PreIPO INTELLI™ Weekly Insights | Series 40
Friday, July 7th, 2023 | Volume 1 Series 40 | Threads Release, Funding & M&A Updates, and Shein's Potential IPO
Greetings and welcome to the latest edition of the INTELLI™ Newsletter. Join us as we bring you the most recent news and updates! In this edition, we'll cover the release of Threads, Instagram's rival to Twitter, explore recent funding and M&A activities, and discuss Shein's potential plans for an IPO in the United States.
🧵 Threads, Instagram's rival to Twitter, has been released
Cristobal Herrera-Ulashkevich/EPA, via Shutterstock
Threads, a new app developed by Meta, the parent company of Instagram and Facebook, has been unveiled as a companion app to Instagram. Many industry observers have speculated that Threads could potentially compete with Twitter and even surpass it in popularity. The rivalry between Mark Zuckerberg, the CEO of Meta, and Elon Musk, who purchased Twitter last year, has intensified with the release of Threads.
While various tech companies have attempted to capitalize on Twitter's recent turmoil, Threads has a distinct advantage due to Meta's financial resources and Instagram's massive user base of over two billion monthly active users worldwide.
Threads is positioned as an app where users can engage in real-time, public conversations with each other. The app aims to create an open and friendly space for communities to interact. Instagram's head, Adam Mosseri, has expressed the goal of building an app with 1 billion or more users, a feat he believes Twitter has failed to achieve.
Threads closely resembles Twitter in terms of its interface and functionality. Users can post predominantly text-based messages on a scrolling feed, where followers and those they follow can engage in conversations. Additionally, users can share photos and videos on the app. However, Threads currently lacks a direct messaging feature, which Twitter provides. Instagram has stated that it may consider adding more features to Threads based on user feedback.
The decision to create Threads as a separate app from Instagram was driven by Instagram's efforts to simplify its existing platform. By spinning off Threads, Instagram aims to avoid clutter and focus on making public conversations work effectively. The opportunity to challenge Twitter arose not only due to Meta's ownership but also because of the product changes and decisions made by Elon Musk and others that have influenced how social media platforms operate.
Instagram began its endeavor to compete with Twitter by gathering input from engineers, product managers, and designers who proposed various ideas for a rival app. Among the concepts discussed were expanding the usage of a feature called Instagram Notes, which allows users to share short messages, and creating a text-focused app utilizing Instagram's technology. Ultimately, the decision was made to bet on a messaging app, leading to the development of Threads.
Instagram's long-term vision for Threads involves integrating it with other apps in what is referred to as the Fediverse. The Fediverse represents a federated universe of services that share communication protocols. This integration aims to make it easier for Threads to seamlessly operate with other platforms, potentially appealing to creators and influencers who desire continuity across apps. For example, if a creator amasses a significant number of followers on Threads, they could potentially migrate those followers to other platforms built on the same technology, reducing the risk of being tied to a single platform.
Meta, under the leadership of Mark Zuckerberg, has a history of attempting to eliminate social media competitors by emulating their features. The company's strategy involves cloning successful apps to gain traction in the market. While some endeavors, such as Facebook's early attempts to replicate Snapchat, did not immediately succeed, Meta has continued to mimic rivals. A notable example is the release of Reels in 2020, a TikTok copycat that has gained widespread usage.
The ultimate success of Threads and its ability to challenge Twitter's dominance in the social media landscape remains uncertain. The app's integration with Instagram and Meta's strategic vision could play a crucial role in determining its future trajectory.
Recent Funding and M&A recap 🤝
Bluesky - $8 Million Seed round
Shortly before the launch of Meta's Instagram competitor, Threads, Bluesky, another Twitter rival, has announced additional funding and its first paid service. Bluesky raised $8 million in seed funds this summer after converting from a public benefit LLC to a public benefit C Corp. The seed round was led by Neo, with participation from various angel investors. The funds will be used to expand Bluesky's team, manage operations and infrastructure costs, and further develop the AT Protocol that powers the Bluesky app.
