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Art has been brutalized by tech’s giants. How can it survive?



There are two stories you hear about making a living as an artist in the digital age, and they are diametrically opposed. One comes from Silicon Valley and its boosters in the media. There’s never been a better time to be an artist, it goes. If you’ve got a laptop, you’ve got a recording studio. If you’ve got an iPhone, you’ve got a movie camera. GarageBand, Final Cut Pro: all the tools are at your fingertips. And if production is cheap, distribution is free. It’s called the internet: YouTube, Spotify, Instagram, Kindle Direct Publishing. Everyone’s an artist; just tap your creativity and put your stuff out there. Soon, you too can make a living doing what you love, just like all those viral stars you read about.

The other story comes from artists themselves, especially musicians but also writers, filmmakers, people who do comedy. Sure, it goes, you can put your stuff out there, but who is going to pay you for it? Digital content has been demonetized: music is free, writing is free, video is free, images you put up on Facebook or Instagram are free, because people can (and do) just take them. Not everyone is an artist. Making art takes years of dedication, and that requires a means of support. If things don’t change, a lot of art will cease to be sustainable.

Yet people are still making art. More people than ever, in fact, as the techies like to point out. So how are they managing to do it? Are the new conditions tolerable? Are they sustainable? What does it mean, in specific practical terms, to function as an artist in the 21st-century economy?

Being an artist has always been hard, but how hard matters. How hard affects how much you get to do your art, as opposed to grinding at your day job, and therefore how good you become. How hard affects who gets to do it in the first place.

The difference now is that it’s hard even if you do find success: if you reach listeners or readers, win the respect of critics and peers, work steadily and full time in the field. I spoke about these matters with Ian MacKaye, frontman of the hardcore bands Fugazi and Minor Threat, and a leading figure in the indie music scene since the early 1980s. “I know plenty of filmmakers,” he said, “who poured their heart and soul and all their money into projects long before the internet who lost their fucking ass, because not enough people wanted to see their movie.” And that is as it should be. The problem now is that you often lose your fucking ass even if enough people do want to see your movie, read your novel, listen to your music.

If many of us are oblivious to the plight of artists in the contemporary economy, there is an obvious reason for that. Not only is there a lot of art being made; there is much, much more of it, at lower cost, than ever. For consumers of art, there really hasn’t ever been a better time—at least, not if you equate quantity with quality, or do not worry overmuch about the workers at the other end of the supply chain. First we had fast food, then we had fast fashion, now we have fast art: fast music, fast writing, fast video, photography, design, and illustration, made cheaply and consumed in haste. We can gorge ourselves to our heart’s content. How nourishing these products are and how sustainable the systems that create them are questions that we need to ask ourselves.

How artists get paid (and how much) affects the art they make, the art we get to experience, the art that marks our age and shapes our consciousness. This has always been the case, and it means we get more of what we support, less of what we don’t. Art that is truly original—experimental, revolutionary, new—has always been a marginal affair. In good times for the arts, more of it gets dragged across the line of viability, where it is able to survive—where the artist can stick around and keep doing it—until it can be recognized. In bad times, more of it gets dragged the other way. What kind of art are we giving ourselves in the 21st century?

The people who pay for art are the ones who determine, directly or otherwise, what is produced: Renaissance patrons, 19th-century bourgeois theatergoers, the mass audiences of the 20th century, public and private funding bodies, sponsors, collectors, and so forth. The 21st-century economy has not only sucked a lot of money out of the arts, it has also moved it around in ways that are unpredictable and not by any means all bad. New financial sources have arisen, most notably crowdfunding sites; old ones are making a comeback, like direct private patronage; some existing ones are getting stronger, like branded art and other forms of corporate sponsorship; others are getting weaker, like academic employment. All this is also changing what gets made.

The internet allows unmediated access to the audience—and to the artist. If it starves professional production, it fosters the amateur kind. It favors speed, brevity, and repetition; novelty but also recognizability. It puts a premium on flexibility, versatility, and extroversion. All of this (and a great deal more) is changing what we think of art, as well: changing what we think is good, changing what we think is art at all.

