TheChek News Flow

BRUSSELS, June 3 (Reuters) - A majority of EU countries have rejected a push by Europe's big telecoms operators to force Big Tech to help fund the rollout of 5G and broadband in the region, people familiar with the matter said.

Telecoms ministers from 18 countries either rejected or criticised the proposed network fee levy on tech firms at a meeting with EU industry chief Thierry Breton in Luxembourg on Thursday, the sources said.

That echoed comments made last month by EU telecoms regulators' group BEREC.

Deutsche Telekom (DTEGn.DE), Orange (ORAN.PA), Telefonica (TEF.MC) and Telecom Italia want Big Tech to shoulder part of the network costs and have found a receptive ear in the European Commission's industry chief Breton, a former chief executive of France Telecom and French IT consulting firm Atos.

Alphabet Inc's (GOOGL.O) Google, Apple Inc (AAPL.O), Meta Platforms Inc (META.O), Netflix Inc (NFLX.O), Amazon.com Inc (AMZN.O) and Microsoft Corp (MSFT.O) have rejected the idea of a levy, saying that they invest in the digital ecosystem.

The ministers cited the lack of an analysis on the effects of a network levy, the absence of an investment gap and the risk of Big Tech passing on the extra cost to consumers in the form of higher prices, the people said.

They also warned about the potential violation of EU net neutrality rules which require all users to be treated equally, barriers to innovation, and a lower quality of products.

The critics included Austria, Belgium, the Czech Republic, Denmark, Finland, Germany, Ireland, Lithuania, Malta and the Netherlands, the people said.

Cyprus, France, Greece, Hungary and Italy backed the idea while Poland, Portugal and Romania either took a neutral stance or had not adopted a position, they said.

Breton is expected to issue a report by the end of June with a summary of feedback provided by Big Tech, telecoms providers and others which will indicate his next steps.

Any legislative proposal needs to be negotiated with EU countries and EU lawmakers before it can become law.

Beijing is within striking distance of its wind and solar power targets, but the boom is a mixed blessing for investors

The sun is shining down out of a blustery sky on China’s renewable energy ambitions. But investors in the country’s green power stocks are bracing for more difficult weather.

China added 62 gigawatts of solar and wind power capacity in the first four months of this year. In comparison, the country added only around 26 gigawatts during the same period in 2022. That will bring non-fossil fuel generating capacity above half of the nation’s total power mix for the first time by the end of the first quarter, according to Fitch Ratings: around 80% of the new power capacity added this year so far came from renewable sources.

Capacity addition in solar has been particularly rapid, as the government pushes for installations of rooftop solar panels. Solar capacity has risen by 44% since the end of 2021.

While actual renewable power generation still lags behind that from fossil fuels, there are encouraging signs there too. Fitch expects more than 17% of China’s power consumption in 2023 will be met by renewable sources, excluding hydropower. China has set a target for 18% of 2025 power consumption to come from non-hydro renewable power. China is already a massive hydropower power generator, so the total renewable percentage will likely be much higher.

China’s renewable exports are also booming: The country controls more than 80% of the global market for key manufacturing stages of solar panels, according to the International Energy Agency. Exports of solar products, including silicon wafers and modules, rose 80% year-over-year in 2022 to $51 billion, according to the China Photovoltaic Industry Association.

Europe was a major destination, accounting for nearly half of those exports, after Chinese exports to the region more than doubled in 2022. Shipments abroad are still growing though the pace has slowed. Exports of solar modules in the first four months rose 15% year on year, according to China’s customs data.

Yet many Chinese renewable stocks have been struggling this year. Shares of Shanghai-listed Longi Green Energy Technology 601012 2.13%increase; green up pointing triangle, one of the world’s largest solar manufacturers, have roughly halved since the end of 2021. Hong Kong-listed Xinyi Solar 968 4.17%increase; green up pointing triangle has lost more than a third of its value over the same period.

The reasons are intense competition and oversupply. After a monstrous rally in 2021 and early 2022, prices of polysilicon—a key component for solar panels—have come crashing down as more supply comes online. Polysilicon prices have dropped 54% in the past year, according to Morgan Stanley. That has driven down prices of products throughout the supply chain—from silicon wafers to solar modules. The correction could eventually lead to more consolidation in the industry.

China’s immense renewable build-out is good news for the planet—and for maintaining the country’s dominance of the industry. But so far, it has proven tougher to make money from Chinese renewable stocks.

