Sourcery (9/11-9/15)

Elon's Book + New Epicenter of US Tech & VC Funding ☀️ Databricks, Kin Insurance, Moment, Roam, Bold, Carenostics, Co-Helm, Denodo, VideoAmp, Pixis, Linear, Goodles, Lyten, Enfabrica, FloLive

The New Epicenter of US Tech & VC Funding is..

Last week was the battle of tech conferences & cities. There was Marc Benioff’s famous Dreamforce in SF, Primary Ventures NYC Summit, and the All-In Pod Summit in LA. And well.. SF & NYC managed to take it to X/Twitter and really stir up some drama over who the main character is in tech/VC funding. It was silly. While there is foundational talent, companies, investors, and a lot of $$ in SF & NYC, the rising star is obviously LA. 

And as the “Queen of Angeles,” I would know. Thank you to Wiz of Spacecadet Ventures for including me in the viral X moment in the 30 year anniversary of Magic the Gathering Tech Titan edition magic card packs (<<click to see all the cards).

So yes, LA is the winner. And despite the writer strikes and backlash in the entertainment/creative industries, the LA ecosystem has actually brought in billions this summer from top sold out 6-night shows like Taylor Swift, Drake, Beyonce, and even in the world of sports with the historic US Open golf tournament at LACC.. but what else is here? Why would anyone want to live or work here in tech? 

Well, LA has two sides..

• Barbie: creative, colorful, glitzy glam of Hollywood, gaming, as well as commerce enablement, marketplaces & CPG powerhouses

• Oppenheimer: rugged, innovative machinist culture that is building for the industrial side of America across aerospace, defense, manufacturing, energy/climate, etc.

Speaking to the latter, last week we added a new section to Sourcery labeled “HardTech” due to the rise in startups building in this arena. Conveniently for us, this is a rapidly evolving market in LA accelerating from talent maturing out of local giants like SpaceX, Anduril, Tesla, etc. Check out some of the leaders in LA..

HardTech (Next week we’ll go deeper into this - stay tuned)

• Aerospace: SpaceX, Varda, Relativity

• Defense: Anduril, Epirus, Chaos

• Manufacturing: Hadrian, Machina Labs, Epsilon3

• Energy/Climate: Tesla, Radiant Nuclear, Universal Hydrogen

Creative / Commerce

• Gaming: Riot, Epic Games, Activision Blizzard

• Commerce Enablement: Honey, GOAT, WhatNot

• Entertainment: Disney, Netflix, Hulu, AppleTV, Coachella 😊

• Creator Economy: Snap, Fourthwall, Creator Now (ok, this category is still early)

Disclaimer Upfront is an investor in GOAT & Creator Now

What do most LA HardTech companies have in common?

Rather, ‘who’? Well it’s Elon Musk. (Wait. Does that mean he’s the King of LA..??😅) Anyways, Walter Isaacson just dropped a new tome on Elon’s life. From the very beginning of his childhood upbringing to his many children (~11) of present day, the book covers both personal and professional sides.. and wow, at 688 pages & 2.25lbs, it is quite dense (though, somehow I may have finished it over the weekend).

Elon might not be human, but damn, is he admirable. The sacrifice, hard work, and mental/physical pain he has gone through to achieve all that he has built across PayPal, SpaceX, Tesla, Neuralink, SolarCity, OpenAI, The Boring Co, X, etc. is unimaginable. So yeah, we can see how some people don’t believe in his mission to mars.. but I have the feeling they might be questioning the wrong guy. Realistically, Elon might just be the closest example (or proof) we have of ‘genius’ existing in modern day.

• Watch/Listen: Walter Isaacson: Elon Musk, Steve Jobs, Einstein, Da Vinci & Ben Franklin, Lex Fridman Podcast

• Related: Intensity and Managing the Beast — At Home and at Work, Dr. Julie Gurner

  • Spoiler alert: Grimes calls the ‘beast’ in Elon “demon mode”

Musings

The battles of the tech cities

• NYC: Primary Ventures Summit VC Market Outlooks on IPOs, Down Rounds, Crypto

• SF: Marc Benioff’s Dreamforce and his Back and Forth on Remote Work 

• LA: All-In Summit Bill Gurley’s Epic 2,851 Miles Keynote on Government Corruption

