💵 The funding gap

Friday, January 13, 2023 by Robinhood Snacks |
Breaking out of the 9-to-5 (MoMo Productions/Getty Images)

Breaking out of the 9-to-5 (MoMo Productions/Getty Images)

Breaking out of the 9-to-5 (MoMo Productions/Getty Images)

Breaking out of the 9-to-5 (MoMo Productions/Getty Images)

Yesterday’s Market Moves
Dow Jones
34,190 (+0.64%)
S&P 500
3,983 (+0.34%)
Nasdaq
11,001 (+0.64%)
Bitcoin
$18,915 (+5.46%)

Hey Snackers,

US markets will be closed on Monday to honor the legacy and dream of Dr. Martin Luther King Jr. It’s an especially good time to celebrate his devotion to equality, nonviolence, and unity.

Stocks ticked up yesterday after the CPI report showed inflation cooling for the sixth straight month (as expected). Notably, consumer prices had their largest month-over-month decrease since April 2020. Next up: investors have eyes on big-bank earnings.

Venture

Quitting the 9-to-5… to be your own boss. Black Americans are more likely to start businesses than any other group, and women of color start businesses at 4.5X the rate of the overall population (as of 2021, white men comprised the minority of business owners). As the US’s fastest-growing group of entrepreneurs, Black women are increasingly leaving corporate roles to launch their own companies. A few factors boosting this trend:

  • Discrimination: Many are worn down by the effects of implicit or explicit bias in corporate America. Nearly half of job seekers say they feel discriminated against during the hiring process, and 55% continue to experience discrimination after getting the job.

  • Job losses: Black women were the most affected by pandemic-related job losses. In 2020, the labor-force participation rate of Black women dropped sharply and is expected to keep falling, though it’s still higher than the rate for white women.

  • FYI: Diverse companies tend to outperform more homogenous orgs, both in profits and in innovation. For companies, losing Black female employees is a worrying trend.

Mind the gap… While the rate of Black entrepreneurship is high, bias and funding gaps pose roadblocks to growth. As of January 2022, just 4% of Black businesses were still open after 3.5 years, compared to the national average of 55%. Fewer than half of Black businesses were considered healthy before the pandemic, versus 73% for white-owned businesses. Lack of capital is a major factor hampering growth for Black businesses.

THE TAKEAWAY

Closing the gap is key to unlocking growth… Loans and venture capital are critical to business growth, but Black startups (especially those run by women) tend to have less access to funding. Black individuals and communities have traditionally been the most likely to be denied access to capital. That’s partly why the racial wealth gap is still so wide: the typical white family has 8X times the wealth of the typical Black family.

Coined

Coming in hot… during crypto winter. Last year saw a record $20B+ in illicit crypto transactions, according to a Chainalysis report. Those came in the form of dark-net market sales, ransomware payments, scams, and hacks. Cross-chain bridges alone saw hundreds of millions stolen in hacks (most notably Ronin and Wormhole). Note: that $20B+ doesn't include any crypto lost to failed exchanges like FTX or bankrupt crypto lenders such as Celsius.

Getting bigger… while staying small. The total dollar value of illicit crypto transactions has been trending up for years. In 2017 it was $5B. In 2019 it hit $12B. And in 2021 it broke $18B. But that rapid climb doesn't tell the entire crypto-crime story. That's because criminal transactions have remained a relatively small percentage of the ~$1T crypto market:

  • Not so big time: Last year's $20B crime record was just 0.24% of all crypto activity that year, and 2% of crypto's total market cap.

  • For some time: Illicit transactions have remained under 2% of total crypto-transaction volumes since 2017.

THE TAKEAWAY

Crypto winter didn't freeze crypto crime… but there wasn't a huge growth spurt either. Last year's market downturn saw $2T in investor value wiped out, which led to trouble at behemoths like DCG and Gemini. In this contracting environment, it's surprising that crime rose at all. But zooming out, that record high looks like crypto business as usual.

Blog

📸 Flashy… The SEC charged lender Genesis and exchange Gemini with offering unregistered securities. Regulators said 340K Gemini customers are out $900M that was sent to Genesis' lending program.

🌶️ Spicy… Disgraced FTX founder Sam Bankman-Fried launched a Substack newsletter while awaiting trial on fraud charges related to his exchange's collapse. In his first post SBF denied stealing customer funds.

🎤 Braggy… Binance CEO Changpeng "CZ" Zhao said the 8K-person exchange is planning a hiring spree. As other exchanges like Coinbase announce fresh layoffs, CZ said Binance expects to pump headcount by up to 30%.

What else we’re Snackin’

  • Bread: Footlong icon Subway, the US’s largest restaurant chain, is reportedly looking to sell itself in a deal that could value it at $10B+. Sales grew 13% last year thanks to turnaround efforts including menu changes.

  • Chased: JPMorgan is suing the 30-year-old founder of Frank, a fintech startup it bought for $175M, alleging that she created millions of fake users and lied about the company’s success to seal the acquisition.

  • Handle: Twitter is said to be considering selling usernames through online auctions to bring in more revenue. Elon Musk has said that eliminating inactive accounts could free up 1.5B handles.

  • B2B2B: Walmart wants to be more than a consumer go-to. America’s No. 1 retailer struck a deal with Salesforce to sell more of its back-end tech and services (like delivery) to other retailers.

  • Old: The FAA system breakdown that grounded flights on Wednesday apparently came after years of warnings from regulators and lawmakers. Transportation officials described the tech as “failing vintage hardware.”

Snack Fact of the Day

250K+ people attended MLK’s “I Have a Dream” speech at the Lincoln Memorial

Friday

  • Earnings expected from: UnitedHealth, JPMorgan Chase, Bank of America, Wells Fargo, BlackRock, and Delta

Authors of this Snacks own shares: of Delta and Walmart

ID: 2678097