Everything

Eruditus, an Indian edtech startup, is in advanced stages of talks to secure about $150 million in new funding, two sources familiar with the matter told TechCrunch, in what would be the largest fundraise by an Indian education firm in years.

TPG, a major private equity player, is discussing to lead the investment, the sources said. The new investment will value Eruditus at up to $2.3 billion, according to proposed terms, the sources added, requesting anonymity as the deliberations are ongoing.

This valuation is tied to Eruditus meeting specific performance targets. Failing to hit these milestones could see the startup lose its value to at least $1.8 billion, the sources added. The potential new valuation represents a decrease from the $3.2 billion at which Eruditus was valued during its last funding round in August 2021.

Terms of the deal could still change in the coming weeks, the sources cautioned. Eruditus counts Chan Zuckerberg Initiative, Prosus Ventures, Accel, SoftBank, Canada Pension Plan Investment Board and Peak XV among its backers.

Eruditus, founded 14 years ago, collaborates with leading global universities to provide executive education programs for businesses and individuals. The startup generates over two-thirds of its revenue from international markets.

Eruditus and TPG didn’t immediately respond to request for comment outside business hours.

The potential $150 million investment in an edtech firm could reinvigorate a sector that has struggled since the reopening of schools post-pandemic. Many edtech companies have faced devaluations or closures as their growth stalled with the return to in-person learning.

The Indian edtech market is also reeling from the sudden collapse of Byju’s, once valued at $22 billion. The Bengaluru-headquartered startup is mired in lawsuits and governance challenges and staring at insolvency proceedings.

Read More

This past week was a wild one in the world of fintech as Bolt surprised the industry with a leaked term sheet that revealed it is trying to raise $200 million in equity and an unusual, additional $250 million in “marketing credits.” 

As part of this deal, Bolt wanted a $14 billion valuation bolstered by an aggressive pay-to-play type cramdown that would try and force its existing investors to cough up more cash, too, or essentially lose their stakes to a 1 cent per share buyout.

The industry responded with a collective “We’ll see about that.”

Brad Pamnani, an investor who is spearheading the proposed $200 million equity investment deal, told TechCrunch on Thursday that shareholders have until the end of next week to indicate whether or not they plan to write checks into the new funding round. 

To backtrack to the beginning: on August 20, the Information reported that one-click checkout startup Bolt was close to raising another $450 million at a potential $14 billion valuation. That would have been shocking if wholly true, but as more info emerged about this proposed deal, the details were not that straightforward.

It would have been shocking because this company had seen a lot of controversy since its last $11 billion valuation in 2022, including its outspoken founder Ryan Breslow stepping down as CEO in early 2022. Part of the news of the new funding round included Breslow coming back as CEO. This after allegations that he misled investors and violated security laws by inflating metrics while fundraising the last time he ran the company. Breslow is also still embroiled in a legal battle with investor Activant Capital over a $30 million loan he took out.

Initial reports tagged Silverbear Capital as leading that investment, but Pamnani told TechCrunch (as also reported by Axios’s Dan Primack) that this isn’t accurate. Although Pamnani is a partner at Silverbear Capital, the investment vehicle is actually a SPV that will be managed by a new UAE-based private equity fund.

“We have already filed in UAE, and it’s pending approval of regulators,” he said, declining to reveal the names of any entities. 

Silvebear is not involved at all in the Bolt deal, Pamnani said, noting that he also works for an unnamed Cayman Islands-based private equity firm that is an LP in the SPV.

“At the beginning, I used my Silverbear email to respond to some things and that caused some confusion but Silverbear was never actually looking at this deal,” he said.

Breslow told TechCrunch he couldn’t comment on the proposed transaction.

Ashesh Shah of The London Fund also explained to TechCrunch more about that additional, at least $250 million he plans to invest in Bolt, but not so much with cash. Instead, he confirmed he’s offering “marketing credits.” He described those credits as a cash equivalent that could be provided in the form of influencer marketing for Bolt by some of his funds’ limited partners, who are in the influencer and media world. 

Image Credits: Bolt

New investors agree to put Breslow back in charge

Bolt’s annualized run rate was at $28 million in revenue and the company had $7 million in gross profit as of the end of March, journalist Eric Newcomer, who also saw copies of the leaked term sheet, reported this week. 

That means a valuation of $14 billion would be an enormous multiple in this market, and a step up to the multiple used when Bolt landed its $11 billion valuation in January 2022.

