July 23, 2021

Market recap

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Top Story

Blockchain Startups Raise Record Funding Amount

Blockchain Venture Capital Funding Hits $4.38 Billion

Blockchain startups raised more than $4 billion in venture capital funding during the second quarter, setting a new record. The investment increase comes even as cryptocurrency prices have suffered a steep decline. Since hitting a high of $65,000 in April, the price of bitcoin has plummeted to around $32,000. During the second quarter blockchain companies raised $4.38 billion, which is up 50% from the first quarter.

The huge uptick in funding, despite the bitcoin volatility, underscores the interest investors still have in the growing sector. They are seeking alternative ways to gain exposure to the space including investing in companies focused on the technology that underpins cryptocurrency.

Circle Raises the Most

Of the blockchain startups which secured the most venture funding during the second quarter, payments company Circle outraised the rest. The blockchain and crypto company, which is going public via a $4.5 billion SPAC deal, raised $440 million.

Ledger, which makes crypto wallets, came in second. The startup raised $380 million. Many legacy financial players weren’t interested in Ledger when it raised an earlier round in April, according to CEO Pascal Gauthier. But now he said most major financial institutions are investing or gearing up to get involved in crypto.

Investors are also showing interest in cryptocurrency miners as an alternative way to play the market. Earlier this week miner Core Scientific announced a $4.3 billion SPAC deal.

Fintechs Raise Record Amounts

Beyond blockchain investing, fintech startups raised a record $30.8 billion in the second quarter. That is up 30% from the first quarter and nearly triple the funding raised by fintechs during the same time last year. Europe was a significant driver with investments up 50% year-over-year. Trade Republic, a German stock-trading app operator, raised $900 million while Mollie, a Dutch digital payments company, secured $800 million.

Despite bitcoin's current bust and the fact that Ether, the world’s second-biggest digital coin, has also fallen over 50% since May, investors are interested in what they consider growing segments of the market. For both the cryptocurrency space and the push to digitize finance, there will surely be speed bumps along the way. Second-quarter funding amounts, however, show that it's full steam ahead.

The ABCs of Student Loan Refi: a Talk with SoFi’s Erika Kullberg and Brian Walsh

Let’s talk refinancing! Join Erika Kullberg and Brian Walsh as they talk all things student loan refi—including formulating repayment strategies so you can start to pay off your debt.
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Instacart Eyes Expansion Through Warehouses

Instacart Eyes Fulfillment Centers

Instacart is expanding into the warehouse industry, teaming up tech company Fabric to open fulfillment centers. The delivery startup plans to cater to supermarkets, relying on robots to grab items off shelves and workers to pack and deliver them. Instacart and Fabric have not said how many of these warehouses they plan to build over the next 12 months. In any event, these facilities will be able to house 10,000 to 50,000 products.

With its current business model, Instacart sends shoppers into stores to select the products and then delivers them to customers’ homes. By opening fulfillment centers it removes a time-consuming step. The warehouses will be fully automated and designed to speed up delivery times.

Warehouses Speed up Delivery Times

Instacart’s business skyrocketed during the pandemic as people stuck at home turned to ecommerce. Consumers are now returning to in-person food shopping as the economy reopens, hurting online sales of groceries. At the same time profitability continues to elude delivery companies, which have not figured out how to offset high labor and transportation costs. Instacart is also facing intense competition and pushback from supermarket operators, who are concerned it is eating away at their profits.

By building small warehouses, Instacart may be able to reduce its costs, carry inventory, and keep shoppers out of stores. It is a capital-intensive effort upfront, but one that may be profitable within a year. One reason why is that Instacart also wants to provide retailers with inventory management services at these fulfillment centers.

Instacart Diversifies for Growth

The move into fulfilment comes as rivals are also chasing the supermarket industry. Earlier this summer DoorDash (DASH) and Uber (UBER) teamed up with grocery chain Albertsons (ACI) to provide delivery and technology services to its stores. Meanwhile goPuff, which owns stock of groceries and delivers them directly to consumers, raised $1.15 billion in March.