As in steel and cement before, enormous excess industrial capacity is helping the nation rapidly transform its economy. The transformation is impressive, but for investors, the best play might be to stand by and watch the show.

Companies can team up in cartel-like coalitions if they make up a fifth of a market or less

The European Commission has relaxed antitrust guidelines for companies that team up to solve climate problems, in response to concerns about cartel-like green coalitions driving up energy prices.

Republican politicians in the US have accused initiatives that push for a phaseout of fossil fuels of breaching antitrust rules, piling pressure on competition authorities around the world to take a stance.

And in a win for rightwing US groups, global insurers quit the Net-Zero Insurance Alliance (NZIA) last week for fear of being accused of breaching competition law, plunging the financial sector climate group known as Gfanz into crisis. The insurers included Allianz, Axa and QBE.

The EU commission said that as of July 1, it will create a “safe harbour” from prosecution for some groups of companies that set “sustainability standards”, for example a boycott of plastics, fossil fuels or steel from coal-fired power plants, even if this pushes up prices. Companies must not make up more than one-fifth of a given market, and must not exchange commercially sensitive information unless necessary or prevent other companies from joining the agreement.

The guidelines, which were published on Thursday, are not legally binding but are designed to help the European Commission, the European Court of Justice and national regulators interpret a prohibition on cartels enshrined in the Treaty on the Functioning of the European Union.

The new guidelines also open up the possibility of immunity for companies that come together to align with the Paris climate agreement on limiting global warming to 1.5C above pre industrial levels. 

Initiatives whose sole goal is to meet the requirements of international treaties are “unlikely to raise competition concerns” and will fall outside the scope of the EU’s competition regime altogether, according to the guidelines.

The disproportionate impact of rising temperatures on developing countries has tested the limits of modern competition regimes, legal experts say. These fail to recognise that some consumers are prepared to pay a higher price for “ethical” products whose positive effects will only be felt by people in other continents, or by future generations.

John Denton, secretary-general of the International Chamber of Commerce, told the Financial Times the EU’s new rules were “without doubt very positive”. But the UK’s competition regulator has been “bolder” in creating the protection “needed to encourage more businesses to take the leap in collaborating with their competitors to accelerate climate action,” he added.

The UK’s Competition and Markets Authority published a draft proposal in February to greenlight climate collaborations as long as these had a substantial and demonstrable impact on climate change, without any express limit on market share. The “sheer magnitude of the risk” represented by climate change and “the degree of public concern” around it justify a more “permissive” approach to this type of agreement, the draft said.

The EU’s new rules are more nuanced, acknowledging that “collective benefits” and “non-use value” can only justify anti-competitive agreements in some cases. “Consumers may opt for a particular washing liquid not because it cleans better but because it contaminates the water less,” they said by way of example. 

The EU “missed an opportunity” to be as ambitious as the UK or the Netherlands, said Maurits Dolmans, an antitrust specialist and partner at Cleary Gottlieb Steen & Hamilton, speaking on his own behalf. “The glass is a bit more than half full, but not as full as it could have been.”

Collective commitments to net zero emission are now likely to be “fine from an EU perspective”. But Dolmans added this would do little to protect groups like the NZIA, given that the invocation of antitrust in the US is about “politics rather than law”.

The Netherlands said last year it would approve sustainability agreements aimed at limiting environmental harm. But, unlike the UK, it is limited by the stance taken by the EU bloc as a whole. The head of the Dutch Authority for Consumers and Markets previously told the FT that companies should challenge the European Commission at the European Court of Justice in Luxembourg if they are prevented from collaborating on the climate.

The bloc was stung in 2014 by a cartel of Europe’s biggest truckmakers, which clubbed together to fix prices and delay the introduction of new emission technologies.

“It is the natural caution of a competition authority that you always have to overcome: if they say something more permissive it will be abused,” said Simon Holmes, a member of the UK Competition Appeal Tribunal and visiting law professor at the University of Oxford.

• A public-private Japanese partnership plans tests to beam space-generated solar power back to earth.
• The cost to install massive solar panels in space to generate 1 gigawatt (GW) of electricity is expected to cost more than $7.2 billion
• China also has ambitious plans to build a solar power station in space at a GW-level

In the latest ambitious project to use solar energy in space for powering the earth, a public-private Japanese partnership plans to test as soon as in 2025 if solar power generated in space can be beamed to the earth and converted into electricity.