Bluesky aims to create a decentralized social network protocol as an alternative to ActivityPub, which is used by platforms like Mastodon and Meta's Threads. With the new funding, Bluesky is exploring revenue-generating strategies and will be offering paid services to sustain its network. The first paid service, in partnership with Namecheap, will allow users to have a custom domain as their handle, simplifying the process of setting up a unique domain. Bluesky plans to explore additional services in the future.
SpeedyBrand - $2.5 Million Pre Seed round
SpeedyBrand, co-founded by Ranti Dev Sharma, Jatin Mehta, and Ayush Jasuja, aims to provide affordable SEO content to small and medium-sized businesses (SMBs) using generative AI. The platform generates custom SEO-optimized content, including websites and social media posts, and allows users to edit and customize the generated content before publication. SpeedyBrand recently raised $2.5 million in a funding round led by Google Ventures and Y Combinator. While generative AI has its concerns regarding hallucination, plagiarism, and spamming, Sharma assures that SpeedyBrand takes measures to mitigate these issues. The company has around 50 paying customers and over 1,000 users, with annual recurring revenue of $100,000. SpeedyBrand plans to launch additional tools for text and image generation with the funding. The generative AI market is projected to be worth over $110 billion by 2030, and SMB owners are increasingly adopting such tools to save time and resources in content marketing.
DigitalOcean acquires Paperspace for $111 Million Cash
Cloud hosting company DigitalOcean has announced its acquisition of Paperspace, a cloud computing and AI development startup, for $111 million in cash. The integration of Paperspace's infrastructure and tools with DigitalOcean's products will enable customers to easily test, develop, and deploy AI applications. Paperspace customers will gain access to DigitalOcean's cloud services, including databases, storage, app hosting, documentation, tutorials, and support. Paperspace will initially remain a standalone business unit within DigitalOcean, and there will be no immediate changes to the service for Paperspace customers. The acquisition aligns with DigitalOcean's goal of providing simplified AI and machine learning offerings to SMBs and startups. Paperspace, known for its AI-focused tools, has raised $35 million from investors such as Battery Ventures and Intel Capital. This acquisition is DigitalOcean's first since 2022 and reflects its efforts to compete in the cloud AI and machine learning market.
Is Shein Going Public Soon? ⏳
China-founded online retailer Shein is reportedly exploring the possibility of an initial public offering (IPO) in the United States. The company is said to be working with three investment banks, including Goldman Sachs, Morgan Stanley, and JPMorgan Chase, as it prepares for a potential listing. While the exact timing of the IPO remains uncertain, Shein's status as one of the most valuable Chinese-founded companies could make it a highly anticipated offering.
Shein, which has faced scrutiny from US lawmakers over its labor practices, has not yet decided on the venue for its IPO. Both the New York Stock Exchange (NYSE) and Nasdaq have reached out to the company in an attempt to convince them to choose their respective exchanges. The final decision will likely depend on a variety of factors, including regulatory considerations and strategic alignment.
The IPO plans come on the heels of a recent private fundraising round in which Shein was valued at over $60 billion. This round saw participation from prominent investors such as General Atlantic, Mubadala, Tiger Global, and Sequoia Capital China. The substantial valuation highlights the company's rapid growth and strong market position, positioning it as a potential IPO candidate with significant investor interest.
However, Shein's path to going public has not been without obstacles. The company has been eyeing a US IPO for several years but faced challenges, including geopolitical tensions between the US and China, scrutiny of Chinese accounting practices, and market volatility caused by the COVID-19 pandemic and geopolitical events. Nevertheless, Shein's decision to move its headquarters to Singapore has helped it navigate the regulatory landscape and position itself for potential overseas listings.
The IPO plans have also sparked controversy. A group of bipartisan US representatives has expressed opposition to Shein's listing, calling for an independent audit to ensure the company does not engage in the use of Uyghur forced labor. Shein has maintained that it adheres to ethical sourcing standards and denies allegations of shipping products from China's Xinjiang region, where forced labor concerns have been raised.
As Shein continues to evaluate its IPO options, it will need to address these challenges and ensure compliance with regulatory requirements. The outcome of its IPO journey will have significant implications not only for the company itself but also for the broader market as investors keenly watch the performance of Chinese-founded companies going public in the US.
As always, stay tuned for more updates and insights from the team at INTELLI™.