Will art itself survive? I don’t mean creativity, or making stuff— playing music, drawing pictures, telling stories. We have always done those things and always will. I mean a particular notion of art—Art with a capital A—that has existed only since the 18th century: art as an autonomous realm of meaning making, not subordinate to the old powers of church and king or the new powers of politics and the market, beholden to no authority, no ideology, and no master. I mean the notion that the artist’s job is not to entertain the audience or flatter its beliefs, not to praise the lord, the group, or the sports drink, but to speak a new truth. Will that survive?

Production and distribution may now be cheap or free, but those are not the true costs of making art. The two main costs are staying alive while you are making it and becoming an artist in the first place, and those have both been soaring.

Staying alive means, principally, rent, and median rent in the United States is up some 42%, adjusted for inflation, since 2000. It also means food and clothes and transportation. Add to this the fact that artists tend to piece together part-time income sources, none of which arrive with benefits, a circumstance that leaves them even more exposed than other workers to the ever-rising cost of health care. Being able to learn and hone your craft also means equipment such as instruments and art supplies; software also isn’t cheap.

Creative time, to be of any use, must be free from interruption. You need the space to sink into your trance. But interruption is inevitable in the attention economy, which centers on the overlapping trio of self-marketing, self-promotion, and self-branding. That much is true, it should be said, even if you aren’t, strictly speaking, doing it yourself. Even if you’re still affiliated with the culture industry, you have to do a lot of it. Authors, for example, now effectively function as partners with their publishing companies in the work of marketing and publicity—an expectation, one industry insider told me, that’s felt to be included in the advance. In the old days, when you finished a novel, Martin Amis once remarked, you just handed it in and that was it.

Jeff Tayler (not his real name) was the frontman of, and creative force behind, a rising indie band when he walked away from music altogether, so fed up was he with all the promotional demands that their label was making: to maintain a constant social media presence; to post photos, videos, and musical tracks; to blog about their shows; to reach out as well as respond to music journalists and bloggers. “They don’t want a band,” he told me at the time. “They want a reality show.” Later he said, “I wanted to write, and I wanted to think, and I wanted to go deep, but I couldn’t really, because I was constantly being called to the surface.” Yet it’s not as if he had a choice, whatever the label might have wanted, “because you’re barely scraping by professionally. You might be popular, and you have fans, but you need all the help you can get.” So you agree to do that seventh interview for a music blog—“it’s a 15-year-old in the attic, [but he] might have actually a shit-ton of followers”—even though “that will destroy your day.” Tayler couldn’t make music anymore. He was too busy being a musician.

Tayler couldn’t make music anymore. He was too busy being a musician.

You don’t need to hate social media to feel this way. It’s possible to be young, adept at social marketing, and nonetheless intensely ambivalent about it. That may, indeed, be more the norm than the exception. The illustrator Lucy Bellwood, who was born in 1989, maintains a robust presence on multiple platforms and has a successful track record on Kickstarter and Patreon. What does it look like “to try and forge an actual, vulnerable human connection with 7,000 people on a Twitter profile?” she wondered. “We are asked to extend the bounds of what would usually be your most intimate friendships to strangers, and that connection is the glue that holds your fiscal life together. And that is both really magical to me and also totally terrifying.”

The central fact about the situation of the artist now is that there’s nothing left to shield you from the market. Artists do not represent a special kind of economic actor: rather, they belong to their age. They were artisans when artisans were common; they were professionals in the age of professionals, and bohemians at a time when bohemianism flourished. So it is in the 21st century. We live in an age of economic atomization, a time when more and more of us are not professionals durably attached to institutions, not workers durably attached to employers, and, God knows, not entrepreneurs, but simply producers: free particles in the marketplace, finding what work we can for what money we can, and exposed without protection to the market’s whims.