  • “Gov’t at its best creates the conditions for success & lets private markets compete. At its worst it coerces, picks winners, & hurts consumers. The right balance is tricky - @bgurley brilliantly reminds us about the dangers of reg capture & the value of competition. Epic.” Brad Gerstner of Altimeter Capital

Tech

• Building a Generational Business Databrick by Databrick, Tomasz Tunguz

  • Last week, Databricks announced their Series I financing at $43b. At the same time, they released quarterly figures similar to a public company’s reporting (Snowflake)

• We Need Nuclear NOW, Pirate Wires

• E6: Chad Byers on Why Susa is Returning to Concentrated, Company-Building Seed Investing, Turpentine VC

• **Balaji on How the Tech Tribe Can Save Our Cities - Part 2, Moment of Zen

  • Balaji Srinivasan returns to go deeper into his theory of the Social Lens – dividing the world into Red, Blue, & Gray tribes & offering a roadmap for Gray to take control. Balaji, Erik, & Dan discuss the tactics the Gray tribe can use to create, identify, grow, & scale their power, how the tribal lens maps to geopolitics, the Blue playbook through the last several decades of world history, & more.

CB Insights Founder Anand Sanwal isn’t holding back on X

• Airtable is probably worth less than the total equity funding it has raised

  • “I'm not talking about the $11.7B valuation it raised at in December 2021, I'm talking about it being worth less than the ~$1.4B+ in financing it has raised. Here's the math/data..”

• Flexports current valuation might actually be 80+% lower

  • “Yup - not the $8 billion valuation it last raised at in 2022. But more on the order of $1.41 to $1.58 billion. Ouch … but why?”

Events

• Newcomer and Volley just announced they're hosting the 2nd Cerebral Valley AI Summit on November 15 in SF. The invite-only event will gather prominent AI founders and investors to discuss AI advancements, startup trends, and the industry's future. Featured speakers include Mustafa Suleyman, Reid Hoffman, & Vinod Khosla, among others. You can apply to attend at cerebralvalleysummit.com

. . .

Last Week (9/11-9/15):

Relevant deals include the 60+ deals across stages below. 

I've categorized the deals below into five categories, FinTech, Care, Enterprise & Consumer, HardTech and Sustainability, and ordered from later-stage rounds to early-stage rounds. Highlighted deals include Databricks, Kin Insurance, Moment, Roam, Bold, Carenostics, Co-Helm, Denodo, VideoAmp, Pixis, Linear, Goodles, Lyten, Enfabrica, FloLive, Parade, CO2 AI, Spiritus; Smucker/Hostess, Everton FC

Final numbers on “Mega Fund” Hipgnosis acquired the rights to MEGA hits at the bottom. (PS Does anyone know how artists are paid out in these deals? what % do they typically take home?)

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Deals 

FinTech:

- Kin Insurance, a Chicago, Ill.-based direct-to-consumer home insurance company, raised $33 million in Series D extension funding. QED Investors led the round and was joined by existing investors Geodesic Capital, Allegis Capital, Hudson Structured Capital Management, and Alpha Edison. 

- CertifID, an Austin, Tex.-based wire fraud protection company, raised $20 million in Series B funding from Arthur Ventures.

- Treasury4, a Spokane, Wash.-based enterprise software platform that makes modern tools for treasury and finance practitioners, raised $20M in Series A funding. WestCap led the round and was joined by Cowles Company, Fortson VC, Voyager Capital, Kick-Start Seed Fund, and W.T.B. Financial Corporation. 

- Moment, a New York City-based startup designing tools to make bond trading and fixed-income securities more accessible for firms, raised $17 million in Series A funding from Andreessen Horowitz. 

- Alix, a Los Gatos, Calif.-based platform using A.I. to humanize estate settlement processes, raised $5.5 million in seed funding. Initialized Capital led the round and was joined by Magnify, Scribble, American Family Ventures, and Alumni Ventures. 

- OpenCover, a decentralized insurance startup, raised $4m in seed funding co-led by NFX and Jump Crypto. https://axios.link/3EvG7uu

- Common Trust, an SF-based employee ownership buyout option for small business owners, raised $2.6m in seed funding. Crossbeam Venture Partners led, and was joined by Schmidt Futures. https://axios.link/3rajB7k

- Roam, a New York City-based online platform allowing users to purchase a home with an assumable low-rate mortgage included, raised $1.25 million in seed funding. Keith Rabois led the round and was joined by Eric Wu, Ryan Johnson, and Jana Messerschmidt. 

