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OpenAI, Multimodal ChatGPT, Aliens ☀️ AlphaSense, Farther, Slope, Series, Mundi, Crediverso, Alto Pharmacy, Midi Health, Cartwheel, Transfr, Lumu, Gem Security, Nx, Nextdata, Nexusflow, Echomark
Welcome to October! (woah, spooky)
For newer readers, I have to acknowledge that this is not solely a HardTech or Aerospace & Defense (“AD”) newsletter, we cover all tech trends + deal announcements, but it just so happens to be that we’ve been having a bit of a moment here in LA. And it’s pretty exciting!
I, for one, focus on early stage B2B software - but as a generally curious person with a newsletter that often leads me to interesting & unexpected rabbit holes like this. It also provides fun stories to apply/share with the tech world.. check out our newsletters on: The Rise of LA Tech, US Open at LACC, LK99, Coachella, Bruce Springsteen in Barcelona, Kentucky Derby
Aliens at Dinner
That being said, our AD team at Upfront, Partner Nick Kim & Jacques, did host a HardTech dinner last week in a secret dark room in Beverly Hills around a large mahogany dining table, with some of LA’s leaders, and delicious Italian cuisine. (wow, we even got an alien there!?)
Guests included Founders, Investors, & Operators, from Epirus, USIT, OpenX, Space VC, Xona Space, Relativity, Embedded Ventures, Riot, 645 Ventures, & Rangeview. P.S. the squash blossoms, focaccia, cacio e pepe, & veal bolognese were incredible (yes, there was cake - sorry Xander, Jordan & Ben). Big shoutout to Lacey for making it happen!
Speaking of Rangeview, Jacques and I got a tour of their factory from its Founder Cameron before we headed to a very “based” “off the record” event (or as they say “in Minecraft”) Saturday evening in El Segundo. If you want to check the factory out yourself, Rangeview was also recently featured in S³ a weekend startup docuseries created by Jason Carmen of Astranis - video tour on X here. It’s quite impressive.
Lastly, congrats to Fil & team Dirac on their public launch 🚀 out of stealth! Dirac’s BuildOS product is the first AUTOMATED Work Instruction platform. Changing the way manufacturing engineers draft work instructions. Check out their announcement on X here.
. . .
Softbank’s Masa eyes $1B investment into OpenAI..
We are so back
We may have overconsumed information in the last week due to all the exciting momentum in the tech ecosystem. Most of this energy is driven by $ going into AI, supply/demand of the current “boom” cycle (ie. AI/LLMs, access to GPUs, & server costs), multimodal ChatGPT, and a thoughtful conversation with the other Altman, Jack Altman, Co-Founder & CEO of Lattice on Logan Bartlett’s podcast.
ChatGPT creator in early discussions to create the ‘iPhone of artificial intelligence’
Potential sale would value startup at roughly 3x where it was set earlier this year
The e-commerce group said it will initially invest $1.25 billion for a minority stake in Anthropic, which like Google’s Bard and Microsoft-backed OpenAI also operates an AI-powered, text analyzing chatbot. As part of the deal, Amazon said it has an option to increase its investment in Anthropic to a total of $4 billion.
Big Tech Roundup (OpenAI & ChatGPT, Meta, Spotify), Animal AI, Nuclear Microsoft, Helion, Frank the Tank, Not Boring by Packy McCormick
Packy breaks down the top headlines of last week → not to miss: Frank Rubio returns to earth after having spent over a year (371 days!) in space
Do We Really Have Too Much AI Infrastructure? Looking at capex from a historical perspective, Vivek Ramaswami & Sabrina Wu
This is a fantastic breakdown of the current “AI revolution” against historical industrial revolutions, also highlighting key players (ie. LLMs, private clouds, models, data processors, etc). All in all, we are really living in an exciting period!
I think about this Tweet by Matt Turck, GP at FirstMark in NYC who specializes in data, a fair amount. There are deep discussions around the advances in AI, data, and models, and then there are larger implications like GPU demand planning, access, usage, etc. that are just almost impossible to predict. (However, Vivek & Sabrina’s piece above does link to this point with GPU supply ultimately getting filled in the time of the crypto boom.)