The Japanese venture is the latest in a series of plans and experiments in recent months to test if solar power converted into microwaves could be beamed to receiving stations on the earth’s surface for large-scale use.

Scientists and science fiction writers have long dreamed of such a solar energy source: harnessing the sun’s energy regardless of weather or the time of day or night. This would overcome the constraints for solar power on earth, where generation can take place only when the sun shines. In addition, microwaves can pass through clouds, so beaming the energy via microwaves to the earth would not pose limits to solar energy due to weather conditions or the time of day.

The limits, of course, are the technology to do this at mass scale and the costs.

The cost to install massive solar panels in space to generate 1 gigawatt (GW) of electricity is expected to cost more than $7.2 billion (1 trillion Japanese yen), Nikkei Asia reports.

Still, researchers led by Kyoto University professor Naoki Shinohara will try to beam solar power to Earth to potentially prove that solar energy harnessed in space can be used for electricity needs on Earth.

Japan’s project involving industry, scientists, and the government space agency carried out successful tests of microwave power transmission horizontally in 2015 and vertically in 2018, both over a distance of 50 meters (164 ft). Vertical transmission with distances between 1 km and 5 km (0.62-3.1 miles) will be attempted in the future.

If we can demonstrate our technology ahead of the rest of the world, it will also be a bargaining tool for space development with other countries,” Shinohara told Nikkei.

The race for generating solar power in space and beaming it back to Earth is heated.

More than two years ago, the Pentagon successfully tested a solar panel in low-earth orbit as a prototype of potential future power-generating systems capturing light from the sun and beaming it back as energy to Earth.

Early this year, the Caltech Space Solar Power Project (SSPP) launched the Transporter-6 mission, launching in orbit a prototype, dubbed the Space Solar Power Demonstrator (SSPD), which will test several key components of an ambitious plan to harvest solar power in space and beam the energy back to Earth.

“When fully realized, SSPP will deploy a constellation of modular spacecraft that collect sunlight, transform it into electricity, then wirelessly transmit that electricity over long distances wherever it is needed—including to places that currently have no access to reliable power,” Caltech said in January.

China also has ambitious plans to build a solar power station in space at a GW-level, which will make the project operational for commercial use, Chinese experts told the Global Times in April.

Also in April, the European Space Agency (ESA) signed contracts for two parallel concept studies for commercial-scale Space-Based Solar Power plants—a crucial step in the Agency’s new SOLARIS initiative – maturing the feasibility of gathering solar energy from space for terrestrial clean energy needs.

“The studies will look at as wide a range of options as possible, including investigating all the different ways to move the energy, safely and efficiently, down to Earth: radio frequency transmission, lasers and simply reflecting sunlight down to solar farms on the ground,” said Sanjay Vijendran, ESA’s lead for the SOLARIS proposal.

According to ESA, “the concept complements rather than competes with terrestrial renewables, because Space-Based Solar Power can make power available reliably on an ongoing 24/7 basis, providing much-needed stability to the electricity grid as the share of intermittent renewables continues to increase, reducing dependence on large-scale storage solutions.”

With the energy crisis, net-zero targets, and issues with land availability for renewable power installations, space solar power could be part of the solution in the future, if technology and costs allow for it.

New York rewrites the rules on sovereign debt restructurings

What’s a safe harbour worth when the tide is turning?

Proposals to block hedge funds from squeezing money out of sovereign debt restructurings have been floating around for some time, ranging from tweaking bond contracts to entirely new laws.

Such laws have already been enacted in the UK, France, and Belgium. Depending on where you stand, they are usually referred to as ‘anti- vulture-fund’ or ‘safe harbour’ laws. Except for a few distressed funds that focus on exploiting the dysfunctionalities of the existing legal framework, notably Elliott Management and NML Capital, market participants hardly took note.

The perception of safe harbour laws as a fringe idea has drastically changed since Assembly Bill A2970 passed the judiciary committee of the New York State Assembly last month. If enacted, the new law will limit the recovery of sovereign debt through New York courts to the burden sharing standards that have been set for the country in an international initiative for debt relief. In other words, it would make the longstanding Paris Club principle of comparable treatment enforceable as a matter of New York law.