Operating in the market inculcates a market personality. In the digital age, the artist is unfailingly genial, cheerful, relatable. Artists today are familiar, humble—regular folks. They need to engage their audience, so they are engaging. Their supporters look to them for inspiration, so they are encouraging. They are ingratiating and earnest, with no anger and no edge. And what is that personality—that stay-positive, self-effacing, smile-and-a-shoeshine personality—if not a commercial one? It is the shop clerk’s smile, the salesman’s hearty handshake, because the audience now is a customer base, and the customer is always right.

Markets, when they function properly, are mechanisms for transmitting the signals of desire.

The market, as it has been altered by the internet, has also accelerated the traditional pace of artistic production. We can imagine the effect of such a climate on artists’ nerves, not to mention their morale. The effect on art is also clear. Irony, complexity, and subtlety are out; the game is won by the brief, the bright, the loud, and the easily grasped.

The internet, needless to say, did not give birth to the kind of art that solicits a more purely visceral response, or appeals to the lowest common denominator, or is only built to last a day. But it did force everything onto the same playing field to compete on the same terms—terms which heavily favor such work. Before the internet arrived, we read novels in books and stories in magazines, listened to music on the stereo or radio, watched movies in theaters and shows on television sets, and looked at images in museums, galleries, or art books. Each form had its separate formats, and moving from one to another was a relatively time-consuming (as well as brain-adjusting) process. Now we take in all the forms in a single place, and we can switch among them in the time it takes to tap a finger.

The Darwinian attention derby happens not just between the different arts, but also within them. The jazz recording competes with the pop song, the New Yorker story with the listicle, the indie movie with the YouTube video. Before the internet, someone who was reading the Paris Review was unlikely to suddenly stop and pick up a copy of the National Enquirer. They didn’t have one, and they probably had never even opened one. But now the equivalent move, as the internet tugs forever at our sleeve, is always an imminent possibility.

Not only must everything compete with everything else, but everything must compete, full stop. In the past, one of the principal ways that the culture industry supported more subtle or thoughtful or artistically ambitious work was through cross-subsidization. The entertainment paid for the art: the thriller supported the poetry, the pop star supported the girl-with-guitar, the blockbuster floated the art-house division. Magazines and newspapers were themselves a form of cross-subsidization, with the fashion features or the sports reporting making possible the fiction or the deep investigative piece. So were albums: the “single” up front, for the radio play; the “deep cuts” for the art and soul. But now it’s every tub on its own bottom. Everything has been unbundled; every song, every story, every unit must pay for itself. No more deep cuts.

When the market is everything, everything gets sucked into the market.

There is no single answer to the problems of the arts economy. There are only lots of partial, little ones. To the extent that there are larger answers, they lie outside the arts entirely. To fix the arts economy, in other words, we need to fix the whole economy. Which means, since the only effective response to the power of concentrated wealth is the power of coordinated action, that we need to organize.

Artists, as I have explained, are not just workers. They are also miniature capitalists: people who produce and sell their work on the open market. Here, indeed, they are organizing. More than one plan is afoot, for instance, to develop a blockchain registry (the same technology that’s used in cryptocurrencies like Bitcoin) to redress a long-standing, and especially galling, injustice: the absence of a resale royalty for art. When someone buys a work of yours and then sells it 10 years later, say, for five times as much, you don’t see a dime of that, even though it is usually your own continued productivity—the value of the work you did in the interim—that is responsible for that appreciation. A registry would enable artists to retain an equity stake in their work (that is, a fractional ownership share), the usual figure proposed being 15%. One version is being developed by Amy Whitaker, the writer and educator, in collaboration with others; a second is in the works from Working Artists and the Greater Economy, a New York–based activist organization. The latter would also include a set of moral rights: the right to have input into how the work is shown, to get it back for a couple of months every year, to block its use as a financial instrument. The point is to establish the principle that a work of art is not merely another commodity.

Such efforts and proposals are admirable. They are also plainly incommensurate with the scale of the overall problem. That is not their fault, nor does it mean that they’re not worth doing. The problem begins with Giant Tech. Silicon Valley in general, and the tech giants in particular—above all, Google, Facebook, and Amazon—have engineered a vast and ongoing transfer of wealth from creators to distributors, from artists to themselves. The cheaper the content, the better for them, because they’re metering the flow—counting our clicks and selling the resulting data—and they want that flow to be as frictionless as possible. Any real solution needs to start there, too.