. . .

Care:

- Bold, a Beverly Hills, Calif.-based platform that provides personalized exercise programs for aging users, raised $17 million in Series A funding. Rethink Impact led the round and was joined by Samsung Next and existing investors Andreessen Horowitz Bio + Health, Khosla Ventures, GingerBread Capital, and Primetime Partners. 

- Carenostics, a Philadelphia-based startup that has developed an AI platform to identify undiagnosed and undertreated chronic disease patients, raised $5 million in seed funding. M13 led the round and was joined by Greatpoint Ventures, Gaingels, and Kurt Hillzinger.

- Gem Specialty Health, a Gem Lake, Minn.-based digital specialty care clinic, raised $5 million in seed funding. HealthTrend Capital led the round and was joined by Base10 Partners and Mairs & Power Venture Capital. 

- Glass Health, a San Francisco-based A.I. powered notebook for clinicians to better manage and prescribe diagnoses and clinical treatments, raised $5 million in seed funding. Initialized Capital led the round and was joined by Tom Lee, Epocrates, Galileo Health, Connor Landgraf, Heather Hasson, and Trina Spear.

- Co:Helm, a New York-based prior authorizations automation startup, raised $3.2m in seed funding, per Axios Pro. Sequoia Capital led, and was joined by Blue Lion Global, Nebular, Ventures Together, Four Acres and Anamcara. https://axios.link/48cnOrS

- Mavida Health, an LA-based maternal mental health platform, raised $1.5m in pre-seed funding led by Lakehouse Ventures, per Axios Pro. https://axios.link/3sPziRN

. . . 

Enterprise & Consumer: 

- Databricks, a San Francisco, Calif.-based platform that allows companies to combine their data, AI, and analytics on one platform, raised $500 million in funding. T. Rowe Price Associates led the round and was joined by Andreessen Horowitz, Baillie Gifford, ClearBridge Investments, Counterpoint Global, Fidelity Management & Research Co, Franklin Templeton, GIC, Octahedron Capital, and Tiger Global.

- Denodo, a Palo Alto, Calif.-based platform for data integration, management, and delivery, raised $336 million in Series B funding from TPG. 

- VideoAmp, a Los Angeles and New York City-based adtech company that amasses audience data intended to help companies create more informed and better planned advertising, raised $150 million in Series G funding from Vista Credit Partners. 

- Pixis, a Chicago-based marketing platform using AI to enhance marketing strategies, raised $85 million in Series C1 funding. Touring Capital led the round and was joined by Grupo Carso, General Atlantic, Celesta Capital, and Chiratae Ventures.

- HiddenLayer, a Leander, Texas-based ML security startup, raised $50m, per TechCrunch. M12 and Moore Strategic Ventures co-led, and were joined by Booz Allen Hamilton, IBM, Capital One and TenEleven. https://axios.link/3r9wb6Q

 - Linear, a Covina, Calif.-based platform for managing software project workflows, raised $35 million in Series B funding. Accel led the round and was joined by Sequoia Capital, 01Advisors, and others.

- Druid, a Romanian developer of business chatbots, raised $30m in Series B funding. TQ Ventures led, and was joined by Smedvig Capital, GapMinder, Hoxton Ventures and Karma Ventures. https://axios.link/3PeaNoU

- Duckbill, a Boston, Mass.-based company developing an online personal assistant powered by AI and humans, raised $25 million in Series A funding. Forerunner led the round and was joined by General Catalyst, Inspired Capital, Greycroft, G9 Ventures, and Offline Ventures. 

- ELSA, a San Francisco-based machine learning and speech recognition technology for teaching English, raised $23 million in Series C funding. UOB Venture Management, UniPresident, Asia Growth Investment Fund and were joined by Gradient Ventures , Monk’s Hill Ventures, and Globant Ventures. 

- Binalyze, a Tallinn, Estonia-based digital forensics and incident response solutions provider, raised $19 million in Series A funding. Molten Ventures led the round and was joined by Earlybird Digital East, OpenOcean, Cisco Investments, Citi Ventures, and Deutsche Bank Corporate Venture Capital.

- Zenity, a Tel Aviv, Israel-based security platform for applications with little to no code, raised $16.5 million in Series A funding. Intel Capital led the round and was joined by Vertex Ventures, Upwest, Gefen Capital, and B5. 