On the day of the judiciary committee meeting, The Credit Roundtable had already issued a last-minute rebuttal. A few days later, law firm Clifford Chance published a client briefing on all three proposals currently pending in the New York legislature. Finally, on May 22, a group of trade associations including the International Capital Market Association and Institute of International Finance issued a joint statement suggesting that New York law would become a sinking ship if the bill was enacted.

As is to be expected from a group of this calibre, the objections reflect serious concerns. As can also be expected, not all are well-founded:

The least convincing concern is the knee-jerk objection that the law would apply retroactively: In a restructuring context this argument only has merit if a law interferes with some but not all types of debt, and thereby benefits other creditors to the detriment of those affected. On the other hand, retroactivity is not an issue if a new law indiscriminately captures all forms of non-preferred debt to achieve equal treatment, as A2970 actually does. In the US, this principle doesn’t seem to have been challenged since 1874, when a federal court in New York confirmed the constitutionality of a statute introducing restructuring by majority vote as an option for all pending and future bankruptcy proceedings.

Because the new law would apply irrespective of the governing contract law, there is also no reason why it should divert issuers and investors to other jurisdictions if they have opted for New York law in the past. No such effect has been observed after the UK introduced a similar statute to enforce debt relief under the HIPC (highly indebted poor countries) initiative in 2010. Indeed, the ability of safe harbour laws to capture types of debt that would otherwise escape the reach of collective action clauses under contract law is the main justification for legislative action.

For similar reasons, it seems highly implausible that the new law would affect market access or increase borrowing costs: If a country proceeds to a restructuring under the Common Framework or with the help of the Paris Club, it will inevitably have to obtain a debt sustainability analysis from the IMF. In other words, the size of the pie will have been defined already, and all the law does is to ensure that no creditor can snatch a bigger slice at the expense of others. Unless they reject comparable treatment together, rational investors will therefore have to base their pricing on the assumption that holdout strategies are a zero-sum game, and that the risk to come out at the wrong side of the equation is high for all but the most aggressive creditors. Thus, rather than increasing borrowing cost, enforcing equal treatment can be expected to result in a decrease, as has been demonstrated for collective action clauses.

A more rational concern relates to the use of equitably burden sharing standards set by an international initiative’ as a statutory benchmark. The broad reference means that creditors — and eventually a judge — might have to form a view on what exactly comparable treatment means in a specific scenario. Since the Paris Club has in the past emphasised flexibility at the expense of predictability, the margin of appreciation does indeed imply some ambiguity.

More clarity on how comparable treatment should be assessed will be one of the topics of a workshop announced by the Global Sovereign Debt Roundtable on April 12. In the meantime, it is worth reminding oneself that good faith is an even more generic concept than equitable burden sharing and comparable treatment. Yet the duty to co-operate in good faith has long been enshrined in New York contract law without affecting market confidence.

In the sovereign debt context, professors Lee Buchheit and Mitu Gulati have suggested that good faith could serve as the statutory basis for a new judicial doctrine to counter holdout strategies. Most recently, an unusually candid footnote by the judge in Hamilton Reserve Bank versus Sri Lanka suggested New York courts are finally losing patience:

This Opinion [to deny a motion by Sri Lanka to dismiss the lawsuit] does not address the serious policy concerns raised by the filing of this litigation while the International Monetary Fund (“IMF”) is actively working with Sri Lanka to resolve its financial crisis. Indeed, as recently as March 20, 2023, the IMF approved a $3 billion loan to help Sri Lanka through its financial crisis. This ruling is confined solely to the legal issue presented and should not be construed either as an endorsement of litigation filed by beneficial holders of sovereign debt while the IMF addresses a grave crisis over that debt or an indication that such plaintiffs should be given priority in recovery during any debt restructuring negotiations that occur.

Before a much less predictable judicial storm breaks loose, institutional investors might be well advised not to mistake the safe harbour for a sinking ship

Regulators might put up an obstacle given the Swedish group’s sizeable footprint in the sector

Norse goddess Freya rode a chariot pulled by cats. Sweden’s EQT has borrowed the name for its bid company buying veterinary drugmaker Dechra for £4.9bn, including debt. On Friday, the London-listed group’s board recommended the offer, which is a 40 per cent premium to the three month undisturbed share price. A compliant purr from shareholders seems likely given the deteriorating outlook for vet and pet products.

Dechra is a long-running success story. Listed at the turn of the millennium, it has flourished under the stewardship of chief executive Ian Page. A near 50-fold total return has beaten the UK pharma and biotech sector by more than 10 times since 2000. While its loss is a blow for the diminished UK market, the offer is good enough to get the deal through.

