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Hello and welcome back toEquity, the podcast about the business of startups, where we unpack the numbers and nuance behind the headlines.

We are nearly at the end of the year, so your friendly, local podcast crew is trying to make sense of just what happened in 2022.

We started the year on a venture capital high which quickly turned into a downturn. Startups kicked off the year hiring and wrapped the year shedding staff. The stock market kept going down. A crypto winter kicked off. We saw some PE deals but very few IPOs. And the world saw a bit more geopolitical upheaval than we might have anticipated.

There were elections and shutdowns and frauds and mistakes and big wins. It was, well, a lot.

Thankfully Mary Ann, Natasha, and Alex were able to collate the news into a few distinct categories, so that we can all look back at 2022 with a bit more clarity. And we even got to hear from a bunch of you, thanks to your dozens, and dozens of great taglines you sent in concerning the year and how it felt from your chair.

We have even more good stuff coming, including our yearly predictions episode. Get hype, and we’ll talk to you soon!

2022: The good, the bad, and the wake-up calls by Natasha Mascarenhas originally published on TechCrunch

This column would like to apologize for somehow missing the buildup to Getaround‘s SPAC combination, which was voted on yesterday and began trading this morning. I don’t know how we managed to get so far behind on this particular news item, but we will rectify our tardiness today.

The Exchange explores startups, markets and money.

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Getaround allows consumers to rent cars from one another, taking a cut on the transactions. As you can imagine, it’s a marketplace-style company. And it was a venture capital darling, raising hundreds of millions of dollars while private, including a $200 million round in 2019and another $140 million in 2020.

It had a choppy early-COVID period but has since managed to announce and close a combination with a special purpose acquisition company.

Early direction of Getaround’s stock after the deal closed and it began to trade under the “GETR” ticker symbol has been sharply negative. Indeed, in the first moments of its trading under its own name, Getaround lost around 65% of its value. It now trades for around $3 per share.

Getaround braves chilly public markets with SPAC combination by Alex Wilhelm originally published on TechCrunch

Tom Zhu, Tesla’s China president who oversaw Gigafactory Shanghai’s transformation into the world’s largest EV plant, has been appointed to run the new Gigafactory in Austin, Texas, Bloomberg reported earlier this week. That would make the China chief, who joined Tesla China in April 2014, one of the top executives at the EV giant.

The decision didn’t come as a surprise to industry insiders, given how quickly Gigafactory Shanghai became a cornerstone manufacturing and export hub for Tesla.

It took the plant merely a year — from December 2018 to December 2019 — to go from construction to production. In August, Gigafactory Shanghai made its one-millionth car, accounting for a third of the total Teslas produced up until that point, Elon Musk tweeted. This November was a record month for the facility with 100,291 vehicles delivered.

Such achievements no doubt make Zhu a preferred aide of Musk who promotes a “hardcore” work environment. While Zhu might have a secret recipe for building a well-oiled manufacturing team in a short time, China’s unique conditions aren’t easily replicable in another country.

“Over the past three years, Gigafactory Shanghai has outperformed its counterparts in Fremont, Texas, and Berlin, although [not all of the success] is attributable to Tom or the China team,” suggested Chris Zheng, founder of Chinese automotive blog Channel-Q.

“A friendly regulatory environment, a strong supply chain base, and an efficient front-line execution team — these are three factors that are currently only available in China, so the key isn’t Shanghai or Texas. Look at BYD. Granted, Tom and his executive team are excellent, but that’s not all,” he added.

Chinese tech news site PingWest reported Wednesday that Musk has anointed Zhu as the CEO of Tesla Global, a new executive role in charge of sales and Gigafactories, while Musk continues to lead “key technical works at the firm.”

Musk tweeted Thursday that he continues to “oversee both Tesla & SpaceX, but the teams there are so good that often little is needed from me.”

This is a developing story…

Tesla hopes China boss will bring secret sauce to Gigafactory Texas by Rita Liao originally published on TechCrunch

After weeks of rumors, Getir has announced that it is acquiring Gorillas. This is a major consolidation deal for the instant grocery delivery space. The Financial Times first reported that Getir has closed the acquisition of its competitor. TechCrunch has confirmed the news with Getir.

“Markets go up and down, but consumers love our service and convenience is here to stay. The super fast grocery delivery industry will steadily grow for many years to come and Getir will lead this category it created 7 years ago,” Getir founder Nazim Salur said in a statement.

Getir originally launched its service in Turkey in 2015. Over the past couple of years, many people started ordering groceries online because of lockdown restrictions. Getir, Gorillas, Flink and a cohort of startups tried to popularize a new model for grocery deliveries.

Instead of reserving a delivery slot for the next day, orders are processed instantly on those apps. The user experience works more like food delivery services, such as Uber Eats, Deliveroo and Just Eat Takeaway. You open an app, pick a few items, hit the order button and track your order from your phone.

