credit accounts and monthly active users. But those are the numbers from March 31, 2021. They are out of date. In the same filing, Robinhood stated that its funded accounts grew to $ 22.5 million in the June 30th quarter. That’s 25% growth in a single quarter!
Of course, there were some things in the second quarter of this year that won’t happen anymore, but it’s still a crazy result.
Formerly a Robinhood investor Jan Hammer from Index sent a comment following the public offer of his investment, arguing that the company is part of the work of tech companies to shake up financial services. Companies like Robinhood, he wrote, are “not just a new coat of paint for the same old financial products.”
I think thats right. And the point is pretty devastating for established gamers who are still out there with dated websites and middling mobile experiences. Can you imagine getting a Gen Zer trading Robinhood or eToro or M1 Finance for John Hancock? The toothpaste, as they say, doesn’t go back in the tube.
How could Fidelity and Vanguard Robinhood users persuade them to switch to their services? Can they do that, or has a whole generation of investors completely skipped traditional financial players? Robinhood cops have to think that way, and I don’t really find it inside me to fight against perspective.
I don’t know how Robinhood is going to play out in the quarters to come, but it feels – given Robinhood’s MAU numbers, M1 AUM numbers, etc. – that fintech startups have several marches on their trustworthy 401 (k) – Vendors stole. A market that I am sure that fintechs will soon dig deeper into the subject.
More about Africa
Back to Africa, how about some July dates? Our investigation into the continent’s strong performance in the first half of 2021 stopped in June, so we’re adding some data. Pro-Africa observational publication The Big Deal, African Startups Raised $ 308 million in 71 deals in the district. That’s a run rate of around $ 3.7 billion. Or put more simply, African startups are still well on their way to hitting their best year when it comes to raising venture capital.
Hugs and get vaccinated.