Virtually everyone I spoke with on the matter advocates an overhaul of the Digital Millennium Copyright Act, the DMCA, which was designed to bring copyright law up to date for the digital age. When the law was passed, in 1998, Google was five weeks old, YouTube did not yet exist, Mark Zuckerberg was starting high school—and Napster was a year away from being launched. It was not designed to deal with piracy at the scale that was about to erupt.

“Takedown” must become “stay down,” so files cannot go right back up again. A small claims court should be established for copyright infringement, so individual artists, not just media conglomerates, can afford to sue for damages. “Fair use,” the provision in copyright law that allows for limited exemptions (like citation for scholarly purposes, or sampling for purposes of satire), which Google and others have relentlessly been seeking to expand, needs to be kept within traditional bounds. In 2019, the European Union passed a landmark law, as the New York Times explained, that “requires platforms to sign licensing agreements” with musicians, authors, and others before posting content—in effect, to remove infringing material proactively. A comparable rule should be enacted in the United States.

But those measures deal only with copyright. The larger issue is the wildly disproportionate advantage that monopoly platforms possess in the struggle over pricing. To begin with, that pricing is often mysterious. We don’t know what the platforms are paying, in many cases, because they aren’t required to tell us. That is why music-streaming rates (0.44 cents on Spotify, 0.07 cents on YouTube) are just a guess, as is the per-page rate that Amazon pays through Kindle Unlimited (its Spotify for e-books). Artists even lack the information upon which to negotiate: namely, how much money the services are taking in. How much does Kindle Unlimited generate, for example? Amazon’s not talking. And even if we had that information, it’s unlikely that the platforms even would negotiate. What really bothers her, the filmmaker Ellen Seidler told me, “is that no one’s willing to come to the table” from the other side. Instead, she said, “artists have been vilified in a fairly orchestrated way. Our voices have been quashed. It’s David versus Goliath.”

What’s less clear is what can be done to create a more equitable distribution of the many billions of dollars that “demonetized” content continues to generate, to claw back the money that the tech monopolies have clawed away. Workers are allowed to organize for higher wages. When producers cooperate to set prices—even imagining that such a thing were possible here, given how incredibly dispersed the production of content now is—it’s called collusion, and it is illegal. The government cannot fix prices either, needless to say.

But there is one thing the government can do—and as people have increasingly begun to realize of late, absolutely must do. It must break up these monopolies. Already there are moves in that direction. In 2019, the federal government initiated antitrust investigations into four of the Big Five, with the Justice Department looking into Google and Apple and the Federal Trade Commission taking responsibility for Amazon and Facebook. The House Judiciary Committee also announced plans for a probe. That same year, the Supreme Court, in a decision on a lawsuit over Apple’s App Store, signaled a willingness to revisit its approach to antitrust law, a move that was long overdue. [Since this book was published, both state and federal antitrust lawsuits have been filed against Google.] Such efforts to rein in “the apex predators of tech,” in the journalist Kara Swisher’s phrase, must not be derailed. The powers of the tech monopolies to flout the law, to dictate terms, to smother competition, to control debate, to shape legislation, to determine price—all these flow directly from their size, wealth, and market dominance. They are too big, too rich, and too strong. And we need to get this done before it is too late.

The arts, it’s often said, are ecosystems. That means that major talents, with their lasting, transformational achievements, do not fall out of the sky, that their emergence depends upon a host of other individuals: childhood teachers, early mentors, lifelong rivals and collaborators, all of whom must have a way to earn their keep as well. It means that institutions (the local club, the 99-seat theater, the indie label, and the independent press) can survive only with a critical mass of artists to serve—who rely, in turn, upon the institutions. It means that even small or mediocre projects have their value, because they give creators experience, and maybe a paycheck, so they can stick around and work another day. It means that artists cannot do their work if others can’t as well: the lighting technician, the copy editor, the person who keeps the books or checks the coats or sells the beer. It means that artists coexist in networks, helping each other find jobs, cheap rooms, opportunities—but only as long as they’re able to stay in the arts.

