Tech IPO Push in EU, YC's Elite Shift, $5B Investor Loss in Twitter Deal

Hey Founder, here are the latest tech news and insights:

• EU politicians are urged to bring tech IPOs home
• Is YC turning into a club for elites?
• Amazon partners with Anthropic's AI to revamp Alexa
• Сarta report: SAFEs now make up the majority of rounds
• Tech Scandal: investors face $5 billion loss in Musk's Twitter takeover
• Tech scandal: $5B investor loss in Musk's twitter deal
• Brian Chesky's viral startup scaling secrets

EU politicians are urged to bring tech IPOs home

The group of European stock exchanges and startup associations is advocating for the European Union to boost its IPO market to offer tech companies a more attractive environment to go public domestically, rather than heading to the US.

In an open letter to European finance ministers and the European Commission, key players such as Deutsche Börse, Euronext, and organizations like France Digital and Germany's Startup Verband have called for efforts to strengthen the EU's capital market union.

They emphasize the need for policy changes to make public listings and investments in Europe more accessible and less bureaucratic, aiming to keep Europe's best tech companies within its borders.

Europe can produce top startups, but without sufficient capital and exit markets, its potential is limited. Many founders move to the US for better funding, leading Europe to lose talent and later-stage benefits like higher pension returns.

‍Y Combinator’s summer 2024 batch: non-American startups and the growing influence of elite backgrounds

Low Representation of Non-American Startups in YC’s Summer 2024 Batch Y Combinator's latest batch saw only 11 European startups make the cut, sparking discussions about the low representation of non-American founders. This raises the question: Is there an emerging trend that favors US-based startups? Factors such as cultural proximity to Silicon Valley, access to local networks, and perhaps a preference for familiar markets could be playing a role in limiting opportunities for non-American founders, particularly those from Europe.

The Growing Role of Elite Backgrounds in Securing YC Spots An analysis by Kevin Jurovich, Co-founder of Circles, using data from Crustdata, highlights a noticeable trend in Y Combinator’s selection process:

Professional Pedigree: 27% of accepted founders previously worked at tech giants like Google, Amazon, Meta, Microsoft, and Apple. Another 9% hail from notable companies such as Tesla, Uber, SpaceX, and Stripe.

Academic Excellence: 30% of accepted founders are alumni of top-tier universities, including Ivy League schools.

This data suggests that Y Combinator may be increasingly favoring candidates from elite professional and academic backgrounds, potentially making it harder for founders from less privileged paths to gain entry into the program.

Is YC becoming less accessible to the broader startup ecosystem? Let’s see how these trends evolve.

Amazon partners with Anthropic's AI to revamp Alexa

According to Reuters, Amazon's upgraded Alexa, which is slated for launch in October in time for the holiday season in the United States, would rely heavily on Anthropic's Claude AI models rather than Amazon's own artificial intelligence technology.

Amazon is going to charge between $5 and $10 per month for its new "Remarkable" Alexa, which would use advanced generative AI to solve complicated questions. Reuters stated in June that the existing "Classic" version would remain free.

According to reports, early versions of the revised Alexa, which used Amazon's proprietary software, had difficulties, typically taking six to seven seconds to respond to requests. As a result, Amazon chose to deploy Claude, an AI chatbot created by the startup Anthropic, because it outperformed Amazon's own AI models.

Immigrant Founders Power 39% of the UK’s Fastest-Growing Companies

A new analysis reveals that 39 out of the UK’s 100 fastest-growing companies are founded or co-founded by immigrants. These founders hail from diverse parts of the world, with America, Germany, and India leading as the most common origin countries.

While the percentage of foreign-born founders has remained steady compared to last year’s analysis, it is a notable decline from 49% in 2019. This trend highlights the indispensable role that international talent plays in driving the UK’s economic dynamism and competitiveness.

The findings emphasize the importance of an immigration system that fosters high-skilled talent and individuals with high potential, ensuring the UK continues to benefit from global innovation and vision.