Centaurs & Cyborgs : The Jagged Frontier of AI, Tomasz Tunguz
Jack Altman on Founding Lattice ($3B), Motivating Employees and Growing up with Sam, The Logan Bartlett Show
“49/50 the most important [company] innovation is a better product.. choose from PLG self serve or enterprise marketing.. most software companies, the structure of them, is so similar that the way to go to market (“GTM”) is going to look like 1/5 blueprints and so trying to create a 6th is just not worth the time and effort” → innovate on product, talk to customers
“People rise to the expectations you hold for them whether they’re high or low. Doubting and coddling can lead to subpar performance. Expressing confidence in someone's abilities encourages them to excel. As a manager, your goal is to set people up so they feel like you believe and trust in their capabilities.” → it is scientifically proven encouragement & acknowledging ‘working hard’ improves performance over regular negative feedback ⬇️
How to Enhance Performance & Learning by Applying a Growth Mindset, Huberman Lab Podcast
Our internal narratives drive our ability to make progress. Dr. Huberman describers the contrast between growth mindset vs. the fixed mindset, how the type of feedback or praise we receive shapes our mindsets, and the huge advantage of rewarding and celebrating “verbs” (actions - ‘hard worker’) rather than adjectives (performance labels - ‘smart’).
Rates Keep Going Up / Implications on Software Valuations, Clouded Judgement by Jamin Ball
Rates continue to push higher, as the aftershock of the Fed’s “Higher for Longer!!” messaging reverberates through the markets
American Cities in Crisis, Pirate Wires
. . .
Last Week (9/25-9/29):
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 AlphaSense, Farther, Slope, Series, Mundi, Crediverso, Alto Pharmacy, Midi Health, Cartwheel, Transfr, Lumu, Gem Security, Nx, Nextdata, Nexusflow, Echomark, UserEvidence, Correcto, The Grand, Invoke AI, Verisoul, Sierra Space, Arc, Kneron, Neara, UnitX; Proplanner, Shopify/Faire, Wonder/Blue Apron
Final numbers on Amazon’s Quiet Giant Ad Business at the bottom.
- Farther, a New York-based wealth management startup, raised $31m in Series B funding. Lightspeed Venture Partners led, and was joined by Bessemer Venture Partners, Cota Capital, Khosla Ventures, MassMutual Ventures and Moneta VC. https://axios.link/3ZBlxCr
- Slope, a San Francisco-based platform for business-to-business payments and financing, raised $30 million in funding. Union Square Ventures led the round and was joined by Sam Altman, Y Combinator, and others.
- Series, an SF-based enterprise OS for automating business and finance stacks, raised $25m in seed and Series A funding from 776, Basis Set Ventures, PearVC, Kleiner Perkins, Day One Ventures, Hustle Fund, Caffeinated Capital and Wischoff Ventures. https://axios.link/3PpfjRq
- IYK, a developer of NFT infrastructure for fashion brands, raised $16.8m in seed funding led by Andreessen Horowitz. https://axios.link/46tGu4x
- PortX, a Mercer Island, Wash.-based platform designed to simplify the management of and access to financial data, raised $16.5 million in Series B funding. FUSE and Curql led the round and were joined by BankTech Ventures, EJF Capital, and the Btech Consortium.
- Mundi, a New York City-based platform designed for companies to make efficient international payments, raised $15 million in a Series A extension. Haymaker Ventures led the round and was joined by Union Square Ventures, GMO Ventures, Upper90, Colibri Ventures, Base10, Asymmetric Capital Partners, Gaingels, Mana Ventures, and GSBackers.
- Grow Credit, a Santa Monica, Calif.-based platform designed to help users build credit by giving them a credit card to use for subscription payments only, raised $10 million in Series A funding from USAA.
- Pontoro, a Mountain View, Calif.-based company designing a platform that is intended to provide private investors with enhanced customization and liquidity, raised $4.6 million in additional seed funding. Ulu Ventures led the round and was joined by Illuminate Financial, Nevcaut Ventures, W11 Capital, and others.
- Avantis Labs, a New York City-based platform where institutional and retail investors can trade crypto and real-world assets on a decentralized exchange, raised $4 million in seed funding. Pantera Capital led the round and was joined by Founders Fund, Galaxy, Base Ecosystem Fund, and Modular Capital.
- Crediverso, a Los Angeles, Calif.-based company providing free financial and educational tools to underserved communities, raised $3.5 million in pre-Series A funding from Torch Capital, Gaingels, Bessemer Venture Partners, and Act One Ventures.
- FlexPoint, a Minnetonka, Minn.-based automatic billing and payment platform, raised $2.4 million in funding. Garuda Ventures led the round and was joined by Far Out Ventures, Techstars, Cascade Seed Fund, Lorimer Ventures, and others.
. . .
- Alto Pharmacy, an SF-based online pharmacy, raised $120m in new funding, per Axios, BFD flashback.
- Midi Health, a Menlo Park, Calif.-based virtual menopause care platform, raised $25 million in Series A funding. GV Ventures led the round and were joined by Felicis, Semper Virens, Icon, 25M, and Operator Collective.