As institutions tremble and crumble, professionals across the board are losing their autonomy, their dignity, their place.

But all communities are ecosystems, not just the arts. In the broader economic ecosystem, too, the whales are getting fatter by starving the plankton. Consolidation toward monopoly is now affecting nearly every sector, and it is the major cause of falling wages. The trend toward poorly compensated contract work—gig work, piecework, temporary work—is virtually ubiquitous. As institutions tremble and crumble, professionals across the board are losing their autonomy, their dignity, their place. Wealth is moving upward everywhere, and everywhere the middle class is disappearing.

Some of the people I spoke with believe that the solution for the arts is better public funding. Others think we need a universal basic income. These may both be good ideas, but I don’t think they would solve the problem. You want the market to have a vote, because you want the public to have a vote. In fact, you want the public to have most of the votes.

Markets, when they function properly, are mechanisms for transmitting the signals of desire—in plainer language, for saying what we want. What we don’t want is for art to be cut off from that, cut off from popular taste; for bureaucrats on arts funding boards to tell us what to want. But markets must function properly. Universal basic income strikes me as the wrong answer to the right question. Yes, we need to put money in people’s pockets, but better to do it organically, not simply by fiat—better to do it, in other words, by restoring the entire ecosystem, by rebuilding the middle class. That would mean undoing much of what we did to get here: breaking up monopolies; raising the minimum wage; reversing decades of tax cuts; reinstituting free or low-cost higher education; empowering workers, once again, to organize, rather than persistently obstructing them. It would also mean updating laws and regulations fashioned for a bygone economy to reflect the one that actually exists: most obviously, by extending the kinds of safeguards that full-time employees enjoy—health and other benefits, protections against discrimination and harassment, the right to engage in collective bargaining—to the growing army of gig and contract workers. You shouldn’t have to be a winner not to be a loser.

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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How fintech and serial founders drove African pre-seed investing to new heights in 2020



When Stripe-subsidiary Paystack raised its seed round of $1.3 million in 2016, it was one of the largest disclosed rounds at that stage in Nigeria. 

At the time, seven-figure seed investments in African startups were a rarity. But over the years, those same seed-stage rounds have become more common, with some very early-stage startups even raising eight-figure sums. Nigerian fintech startup, Kuda, which bagged $10 million last year, comes to mind, for example.

Also notable amidst the growth in seven and eight-figure African seed deals have been gains in pre-seed fundraising. Typically, pre-seed rounds are raised when the startup is still in the product development phase, yet to make revenue or discover product-market fit. These investments are usually made by third-party investors (friends and family), and range between $25,000-$150,000.

But the narrative as to how much an early-stage African startup can raise as pre-seed has changed. 

Last year, African VCs who usually fund seed and Series A rounds began partaking in pre-seed rounds, and they don’t seem to be slowing down. Just a month into 2021,  Egyptian fintech startup Cassbana raised a $1 million pre-seed investment led by VC firm Disruptech in a bid to drive expansion within the country.

So why the sudden change in appetite from investors?

Andreata Muforo is a partner at TLcom Capital, a pan-African early-stage VC firm. She told TechCrunch that last year’s run of 23 pre-seed rounds (10 of which were $150,000+ deals) per Briter Bridges data, was due to the confidence investors had in the market, especially fintech.

Startups building financial infrastructure got noticed

While most African pre-seed investments in 2020 went to fintech, there were exceptions, including Egyptian edtech startup Zedny, which raised $1.2 million; Nigerian automotive tech startup Autochek Africa, which raised $3.4 million; and Nigerian talent startup TalentQL, which raised $300,000. 

Just as Paystack and Flutterwave built payment infrastructure for thousands of African businesses, these fintech startups are trying to make their mark in the sweet spots of credit and banking. 