Pamnani told TechCrunch that he was hoping for a valuation closer to $9 billion or $10 billion.

“We wanted a discounted valuation when going in and were discussing somewhere close to $9B-$10B. We have no interest in paying top dollar if we don’t have to. Unfortunately we didn’t land that,” he said. 

“But we think that is a fair valuation to be able to reach,” he said of the $14 billion valuation. 

Pamnanii said the SPV also pushed for Breslow to be reinstated as CEO. Notably, the term sheet stipulates that the founder would receive a $2 million bonus for returning as CEO, plus an additional $1 million of back pay.

Bolt has been running under former director of sales Justin Grooms as interim CEO as of March when Maju Kuruvilla was out after reportedly being removed by Bolt’s board. Kuruvilla served in the role since early 2022 after Breslow stepped down.

“We realized just looking back at the historical record that Bolt had when Ryan was in the driver’s seat, and then as soon as he left, it started going downhill, and it was not the best time,” Pamnani said. 

Can Bolt really force investors to sell for a penny a share?

The deal also includes a so-called pay-to-pay or cramdown provision where existing shareholders must buy additional stakes at the higher rates or the company has threatened to buy back their shares for a penny apiece.

So the question is, if a shareholder doesn’t agree to buy in again, can the company really dispose of their investment in such a way? 

Not likely, according to Andre Gharakhanian, partner at venture capital law firm Silicon Legal Strategy, who has viewed the company’s charter. He described the proposed transaction as “a twist on the pay-to-play structure.”

“Pay to play” is a term used in term sheets that benefits new investors at the expense of old. It grows in popularity during market downturns (which is why it has become increasingly common in 2024, according to data from Cooley.) Essentially, it forces existing investors to buy all the pro rata shares they are entitled to or the company will take some punitive action, like converting their shares from preferred shares with extra rights to common shares, explains AngelList.

In Bolt’s case this is “actually not a forced conversion like most pay-to-plays. Instead, it’s a forced buyback. The goal is the same — to pressure existing investors to continue to support the company and diminish the ownership of those who are not providing that support,” Gharakhanian said. “However, instead of automatically converting non-participating investors into common — they are buying back 2/3 of the non-participating investors’ preferred stock at $0.01/share.”

The catch, he said, is that most venture-backed startups must obtain approval from preferred stockholders to do a gambit like that, according to their corporate charters. That typically requires approval from the majority, the very people that Bolt is trying to strong arm.

What usually happens is that such a threat sends everyone to their lawyers. A deal could eventually get struck after much “hemming and hawing” and much ill will, Gharakhanian said.  

“If the company truly has no other alternatives, the non-participating investors will often relent and consent to the deal,” he said, meaning they will agree to let the company buy them back. If they agree to take that much of a loss remains to be seen.

Stay tuned.

Want more fintech news in your inbox? Sign up for TechCrunch Fintech here.

Want to reach out with a tip? Email me at [email protected] or send me a message on Signal at 408.204.3036. You can also send a note to the whole TechCrunch crew at [email protected]. For more secure communications, click here to contact us, which includes SecureDrop (instructions here) and links to encrypted messaging apps.

Read More

Boeing’s Starliner mission is coming back to Earth — empty.

After months of data analysis and internal deliberation, NASA leadership announced today that Starliner will be coming back to Earth in September, without a crew. Meanwhile, astronauts Butch Wilmore and Sunita Williams will remain on-board the International Space Station until February 2025, when they will return on SpaceX’s Dragon spacecraft as part of the Crew-9 mission.

NASA noted that while the astronauts’ eight-month stay on the ISS will be longer than expected, others have remained on the ISS for as long as 12 months. While there, Wilmore and Williams will be involved in research, station maintenance, and potentially a few spacewalks.

Boeing launched the first crewed Starliner mission — a test mission — on June 5, with issues starting around 24 hours later. In the final phase of approach to the ISS, five of the 28 thrusters on Starliner went offline, and several helium leaks sprung up in the spacecraft’s propulsion system. Since then, NASA and Boeing engineers have been engaged in a root cause analysis, conducting tests of the thrusters onboard the spacecraft and testing a replica engine here on Earth. 

NASA was betting a lot on Starliner — approximately $4.2 billion, per a contract that was awarded to Boeing for Starliner’s development back in 2014. Boeing has also put a lot on the line, with cost overruns on the capsule amounting to over $1.5 billion.