Сarta report: SAFEs now make up the majority of rounds of under $3 million and other key finding

Fresh data from the Carta Pre-Seed report on U.S. startups for Q2 2024 and top 6 findings for founders:

• SAFEs now make up the majority of rounds of under $3 million. 90% of rounds under $1 million are happening through SAFEs (vs priced equity).
• 85% of SAFEs are post-money.
• SAFE terms by share: 57% valuation cap only, 35% val cap + discount, 7% discount only, almost none uncapped & no discount.
• Median valuation cap for a $1 million raise remains $10M (post-money). Val caps for a $500K raise float around $7-8M.
• Small checks (under $25K) were a little harder to find in the most recent quarter, with the larger checks taking more share of total investment.
• When present, the median discount is 20% (whether or not a valuation cap is also in the terms).
• Bonus: average interest rates on convertible notes ticked up to 7.8% in Q2 vs 6.8% in Q2 2023.

Computer Science replaced Engineering as the most common graduate field among unicorn founders

Before 2008, Engineering was the top graduate field among unicorn founders, with 26% specializing in it. Business degrees followed with 21%, and CS was third at 16%.

From 2008 to 2013, Engineering dropped to 15%, while CS and Business took the lead with 24% and 20%, respectively.

Since 2014, Business degrees rank first at 20%, CS stands at 17%, and Engineering holds steady at 16%.

Other significant majors have included Medicine (6%) and Finance (5%) before 2008, Medicine (6%) and Biology (5%) from 2008 to 2013, and Biology (10%) and Medicine (8%) since 2014.

Note: The dataset includes 1,566 graduate degrees (MBA, Master, and Doctorate) among 2,897 founders of US-based VC-backed unicorns, categorized by graduation time: before 2008, 2008-2013, and from 2014 onwards.

Originally published on Ilya Strebulaev's LinkedIn.

Major investors face $5 billion loss in Musk's Twitter takeover

The Washington Post published a detailed report analyzing the losses of major investors in Musk's Twitter acquisition.

The report estimates that the eight largest initial investors in Musk's Twitter acquisition have collectively lost about $5 billion in value since the takeover. This is based on an analysis using Fidelity's estimates, which value the company's stake about 72% lower than when Musk took over

The report notes that advertisers, a key source of revenue for X, have fled following controversies, some of which were caused by Musk himself. This has exacerbated the financial challenges faced by the company.

There has been some discussion on Reddit about the financial losses experienced by X (formerly Twitter) investors since Elon Musk's acquisition. Here are some key points from the Reddit threads:

• Many Reddit users expressed little surprise at the massive devaluation, with some viewing it as an expected outcome of Musk's takeover.
• One commenter suggested that for Musk, this was "never an investment" but more of a "hobby/ego boost".
• Some speculated that controlling the social narrative was a primary motivation for the acquisition, rather than financial gain.
• There's discussion about the potential impact on elections and public discourse, with some users suggesting Musk's ownership of X could be used to influence political outcomes.

Paul Graham on Brian Chesky's 'Founder Mode' Revolution in Scaling Companies

Paul Graham, a prominent figure in the startup world and co-founder of Y Combinator, recently published an essay that quickly got viral online. In this piece, Graham highlighted a noteworthy discussion delivered by Brian Chesky, co-founder of Airbnb, at a recent YC event, challenging traditional thought on company expansion. 

Chesky's presentation at YC attracted significant interest by questioning the effectivness of the "hire good people and give them room" approach. He argued that this strategy, often cited as a cornerstone of successful scaling, had led to devastating results for Airbnb. Instead, Chesky drew inspiration from Steve Jobs and developed a unique scaling strategy that has contributed to Airbnb's remarkable growth.

In effect there are two different ways to run a company: founder mode and manager mode. Till now most people even in Silicon Valley have implicitly assumed that scaling a startup meant switching to manager mode.

Chesky's discussion emphasised a critical point: expanding a firm necessitates "founder mode," not typical management. Unlike managers, founders can use their own vision and hands-on approach to keep their businesses creative. Though not fully understood, founder mode promises to be a more effective approach to scaling firms, with the potential to set a new standard for success.

Reina-Flor Okori Makendengue OLY has joined the Tribume Expert Board

We want to share exciting news from Tribume that we got Reina-Flor Okori Makendengue OLY as a member at Expert Board. As a seasoned startup investor and mentor, her broad knowledge and dedication to assisting early-stage startups will be essential to our team.

Reina-Flor, a four-time Olympian representing France and Equatorial Guinea, has more than two decades of competitive experience. Aside from the track, she has conducted podcasts for Forbes France, demonstrating her media expertise and capacity to push causes that require public attention. With her African origin and exceptional athletic history, she provides unique insights to help international firms, executives, and athletes redefine leadership and success.

Originally published on LinkedIn

Get essential startup news and insights — subscribe to the Tribume newsletter