“Fintech is compelling. But while most fintech startups play around the commodities side of fintech, it’s the companies building infrastructure around the market that got most of the pre-seed validation last year,” Muforo said. Her firm, TLcom, led the $1 million pre-seed investment in Okra.

Okra is an API fintech startup. So are Mono, OnePipe and Pngme. They are building Africa’s API infrastructure that connects bank accounts with financial institutions and third-party companies for different purposes. Within the past 18 months, Mono and Pngme raised $500,000, while OnePipe raised $950,000 in pre-seed.

It is noteworthy that while these startups are clamoring to solve Africa’s open API banking issues, three of the four deals came after Visa’s $5.3 billion acquisition of Plaid last year in January.

Although the Visa-Plaid acquisition has now been called off, it is safe to say some African investors developed FOMO, handing out sizable checks to fund “Africa’s Plaid” in the process.

Digital lenders remain one of their most important customers for fintech API startups. They can access customers’ financial accounts to understand their spending patterns and know who to loan to.

Egypt’s Shahry and Nigeria’s Evolve Credit are fintech startups building credit infrastructure for their markets. Evolve Credit connects digital lenders to those who need loan services in Nigeria via its online loan marketplace. Shahry, on the other hand, employs an AI-based credit scoring engine so users in Egypt can apply for credit. The pair also secured impressive pre-seed funding — Evolve Credit, $325,000, and Shahry, $650,000.

A recurring theme: Serial founders

Muforo points out that aside from startups building fintech infrastructure, the caliber of founders was another reason pre-seed funding peaked last year.

Adewale Yusuf, co-founder and CEO of TalentQL, a startup that hires, manages and outsources talent for Nigerian and global companies, seemed to agree. He told TechCrunch that trust between the VCs and founders involved played a major role in most pre-seed rounds last year. 

“It wasn’t surprising that a lot of investors put money in pre-seed rounds. I say this because we also saw existing founders and serial entrepreneurs coming back to the market. To me, these founders’ credibility was a major part of why those rounds were large,” he said.

A second-time founder himself, Yusuf is the co-founder of Nigerian tech media publication Techpoint Africa. His partner at TalentQL, Opeyemi Awoyemi, is also a serial entrepreneur. He co-founded Ringier One Africa Media-owned Jobberman, one of Africa’s most popular recruitment platforms.

According to Adedayo Amzat, founder of Zedcrest Capital, which is the lead investor in TalentQL’s round, the founders’ experience proved vital in closing the deal. 

He says investors are more comfortable backing experienced founders in pre-seed rounds because they have a more mature understanding of the problems they’re trying to solve. So, in essence, they tend to raise more capital.

“If you look at pre-seed sizes, experienced founders can demand a significant premium over first-time founders,” Amzat said. “Pre-seed valuation cap for first-time founders will typically be between 400K to $1 million while we frequently see up to $5 million for experienced founders.” 

It was a recurring theme last year. Yele Bademosi, who runs Microtraction, a West African early-stage VC firm, is the CEO of Bundle Africa, a Nigerian-based crypto-exchange startup that raised $450,000 in April 2020. 

Shahry co-founders Sherif ElRakabawy and Mohamed Ewis also run Egypt’s largest shopping engine and price comparison website, Yaoota.

Mono co-founder and CEO Abdulhamid Hassan was the co-founder of Nigerian fintech startup OyaPay and data science startup Voyance. Also, Etop Ikpe, the co-founder and CEO of Autochek Africa, was CEO of DealDey and Cars45.

That said, Fara Ashiru Jituboh of Okra and Akan Nelson of Evolve Credit as first-time founders got investments that most of their counterparts would only dream of. For Jituboh, her solid tech background spoke for her — boasting a senior software engineering job at Pexels and engineering consultant role at Canva before founding Okra.

“We backed Fara because she’s a strong tech founder. When you look at the core of what Okra does as a tech-heavy company, you see how important it was to make the decision,” Muforo said about backing Okra’s CEO and CTO.