- Exostellar, an Ithaca, N.Y.-based cloud spend optimization platform, raised $15m in Series A funding. Celesta and Cambium Capital co-led, and were joined by Alpha Intelligence Capital. https://axios.link/3LLiMcn

- Ello, a literacy app for kids, raised $15m in Series A funding. Goodwater Capital led, and was joined by Reed Hastings, Common Sense Growth, Homebrew and Ravensburger. https://axios.link/3Lhc1Pb

- Goodles, a Santa Cruz, Calif.-based noodle brand, raised $13m in Series A funding led by L Catterton. www.goodles.com

- Series AI, a San Francisco-based company developing AI-powered tools to build video games, raised $7.9 million in seed funding from A16Z GAMES, BITKRAFT, F4 Fund, and the Siqi Chen Access Fund.  

- Mindtrip, a San Francisco-based company employing A.I. to aid in travel planning, raised $7 million in seed funding from Costanoa Ventures.

- Gable.ai, a Seattle, Wash.-based collaboration platform for software and data developers to build and manage data sets together, raised $7 million in seed funding. Zetta Venture Partners, Crane Venture Capital, and Essence Venture Capital led the round and were joined by angel investors The New Normal Fund, Monte Carlo, Hex, and others.  

- Sailes, a Kansas City, Mo. and New York City-based startup developing an AI bot to automate the prospecting process for sales teams, raised $5.1 million in Series A funding. Lewis & Clark Ventures led the round and was joined by Acronym Venture Capital, Tenzing Capital, and existing investors KCRise Fund and Valor Ventures.

- Prewitt Ridge, a Los Angeles-based engineer automation software developer, raised $4.1 million in seed funding. Squadra Ventures led the round and was joined by Stage Venture Partners, Aurelia Foundry, Wonder Ventures, Haystack, Acequia, TechStars, GC&H, and angel investors.

- Movement Labs, a New York City-based company designing blockchains that are intended to make communication between chains easier, raised $3.4 million in pre-seed funding. Varys Capital, dao5, Blizzard The Avalanche Fund, and Borderless Capital led the round and were joined by Colony, Interop Ventures, Elixir Capital, BENQI, and others. 

- SaaSGrid, a San Francisco and New York City-based data and analysis platform for SaaS metrics, raised $3.3 million in seed funding. Craft Ventures led the round and was joined by angel investors.

- Patronus AI, a New York City-based platform that monitors and evaluates the efficiency of companies’ large language and AI models, raised $3 million in seed funding. Lightspeed Venture Partners led the round and was joined by Factorial Capital and others. 

- Science On Call, a tk-based AI-powered help desk for restaurants, raised $2.6 million in seed funding. York IE led the round and was joined by Bread & Butter Ventures, Relish Works Capital Investments, Groove Capital, Connetic Ventures, Redstick VC, and Phoenix Club. 

. . .

HardTech:

- Lyten, a San Jose, Calif.-based manufacturer of materials used in lithium-sulfur batteries for the automotive, aerospace and defense markets, raised $200 million in Series B funding. Prime Movers Lab led the round and was joined by Stellantis, FedEx Corporation, Honeywell, Walbridge Aldinger Company, and others.

- Enfabrica, a Mountain View, Calif.-based silicon and software company that provides the networking and chips for AI functions, raised $125 million in Series B funding. Atreides Management led the round and was joined by Sutter Hill Ventures, NVIDIA, IAG Capital Partners, Liberty Global Ventures, Valor Equity Partners, Infinitum Partners, and Alumni Ventures.

- Mighty Buildings, an Oakland, Calif.-based maker of 3D-printed homes, raised $52m. Waed Ventures and Bold Capital co-led, and were joined by Kholsa Ventures. https://axios.link/3Rd68Gs

- FloLive, a London-based IoT connectivity startup, raised $47m in Series C funding. Greenfield Partners and insider 83North co-led, and were joined by Qualcomm Ventures, Dell Technologies Capital, Saban Ventures and Hazelnut Partners. https://axios.link/3rfWiZF

- Heliene, a Sault Sainte Marie, Canada-based solar panel manufacturer, raised $20 million in funding from Orion Infrastructure Capital, 2Shores Capital, Valta Energy, and Bullrock Reneweables. 

- Prisma Photonics, a Tel Aviv, Israel-based startup using AI to monitor and manage large scale infrastructure, like power grids, raised $20 million in Series C funding. Insight Partners led the round and was joined by Elements, SE VEntures, Future Energy Ventures, Chione Switzerland, and INcapital.