NASA’s aim was to have two commercial crew transportation providers, which is why it awarded contracts to Boeing and SpaceX. But while SpaceX completed its certification mission in 2020, and has conducted eight NASA missions since that point, Boeing’s Starliner faced numerous delays.

Although the incident might seem like the nail in Starliner’s coffin, at today’s press conference, NASA leaders said they’ve been working closely with Boeing, and they pushed back against a question implying that there’d been any loss of trust in the company or Starliner — instead, they suggested there was merely a “disagreement” over the level of risk.

“Spaceflight is risky, even at its safest and most routine,” said NASA Administrator Bill Nelson. “A test flight, by nature, is neither safe, nor routine. The decision to keep Butch and Suni aboard the International Space Station and bring Boeing’s Starliner home uncrewed is the result of our commitment to safety: our core value and our North Star.”

Nelson later said he is “100 percent” certain that Starliner will be able to launch a crewed mission to the ISS in the future.

Read More

This week, Google joined a $250 million deal with the state of California to support California newsrooms. While the deal offers a much-needed cash infusion for an industry that’s seen crippling layoffs this year, the deal’s been criticized by some as a half-measure — and a cop-out.

By agreeing to this deal, Google averts bills that would have forced it and other tech companies to pay news providers when they run ads alongside news content on their platforms.

The Media Guild of the West (MGW), the local chapter of the journalism labor union the NewsGuild-CWA, denounced the deal in a post on X, calling it a shakedown.

“After two years of advocacy for strong anti-monopoly action to start turning around the decline of local newsrooms, we are left almost without words,” MGW said in a statement. “The publishers who claim to represent our industry are celebrating … minimum financial commitments to Google to return the wealth this monopoly has stolen from our newsrooms.”

But what would the Google agreement actually accomplish, should it be approved by California’s policymakers? And are there any reasons to be optimistic?

Five years of funds

Last year, California Assemblymember Buffy Wicks introduced a bill, AB 886, that would’ve mandated certain platforms pay publishers a percentage of their ad revenues in exchange for linking to those publishers’ articles. Senator Steve Glazer introduced a second bill, SB 1327, that would’ve levied a 7.25% tax on ad revenue to create a tax credit for newsrooms.

The $250 million Google deal leaves both proposals dead in the water.

Instead of imposing a fee structure, the deal will draw on funding from Google, taxpayers, and potentially other private sources to establish two programs: the News Transformation Fund and the National AI Innovation Accelerator.

Administered by UC Berkeley’s Graduate School of Journalism, the News Transformation Fund will support newsrooms (excluding broadcasters) based in California. Taxpayers’ contributions amount to $70 million while Google is pledging to give at least $55 million for a grand total of ~$125 million, with the funds to be doled out to news organizations based on how many reporters they employ. Funds will be distributed over a five-year period.

Twelve percent or more of the News Transformation Fund’s pool will go toward “locally focused” publishers and publications aimed at underrepresented groups, reports The New York Times. Google will pay $15 million into the News Transformation Fund in the first year and “at least” $10 million in each of the following years; California taxpayers will provide $30 million in the first year and $10 million in each of the next four years.

The National AI Innovation Accelerator has a different, more tech-driven mission. With $62.5 million from Google over five years, it’ll provide “organizations across industries and communities” with funding to experiment with AI to “assist them in their work,” according to a press release. The funds “will be administered in collaboration with a private nonprofit,” the release reads, “and will provide organizations from journalism, to the environment, to racial equity and beyond with financial resources and other support.”

You’ll notice that Google’s financial commitments come to $117.5 million — short of the $250 million figure quoted in the release. That’s because the remainder ($132.5 million) is in the form of replenishments to the company’s existing programs to support journalism, the Google News Initiative and partnerships through Google News Showcase, Google says.

Pros and cons

The initiatives, slated to go live sometime in 2025, drew praise from California governor Gavin Newsom and the California News Publishers Association (CNPA), a nonprofit trade association representing California newspapers.

“The deal not only provides funding to support hundreds of new journalists but helps rebuild a robust and dynamic California press corps for years to come, reinforcing the vital role of journalism in our democracy,” Newsom said in a statement. CNPA called the agreement “a first step toward what we hope will become a comprehensive program to sustain local news in the long term.”

Others were skeptical it’s a slam dunk.