Nelson also told TechCrunch that his finance background helped Evolve Credit raise its six-figure sum. The team’s bullishness on finding product-market fit and the potential of Africa’s loan marketplace was also enough to bring foreign and local VCs like Samurai Incubate, Future Africa, Ingressive Capital and Microtraction on board.

While early-stage investments in African startups haven’t reached full speed, the explosion in the number of angel investors has lowered entry barriers into early-stage investing. 

Now investors are beginning to show readiness toward African startups that have promise as they continue to search for the next Paystack. 

“More people are willing to take risks now in the market, especially angel investors. They can easily let go of $10K-$50K because of success stories like Paystack,” Yusuf said about the $200 million acquisition by U.S. payments startup Stripe

For all of its significance to the African tech ecosystem, what particularly stands out about Paystack’s exit is the return on investment made for early investors.

By the time it exited in October 2020, some angel investors had an ROI of more than 1,400% according to Jason Njoku in his blog post. Njoku, who took part in the round as an angel investor, is the CEO of IROKO, a Nigerian VOD internet company.

For Muforo, witnessing more early-stage investments is a big deal, one the African tech ecosystem should savor regardless of the round in question.

“Pre-seed or seed are just names investors and founders give. They can basically mean the same thing, in my opinion,” she said. “What I think is most important is the fact that we’re getting more early-stage capital into Africa, and startups are getting more attention from investors, which is fantastic.”

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Is anything too big to be SPAC’d?



While many deemed 2020 the year of SPAC, short for special purpose acquisition company, 2021 may well make last year look quaint in comparison.

It’s probably not premature to be asking: is anything too big to be SPAC’d?

Just today, we saw the trading debut of the most valuable company to date go public through a merger with one of these SPACs: 35-five-year-old, Pontiac, Michigan-based United Wholesale Mortgage, which is among the biggest mortgage companies in the U.S.

Its shares slipped a bit by the end of trading, closing at $11.35 down from their starting price of $11.54, but it’s doubtful anyone involved is crying into their cocktails tonight. The outfit was valued at a whopping $16 billion when its merger with the blank-check outfit Gores Holdings IV was approved earlier this week.

Why is this interesting? Well, first, despite UWM’s size, unlike with a traditional IPO that can require 12 to 18 months of preparation, UWM’s path to going public took less than a year, beginning with Gores Holdings IV completing its IPO in late January 2020 and raising approximately $425 million in cash.

Alec Gores, the billionaire founder of of the private equity firm Gores Group, led the deal. It isn’t clear when Gores approached UWM, but the tie-up was announced back in September and ultimately included a $500 million private placement. (It’s typical to tack-on these transactions once a target company has been identified and accepts the terms of the proposed merger. Most targets are many times larger than the SPACs. In fact, according to law firm Vinson & Elkins, there’s no maximum size of a target company.)

Also notable is that UWM is a mature company, one that says it generated $1.3 billion in revenue in the third quarter of last year alone. UWM CEO Mat Ishbia, whose father started the company in 1986, said last fall that the company is “massively profitable.”

It’s a story unlike that of many other outfits to go public recently through the SPAC process. Many — Opendoor, Luminar Technologies, Virgin Galactic — are still developing businesses that need capital to keep going and which might not have found much more from private market investors. Indeed, today’s deal would seem to open up a new world of possibilities, and for companies of all sizes.

Either way, it isn’t likely to hold the record for ‘biggest SPAC deal ever’ for long. Not only is interest in SPACs as feverish as ever, billionaire investor William Ackman is still sitting on a $4 billion SPAC to which he has said he’ll throw in an additional $1 billion in cash from his hedge fund, Pershing Square Capital.

You can bet the deal will be a doozy. Reportedly, Ackerman was at one point looking to take public Airbnb with his SPAC, which began trading in July. When Airbnb passed on the proposed merger, he reportedly reached out to the privately held media conglomerate Bloomberg (which Bloomberg has said is untrue).

Because SPACs typically complete a merger with a private company in two years or less, speculation continues to run rampant about what Ackman will put together. In the meantime, there have already been 59 new SPAC offerings this year — as many as in all of 2019 — that have raised $16.8 billion, and there’s seemingly no end in sight.