- Parade, a San Francisco-based platform for booking and managing freight trucks, raised $17 million in pre-Series B funding. I Squared Capital led the round and was joined by existing investors Menlo, Greenhawk Capital, Jones Capital, The House Fund, Operator Stack, and angel investors. 

- DetraPel, a Boston, Mass.-based sustainable coatings manufacturer, raised $7.6 million in Series A funding. Material Impact led the round and was joined by INX International, Touchdown Ventures, FitzGate Ventures, Boro Capital, Icebook Investments, and others. 

. . .

Sustainability:

- Optera, a Boulder, Colo.-based ESG and carbon management software provider, raised $12 million in Series A funding. Next Frontier Capital led the round and was joined by Blackhorn Ventures, Mucker Capital, Overture, Engage, Massive, SaaS Ventures, Valo Ventures, AngelList, and Stout Street Capital.

- CO2 AI, a Paris, France-based platform where companies can measure their carbon use and explore ways to reduce it, raised $12 million in seed funding. Unusual Ventures led the round and was joined by Partech. 

- Spiritus, a White Rock, N.M.-based climate company creating carbon removal technology, raised $11 million in funding. Khosla Ventures led the round and was joined by Page One Ventures and others.

- florrent, an Amherst, Mass.-based company developing high-energy density ultracapacitor technology to stabilize electrical grids and make renewable energy adoption more efficient, raised $2.1 million in seed funding. MassVentures led the round and was joined by MassMutual Catalyst Fund, AIN Ventures, Tale Venture Partners, NextFab Ventures, Boston Impact Initiative, and others. 

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Acquisitions & PE: 

- J.M. Smucker agreed to acquire Hostess Brands, a Lenexa, Kan.-based snacks company and maker of Twinkies, for $5.6 billion including debt. 

- 777 Partners of Miami agreed to buy Everton FC, a Premier League club based in Liverpool. https://axios.link/44Ws2AZ

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Funds:

- Cendana Capital raised $470m for new funds-of-funds focused on seed-stage managers. https://axios.link/3Pd0e5F

- 9900 Capital, an early-stage VC firm co-founded by Christopher Corbishley (ex-Hedosophia) and Rory Mounsey-Heysham (ex-Gates Foundation), raised $100m for its debut fund. https://axios.link/4671huF

- Sierra Ventures raised $265m for its 13th fund, focused on seed and Series A deals for B2B startups. www.sierraventures.com

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Hits don’t lie

Hipgnosis Songs Fund — a music mega fund that's spent the last 5 years and more than $2 billion acquiring the intellectual property rights to more than 65,000 songs — has announced that it's selling ~20% of its portfolio for $465m.

Entire song collections from Shakira, Barry Manilow, and Nelly will change hands in the deal, as the fund seeks to cut debts and buy back shares with the proceeds generated by the 29-catalog sale announced last week.

The idea behind the UK-based fund is simple. Founder Merck Mercuriadis believes that hit songs are actually long-term predictable assets that, in most cases, will hold their value for decades to come — particularly as streaming continues to be the rising tide lifting all boats.

Born to run deals (Shoutout to Cory if you read this far!)

Hipgnosis’s aggressive deal-making has contributed to the trend of songwriters cashing in on their copyrights. The allure of big lump-sum payments, rather than royalties spread over decades, is obvious. Some of the biggest names in music, including Bruce Springsteen and Bob Dylan, have reportedly received $500m and $300m for selling off their respective songbooks.

Funds like Hipgnosis are comfortable shouldering the risk, and the rewards, associated with the future value of their music. But in HSF’s case, they might have slightly overstuffed their playlist just at the wrong moment: a pivotal vote in October determines whether shareholders will back the fund for another 5 years, or completely stop the music.

. . .

The material presented on Molly O’Shea’s website are my opinions only and are provided for informational purposes and should not be construed as investment advice. It is not a recommendation of, or an offer to sell or solicitation of an offer to buy, any particular security, strategy, or investment product. Any analysis or discussion of investments, sectors or the market generally are based on current information, including from public sources, that I consider reliable, but I do not represent that any research or the information provided is accurate or complete, and it should not be relied on as such. My views and opinions expressed in any website content are current at the time of publication and are subject to change. Past performance is not indicative of future results.