The price is 25 times Dechra’s expected ebitda over the next 12 months. The offer is 5 per cent lower than the initial one in April, before it warned about US destocking and weaker EU trading. Operating profits will be “materially” below the £186mn forecast in February, it said on Friday.

That may push the multiple higher. But it will still be below the 29 times forward ebitda on which US-listed Pfizer spin-off Zoetis trades. The latter’s higher profit margins explains the difference.

Competition regulators may present an obstacle given EQT’s already sizeable footprint in the pet and vet sector. EQT says it has no plans to combine Dechra with IVC Evidensia, a business of 2,500 veterinary centres across Europe it owns alongside other private equity groups. But the UK’s Competition and Markets Authority is already concerned about horizontal integration in vet care. About half of the UK’s independent vets have been rolled up by bigger groups in the past decade.

Vertical overlap between Dechra and IVCE might pique the CMA’s interest. Perhaps hamingja — Norse luck — would have been a better name for the bidco tasked with getting this deal through.

You had to go big in May to get on this list. Each of the 10 biggest rounds last month was well above $100 million, so it seems like investors opened their checkbooks a little more.

Not surprisingly, AI again led the way, but biotech also remained strong in the last full month of spring. Other sectors including cleantech, network software and even crypto (it’s been a while) also had large raises.

1. Anthropic, $450M, artificial intelligence: If Anthropic looks familiar to you on this list, there’s a reason. In February there were reports that Google had invested between $300 million and $400 million into the San Francisco-based startup. That was followed in March by reports that Anthropic was raising another $300 million round at a pre-investment valuation of $4.1 billion. Finally last month, Anthropic — a ChatGPT rival with its AI assistant Claude — announced it had raised $450 million in Series C funding led by Spark Capital with participation from the likes of Google and others. Anthropic itself previously announced a $124 million Series A in 2021 and a $580 million Series B in 2022 — led by none other than disgraced FTX founder Sam Bankman-Fried. Of course, nothing has been hotter than AI this year. The raise was only topped by the $10 billion investment into OpenAI reportedly by Microsoft in January.

2. ElevateBio, $401M, biotech: Biotech had a big May. First up is Massachusetts-based gene therapy startup ElevateBio, which raised a $401 million Series D led by the AyurMaya Capital Management Fund, a VC fund managed by Matrix Capital Management. The startup has multiple platforms for things such as drug development and manufacturing that interconnect with one another, making it an end-to-end biopharma company. The company has multiple drug development pipelines as demand grows for gene therapies that help the immune system fight its way through disease. Founded in 2017, the company has now raised $1.2 billion, per Crunchbase.

3. ReNAgade Therapeutics, $300M, biotech: This brings us to our second big biotech raise. Cambridge, Massachusetts-based ReNAgade Therapeutics locked up a $300 million Series A led by MPM BioImpact and F2 Ventures. That money would be big for any round, but a $300 million Series A in this venture market borders on the amazing (yes, it can be difficult to figure out how long a round took to raise, but still). ReNAgade is developing RNA therapeutics (hence the name) to fight disease. The company already has established a joint venture with Orna Therapeutics. Founded in 2021, this is the company’s first outside funding, per Crunchbase.

4. Gradiant, $225M, cleantech: Gradiant became one of the newest unicorns last month after raising a fresh $225 million in a Series D led by BoltRock Holdings and Centaurus Capital. The water tech startup is now valued at $1 billion. The startup develops technology to reduce water usage and build wastewater treatment systems for companies in the pharmaceutical, semiconductor, food and beverage, and other water-demanding industries. The funding is the largest in the wastewater treatment space, at least since the beginning of 2022. Founded in 2013 at the Massachusetts Institute of Technology, the company has now raised more than $392 million, according to Crunchbase.

5. CoreWeave, $200M, cloud: AI keeps the hits coming. Just more than a month after raising $221 million, New Jersey AI cloud infrastructure startup CoreWeave raised another $200 million from existing investor Magnetar Capital. Unlike some of the generative AI application startups that have received huge funding rounds, CoreWeave provides some of the plumbing necessary for AI to work. The specialized cloud provider — which actually started out as an Ethereum mining operation — offers cloud infrastructure with better processing that will be needed to train large language models for AI. Coreweave, which competes with cloud providers Amazon Web Services, Microsoft and Google, has now raised $576.5 million in total funding, per Crunchbase.

