🙁 SPAC party is over

TikTok, Shopify announce a new project, SPACs boom is flaming out, Zetwerk raises Series E and some more updates.

Aug 26, 2021

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First up,

Market Recap 📈

Indian benchmark indices erased early gains and closed on a flat note, with FMCG, oil & gas, realty, and power indices ending in the green. Meanwhile, US stocks jumped to fresh all-time highs ahead of a key Federal Reserve event later this week.

Sensex: 55,949.10 (+0.0087%) ↑

Nifty 50: 16,636.90 (+0.014%) ↑

Dow Jones: 35,405.50 (+0.11%) ↑

Nasdaq 100: 15,368.92 (+0.073%) ↑

Bitcoin: $47,017.19

Top Stories 📰

1. TikTok's venturing into e-commerce 🛒

For the first time, e-commerce giant Shopify and TikTok announced that they're collaborating on a pilot project that will allow consumers to shop directly on the TikTok app.

The social video platform, mainly used for sharing memes and entertaining content, already features several influencers talking about makeup, clothing, and household products but doesn't support direct purchases on the app. For now, users are only allowed to make purchases by clicking on the ads.

The new partnership will allow Shopify merchants to create and promote TikTok marketing campaigns directly from their dashboards. It will also provide merchants with a "Shopping" tab to sync their product catalogues and create mini storefronts on their TikTok profiles.

The product is available to US and UK merchants, with Kylie Jenner being one of the early adopters with her company, Kylie Cosmetics.

Why it matters? Social commerce is the future. TikTok will join Facebook and Instagram in helping creators disrupt the online consumer shopping space and capitalize on its ever-growing user base. Additionally, social commerce sales in the US is still growing. This year, the retail social commerce sales in the US was at $36.62 billion, compared to China which made $352.65 billion this year alone.

2. Breaking: SPACs are tanking 📉

Back in 2019, SPACs first rose to popularity after Richard Branson took his space tourism company, Virgin Galactic, public via a SPAC deal with Social Capital Hedosophia. And while Branson plans to follow the same route for his new company Virgin Orbit (a spinoff of Virgin Galactic) this year, the craze has started to flame out.

As per S&P Global Market Intelligence, 110 companies raised $16 billion from SPAC deals this recent quarter, compared to the last one, which raised $88 billion via 320 SPAC transactions.

Why the drop? Investor, analyst, and regulatory scepticism is at its highest after a series of accounting problems were discovered at Lordstown Motors and Nikola, both electric vehicles startups that went public via blank check deals.

Short-sellers, like research firm Hindenburg, noted that the finances of such companies are often overvalued. Additionally, these companies don't go through a rigorous review by investment bankers and the SEC as firms going public via the IPO route. While the SEC issued new, stringent accounting guidelines in April, the growth remains stagnant.

Why it matters? The pandemic has led to an astronomical demand for IPOs and SPACs, stoked by the stimulus from the Federal Reserve that helped reinforce the stock prices. But growing regulatory scrutiny and disappointing share prices have led investors to rethink their decision.

Deal Street 🤑

Zetwerk becomes a unicorn
Zetwerk, a Bangalore-based B2B platform for custom manufacturing, has raised $150 million in a Series E funding round at a $1.33 billion valuation, becoming the 25th Indian startup to join the unicorn club this year. The round was led by New York-based D1 Capital Partners, with new investors like Avenir and IIFL and existing investors such as Lightspeed Venture Partners, Accel Partners, and Sequoia Capital participating in the fundraising. The 2018-founded company provides manufacturing services from small and medium companies and connects them to large OEMs (original equipment manufacturers) and engineering, procurement and construction firms in India, South East Asia, and North America. The company's revenue almost tripled in FY21, from Rs 360 crore to Rs 949 crore. Zetwerk wants to use the fresh capital for expanding to international markets and broadening its technology stack.
Visa enters the NFT space
Financial service giant Visa joins the NFT frenzy after purchasing CryptoPunk #7610 for around $150,000 in Ethereum. The move comes as the company aims to understand first-hand what it takes to purchase, custody, and interact with an NFT in hopes of better positioning itself to help its clients navigate the emerging cryptocurrency and blockchain technology. “We think NFTs will play an important role in the future of retail, social media, entertainment and commerce,” Visa's crypto head Cuy Sheffield said in a blog post. The NFT is one of the 10,000 collectable characters built on the Ethereum blockchain, first introduced in 2017. Previously, Visa also announced that it's offering crypto payments at 70 million merchants worldwide.