Those services raised a ton of money and grew at a rapid pace during the COVID-19 pandemic. Behind the scenes, all those instant delivery startups built networks of dark stores in dense cities so that orders can be delivered in less than an hour.

In addition to these expensive operation costs, startups in the space spent a small fortune in promo codes and reduced delivery fees. But restrictions were lifted, VC funding dried up and some cities put some restrictions on dark stores. That’s why 2022 has been a rough year for the industry, leading to a lot of layoffs, pullbacks and consolidation moves.

In May, Getir announced that it would cut 14% of its global staff — more than 4,000 were impacted by the downsizing. In addition to its home country, Getir operates in various European countries, such as the U.K., Germany, France, Italy, Spain, the Netherlands and Portugal. It operates in the U.S. as well.

Gorillas also had to conduct a round of layoffs earlier this year. It decided to focus on a handful of markets — Germany, the Netherlands, the U.K. and the U.S. The German startup acquired Frichti before it became harder to raise funding rounds.

According to the Financial Times’ Tim Bradshaw, the combined group is now valued at $10 billion. At the height of the instant grocery bubble, Getir and Gorillas reached valuations of $11.8 billion and $3 billion respectively. Gorillas investors are set to obtain 12% of Getir’s capitalization table.

As there is a lot of overlap between the two companies, there might some layoffs in some cities where both services are currently live. Reducing the number of dark stores could also help the company’s bottom line.

Instant grocery app Getir acquires its competitor Gorillas by Romain Dillet originally published on TechCrunch

When President Joe Biden signed the Inflation Reduction Act (IRA) into law on August 16, 2022, we started looking into its implications, particularly with regard to the impact on the future of the climate and the innovations that might shape that future.

As the most important piece of climate legislation in United States history, the IRA represents a fundamental regulatory inflection that may help create a different future. The purpose of this post is to share our understanding of the regulatory ramifications of this monumental bill, especially as they relate to the problems some of the most capable founders in the world are looking to tackle.

Building electrification

The IRA contains several major programs that aim to accelerate building electrification — the replacing of residential fossil fuel machines with electric equivalents. This has the benefit of eliminating combustion emissions, improving comfort, as well as improving indoor air quality, which can have dramatic positive health impacts.

There are three major programs that incentivize building electrification. The first (Sec. 50122) provides a total of $4.5 billion in funding for appliance replacements and is means tested: It provides up to 100% of project costs for those earning less than 80% of area median income (AMI) and 50% of project costs for those earning less than 150% AMI, with annual limits. Eligible appliances include heat pumps, heat pump water heaters, electric or induction stoves, electric or heat pump clothes dryers, upgraded breaker boxes, electrical wiring upgrades, home energy audits, and insulation and sealing.

The second program (Sec. 50121) is a performance-based home energy retrofit program that provides up to $4,000 per home, or $8,000 per home for low-to-moderate income households. Projects cannot claim both this program and Sec. 50122.

Both programs can be combined with the third program (Sec. 13302), which expands the Investment Tax Credit (ITC) to a 30% tax credit for eligible projects including residential solar, solar water heating, fuel cell, small wind energy, battery storage and geothermal heat pumps.

The IRA also includes significant and open-ended financing for projects that broadly reduce greenhouse gasses and accelerate deployment of renewable energy, many of which will likely apply to building electrification projects, such as the Greenhouse Gas Reduction Fund (Sec. 60103), and $40 billion in loan guarantee authority for the Department of Energy (Sec. 50141).

Interesting problems

The funding in the IRA for buildings is likely to catalyze the replacement of fossil fuel machines in buildings and accelerate the adoption of fully electric alternatives. Today, market share of these alternatives is relatively low and contractor adoption and expertise is lacking. Early examples of an increase in consumer demand for these products include Maine and New York.

While we won’t see an overnight shift across the country, these incentives will create a burgeoning market for home electrification, similar to how past laws created a market for residential solar. Problems we have identified include:

Fragmented contractor market.
There are not enough trained professionals (electricians, HVAC technicians, etc.).
Projects tend to be highly custom and time intensive to design and quote.
Difficult for businesses and consumers to navigate the changing financing/incentives landscape.
The ROI of these projects will be highly variable and vary from home to home.
Most home appliances are replaced on failure in an emergency, and most homes are not wired for 220v, so there is a pre-wiring problem to be solved.
Navigating the retrofit process is time consuming and confusing for consumers, requiring work across multiple contractors that don’t individually plan for holistic project needs (e.g., panel upgrade).

Carbon capture/methane reduction

The latest science tells us that in order to keep warming to 1.5°–2° C, we need to reduce emissions to about 45% lower than 2010 levels by 2030 and achieve net-zero by 2050. It is not realistic to expect that we can replace all of our fossil fuel machines and processes in that time frame.

The climate founders’ guide to the Inflation Reduction Act by Ram Iyer originally published on TechCrunch