Senate president pro tempore Mike McGuire questioned legislative support for California’s share of the deal. And Senator Glazer called it “completely inadequate,” noting that Google is the sole tech company participating. (OpenAI is contributing technology, but not any money.)

“There is a stark absence in this announcement of any support for journalism from Meta and Amazon,” Glazer said in a release. “These platforms have captured the intimate data from Californians without paying for it. Their use of that data in advertising is the harm to news outlets that this agreement should mitigate.”

Glazer also suggests Google is paying less than its fair share — and at least one study supports his argument. Researchers at Columbia, the University of Houston, and consulting firm the Brattle Group estimate that Google owes U.S. publishers 50% of the value added to their platforms by news, which they peg at between $10 billion and $12 billion in revenue sharing annually.

Declining revenue

The past six months have been brutal for the news sector.

The industry could be on track to shed 10,000 jobs this year, per Fast Company. That’d be an improvement from last year, which saw over 21,400 journalism jobs eliminated — but it’s hardly a sunshiney outlook.

California has had a particularly rough go of it. According to a 2023 Northwestern Medill School of Journalism report, the state has lost one-third of its publishers and 68% of its journalists since 2005. The Los Angeles Times, the largest metro daily newspaper in California (and the U.S.), cut more than 20% of its newsroom in January — one of the largest cuts in the paper’s 142-year history.

What’s causing the decline? Many factors, from slow-growing ad budgets to inflation (which has harmed subscription growth). The struggle to find a sustainable business model hasn’t been helped by Big Tech, either, whose search and feed algorithm changes — and AI-generated overviews — have reduced publisher traffic.

Pundits argue that tech has also trained people to expect free content — close to half of Americans get their news from social media (despite frequent inaccuracies) — and captured an increasing share of ad dollars at the expense of publishers. Approximately 60% of global ad spend is now funneled toward Big Tech companies, including Google and Meta; one study found that broadcasters lose nearly $2 billion in ad revenue annually to Google’s and Meta’s platforms.

Tech companies have historically played hardball when faced with efforts to fund journalism through fees levied on their platforms.

In opposition to Wicks’ bill, Google said it was considering temporarily blocking news websites from some California users’ search results. Abroad, the company fought bills in Australia and Canada that would’ve forced it to compensate publishers — in 2021 threatening to leave Australia if the government’s proposed legislation went through. After France implemented an EU law to grant publishers the right to charge for aggregation of their content, Google said that it would remove snippets from Google Search. And in Spain, which passed a similar law in 2014, Google shut down Google News altogether.

Google has since made arrangements with publishers in those countries through the aforementioned Google News Showcase, its program launched in 2020 that pays selected outlets on Google’s own terms. At last count, Google had around 180 publications in the program; the company claims it’s committed over $1 billion to journalism since 2020.

Read More

A court order recently forced Elon Musk’s X to reveal its full list of shareholders, as of June 2023, to the public.

Many of the recognizable tech industry names had already been reported as backers of Musk’s effort to buy the social media company then known as Twitter and take it private, inculding VC firms Andreessen Horowitz, Draper Fisher Jurvetson, and Sequoia Capital, as well as Oracle founder Larry Ellison and crypto company Binance.

Less widely known was the involvement of Sean “Diddy” Combs, who is apparently an investor through Sean Combs Capital (his investment was previously reported by the Daily Mail). Bill Ackman, the activist investor who recently made headlines with his campaign against activism at Ivy League schools, is also a shareholder through the Pershing Square Foundation. So is 8VC, the VC firm co-founded by Palantir’s Joe Lonsdale, which has reported ties to Russian oligarchs.

Some of the listed shareholders were investors in Twitter before Musk’s takeover. For example, Twitter co-founder Jack Dorsey and Saudi Prince Alwaleed bin Talal al Saud reportedly rolled over their Twitter shares into stakes in what’s now X.

The court filing containing the list of shareholders is dated June 9, 2023, but it was unsealed this week in response to a motion from the Reporters Committee for Freedom of the Press on behalf of independent journalist Jacob Silverman.

In a blog post publishing the full list of investors, Silverman acknowledged that many of Musk’s backers were already known, and that the list doesn’t include ownership amounts. Still, he said it’s “a great starting point for journalists, researchers, regulators, activists, and anyone else who wants to know what’s going on behind the scenes of this important company.”

Read the full list here.

Read More