Just this week, Fifth Wall Ventures, the four-year-old, L.A.-based proptech focused venture firm, registered plans to raise $250 million for a new blank-check company.

Intel Chairman Omar Ishrak, who previously ran medical device giant Medtronic, is planning to raise between $750 million and $1 billion for a blank-check firm targeting deals in the health tech sector, Bloomberg reported on Sunday.

Gores Group isn’t done, either. On Wednesday, it registered plans to raise $400 million in an IPO for its newest blank check company. It will be the outfit’s seventh to date.

There are now so many companies to go public through a SPAC exchange-traded funds are beginning to pop up, putting together baskets of SPAC deals for investors who want to hedge their bets.

The very newest fund, reported on earlier this week by the WSJ and overseen by hedge fund Morgan Creek Capital Management and  fintech company Exos Financial, will be actively managed and snap up stakes in firms that recently went public by merging with a SPAC, as well as shell companies that are still on the prowl.

It will be joining the world’s first actively managed exchange-traded fund focused on SPACs, the Calgary-based Accelerate Arbitrage Fund, which launched in April of last year.

A second ETF, the Defiance NextGen Derived SPAC ETF, emerged in October.

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Daily Crunch: Alphabet shuts down Loon



Alphabet pulls the plug on its internet balloon company, Apple is reportedly developing a new MacBook Air and Google threatens to pull out of Australia. This is your Daily Crunch for January 22, 2021.

The big story: Alphabet shuts down Loon

Alphabet announced that it’s shutting down Loon, the project that used balloons to bring high-speed internet to more remote parts of the world.

Loon started out under Alphabet’s experimental projects group X, before spinning out as a separate company in 2018. Despite some successful deployments, it seems that Loon was never able to find a sustainable business model.

“While we’ve found a number of willing partners along the way, we haven’t found a way to get the costs low enough to build a long-term, sustainable business,” Loon CEO Alastair Westgarth wrote in a blog post. “Developing radical new technology is inherently risky, but that doesn’t make breaking this news any easier.”

The tech giants

Apple reportedly planning thinner and lighter MacBook Air with MagSafe charging — The plan is reportedly to release the new MacBook Air as early as late 2021 or 2022.

Google threatens to close its search engine in Australia as it lobbies against digital news code — Google is dialing up its lobbying against draft legislation intended to force it to pay news publishers.

Cloudflare introduces free digital waiting rooms for any organizations distributing COVID-19 vaccines — The goal is to help health agencies and organizations tasked with rolling out COVID-19 vaccines to maintain a fair, equitable and transparent digital queue.

Startups, funding and venture capital

‘Slow dating’ app Once is acquired by Dating Group for $18M as it seeks to expand its portfolio — Once has 9 million users on its platform, with an additional 1 million users from a spin-out app called Pickable.

MotoRefi raises $10M to keep pedal on auto refinancing growth — CEO Kevin Bennett sees the opportunity to service Americans who collectively hold $1.2 trillion in auto loans.

Backed by Vint Cerf, Emortal wants to protect your digital legacy from ‘bit-rot’ —  Emortal is a startup that wants to help you organize, protect, preserve and pass on your “digital legacy” and protect it from becoming unreadable.

Advice and analysis from Extra Crunch

How VCs invested in Asia and Europe in 2020 — The unicorns are feasting.

End-to-end operators are the next generation of consumer business — VC firm Battery has tracked seismic shifts in how consumer purchasing behavior has changed over the years.

Drupal’s journey from dorm-room project to billion-dollar exit — Twenty years ago, Drupal and Acquia founder Dries Buytaert was a college student at the University of Antwerp.

(Extra Crunch is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Everything else

UK resumes privacy oversight of adtech, warns platform audits are coming — The U.K.’s data watchdog has restarted an investigation of adtech practices that, since 2018, have been subject to scores of complaints under GDPR.

Boston Globe will consider people’s requests to have articles about them anonymized — It’s reminiscent of the EU’s “right to be forgotten,” though potentially less controversial.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.

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