Beyond building warehouses and providing inventory management services, Instacart is eyeing other ways to diversify and boost growth. It is expanding its advertising business and its partnerships with manufacturers to offer discounts on its platform. The company is eyeing international expansion and is readying an IPO. So far this year it has raised $700 million in funding and now sports a valuation of $39 billion.

As one of the leaders in the delivery market and with a value that is larger than the supermarkets it's aiming to serve, it will be interesting to see if these warehouses are what it takes for Instacart to continue to grow.

Friday Fundings: Swiggy, Pivot Bio, Carbon Health

Indian Food Delivery Startup Raises $1.25 Billion

Swiggy, an Indian food delivery startup, raised $1.25 billion in venture capital funding led by SoftBank’s Vision Fund 2 and Prosus. The investment is a testament to the startup's ability to weather the COVID-19 pandemic. Prior to COVID-19, Swiggy solely focused on delivering food for restaurants. During the pandemic, Swiggy expanded into supermarket delivery which boosted its sales. Order volume is up 30% compared to before the pandemic hit.

With the Series J investment, Swiggy is valued at $5.5 billion. The startup plans to use proceeds to invest in its non-food delivery business. India’s food delivery market alone is forecast to reach $12 billion by 2022. Indian startups have been raising record capital in 2021 as big investors including SoftBank enter the market.

PS: Softbank is an investor in SoFi.

Green Crop Feeder Raises $430 Million

Pivot Bio, a startup that wants to replace synthetic fertilizer with a greener alternative, raised $430 million in venture capital funding. The startup, formed in a University of California, Berkeley lab, is now valued at close to $2 billion. DCVC and Temaske (TEM) led the round of funding.

Using naturally occurring microbes from crop soils, Pivot Bio feeds nitrogen to corn and wheat crops. Pivot’s liquid product is applied at the same time the seed is planted, which lowers the labor costs associated with planting crops because it removes one of the steps in the process. The company’s sales have tripled this year with corn and wheat farmers applying it on millions of acres of land. Pivot Bio plans to use the funding to expand into new markets and improve its products.

Primary Care Startup Now Valued at $3.3 Billion

Carbon Health, a startup combining in-person and virtual healthcare, raised $350 million in a round of venture capital funding. The investment, which gives the company a valuation of $3.3 billion, was led by Blackstone’s Horizon platform. The company plans to use the investment to capitalize on the growth it saw during the pandemic and support its goal to become the biggest primary care provider in the US.

Since its previous funding round in November 2020, Carbon Health has seen a 129% increase in patient volume. The company is trying to revolutionize primary care with its omnichannel care model which combines in-person clinics, home care, and hardware to improve health outcomes.

Not-So-Breaking News

  • Uber Freight, the trucking unit of Uber (UBER), is acquiring shipping software company Transplace. The stock and cash deal values Transplace at $2.25 billion.

  • Daimler’s (DMLRY) Mercedes-Benz brand will be ready to go completely electric by the end of the decade. Starting in 2025, all new Mercedes-Benz models will be electric only.

  • Visa (V) made its second fintech acquisition of the year, spending $962 million to purchase Currencycloud. Visa led an $80 million investment round in the UK payments startup at the beginning of 2020.

  • Didi’s (DIDI) shares were under pressure as Chinese regulators gear up to punish the ride-hailing startup after its US listing. The punishments could include a more than $2.8 billion fine, delisting of its shares in the US, and the suspension of some operations. The Cyberspace Administration of China alleged that Didi had illegally collected users’ data.

  • American Airlines (AAL) and Southwest Airlines (LUV) reported profits in their second quarters, lifted by demand for travel. American had net income of $19 million, ending five consecutive quarters of losses. Southwest Airlines reversed a $915 million loss, earning $348 million.

  • Feeling the pressure of doing it all? Read How to Negotiate an Adjusted Summer Work Schedule for tips to make your summer schedule work for you.

Career Tip of the Day

“Find people who see your vision, understand your mission’s roots and can actually see a better version of it for you. Once you identify these people, take the leap and delegate out the tasks they are better at than you.”

Ashely Stahl, Career Expert at SoFi

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