6. Strive Health, $166M, health care: Per Centers for Disease Control and Prevention numbers, 37 million U.S. adults live with kidney disease, but about 9 out of 10 people with kidney disease don’t know they have it. That’s a problem, as early care is pivotal in trying to control the situation. Denver-based Strive Health raised a $166 million Series C led by NEA to help people get that care. The startup offers value-based kidney care, as it partners with healthcare providers. Strive Health uses a unique combination of technology-enabled care interventions and seamless integration with local providers to help patients suffering from chronic kidney disease get care at all stages of the fight. Founded in 2018, the company has now raised $386 million, according to Crunchbase.

7. Lightmatter, $154M, hardware: Along the same lines as CoreWeave, Boston-based Lightmatter also has its hands in AI, but not creating applications. Rather the startup uses light to link computer chips together and to do calculations for deep learning necessary for AI. However, the use of light allows for this to happen faster and more energy-efficiently. Investors see that need apparently, as the Boston-based company locked up a $154 million raise from the likes of GV, the venture capital investment division of Alphabet, and Fidelity Management and Research Co. were among the round’s investors. Founded in 2017, the company has raised $267 million, per Crunchbase.

8. Carmot Therapeutics, $150M, biotech: Berkeley, California-based biotech firm Carmot Therapeutics closed a $150 million Series E led by Deep Track Capital. The startup is developing therapies for metabolic diseases including obesity and diabetes. Carmot has several therapeutics in its pipeline and the new cash infusion to add to its portfolio. Founded in 2008, the company has raised nearly $385 million, per Crunchbase.

9. Restaurant365, $135M, accounting: It’s hard to run a restaurant — as anyone who has watched several reality shows based on doing so knows. Restaurant365 tries to make that a little easier and last month the Irvine, California-based startup added some big-named backers. The company nailed down a $135 million round co-led by KKR and L Catterton. The new round values the company at $1 billion, per its release. Restaurant365 offers enterprise management software for restaurants, helping them take care of accounting, payroll, supply chain and more. The company has surpassed $100 million in revenue and is used in more than 40,000 restaurant locations. Founded in 2011, Restaurant365 has raised over $260 million, per Crunchbase.

10. Tools For Humanity, $115M, crypto: It’s Sam Altman’s world — we’re just living in it. Worldcoin developer Tools For Humanity — co-founded by Altman — raised a $115 million Series C led by Blockchain Capital. The San Francisco-based startup is building tools in support of Worldcoin, an Ethereum-based token currently in beta. Its World ID platform is attempting to create unique digital identities — based on blockchain technology — for people by scanning their eyes with a small orb. The startup has raised many questions surrounding AI, data and privacy. While such an identity platform could be useful as AI makes it more difficult to know who or what one is dealing with over the internet, the scanning of people’s eyes to create a digital identity and how that information could be used raises obvious privacy and data concerns. The company did not reveal a valuation, but an earlier report said it is looking to raise money at a $3 billion valuation.

Fidelity, the lead investor in Reddit’s most recent funding round in 2021, has slashed the estimated worth of its equity stake in the popular social media platform by 41% since the investment.

Fidelity Blue Chip Growth Fund’s stake in Reddit was valued at $16.6 million as of April 28, according to the fund’s monthly disclosure released over the weekend. That’s down 41.1% cumulatively since August 2021 when the asset manager spent $28.2 million to acquire the Reddit shares, according to disclosures the firm has made in its annual and semi-annual reports.

Reddit was valued at $10 billion when the social media giant attracted funds in August 2021. Fidelity — which has marked down its stakes in many startups including Stripe and Reddit in recent quarters — also slashed the value of its Twitter stake, it disclosed in the filing, valuing Elon Musk’s firm at about $15 billion.

Reddit declined to comment.

This devaluation, part of a broader trend that has hit a variety of growth stage startups across the globe in the past year, raises uncertainties about whether Reddit will maintain its initial intent to reportedly go public at a valuation around $15 billion.

Reddit, which has raised over $1 billion to date, counts Sequoia Capital and Andreessen Horowitz among its backers.

The current wave of valuation cutbacks sheds new light on the impact of deteriorating worldwide economic conditions on fledgling startups. Despite the diminished funding activities for startups globally over the past year, valuations of numerous larger startups have stayed constant.