- Cartwheel, a Cambridge, Mass.-based platform that offers telehealth services to students struggling with mental health issues, raised $20 million in Series A funding. Menlo Ventures led the round and was joined by Reach Capital and existing investors General Catalyst, BoxGroup, and Able Partners.
- Evvy, a New York City and London, U.K.-based vaginal health testing and care provider, raised $14 million in Series A funding. Left Lane Capital led the round and was joined by General Catalyst, Labcorp Venture Fund, RH Capital, Ingeborg Investments, G9 Ventures, Virtue, and Amboy Street Ventures.
- Meeno, a San Francisco-based AI-powered app that gives relationship advice to users, raised $3.9 million in seed funding. Sequoia Capital led the round and was joined by AI Fund and NEA.
. . .
Enterprise & Consumer:
- AlphaSense, a New York-based market intelligence and search platform, raised $150m in Series E funding at a $2.5b valuation. Bond led, and was joined by CapitalG, Viking Global, BAM Elevate and Goldman Sachs. https://axios.link/3PUocUz
- Transfr, a provider of VR-based skills training solutions, raised $40m in Series C funding. ABS Capital led, and was joined by Chase Impact Finance & Advisory, Lumos Capital Group, Akkadian Ventures, Spring Tide Capital and Firework Ventures. https://axios.link/3EZdExn
- League One Volleyball, a Los Angeles, Calif.-based youth volleyball brand and professional volleyball league, raised $35 million in Series B funding. Left Lane Capital led the round and was joined by Ares Management Funds and others.
- Lumu, a Doral, Fla.-based enterprise cybersecurity startup focused on real-time compromises, raised $24m in Series B equity funding (plus $6m in debt) led by Forgepoint Capital. https://axios.link/46tDN2S
- Gem Security, a New York City-based platform that detects and responds to cloud security risks, raised $23 million in Series A funding. GGV Capital led the round and was joined by IBM Ventures, existing investor Team8, and angel investors.
- Nx, a Gilbert, Ariz.-based coding platform providing tools to web and software developers, raised $16 million in Series A funding from Nexus Venture Partners and a16z.
- Canvs AI, a New York City-based platform using AI to analyze customer and employee feedback, raised $15 million in funding. Fulcrum Equity Partners led the round and was joined by Engage.
- Kolena, an SF-based provider of AI model testing tools, raised $15m. Lobby Capital led, and was joined by SignalFire and Bloomberg Beta. https://axios.link/3RwOain
- Nextdata, an SF-based platform for building and sharing data products, raised $12m in seed funding co-led by Greycroft and Acrew Capital. www.nextdata.com
- Nexusflow, a Palo Alto, Calif.-based company developing an AI model that can automate cybersecurity processes and securely analyze data, raised $10.6 million in seed funding. Point72 Ventures led the round and was joined by Fusion Fund and others.
- Revefi, a Seattle, Wash.-based platform for management and analysis of large data sets, raised $10.5 million in seed funding. Navin Chaddha led the round and was joined by GTMfund, Neythri Futures Fund, Ajeet Singh, and others.
- Erudit, a Miami, Fla.-based AI-powered company designed to track employee engagement, raised $10 million in Series A funding from Conexo Ventures, Athos Capital, Ignia Partners, True Blue Partners, and Fondo Bolsa Social.
- Echomark, a Kirkland, Wash.-based data security company, raised $10 million in seed funding from Craft Ventures.
- UserEvidence, a Jackson Hole, Wyo.-based AI platform that automatically generates social content, case studies, and aggregates customer feedback, raised $9 million in Series A funding. Crosslink Capital led the round and was joined by Founder Collective, Afore, and Next Frontier Capital.
- XL8, a San Jose, Calif.-based AI platform that translates media content into different languages, raised $7.5 million in Series A funding. KB Investment led the round and was joined by Atinum Investment.
- Correcto, a Madrid-based developer of a language writing tool for Spanish speakers, raised $7m in seed funding. Octopus Ventures led, and was joined by Carya Venture Partners and River Park Ventures. https://axios.link/3LBZAO9
- Digma, a Santa Clara, Calif.-based platform designed to monitor and analyze code for risks to help engineers work efficiently, raised $6 million in seed funding. at.inc/ and Sorenson Ventures led the round and were joined by Abstraction Capital, Inner Loop Capital, Hetz Ventures, and angel investors.
- The Grand, a New York-based leadership coaching platform, raised $4.7m led by Seven Seven Six Fund. www.thegrand.world
- Rayon, a Paris, France-based company developing a collaborative architectural design platform, raised €4 million ($4.2 million) in seed funding. Northzone and Foundamental led the round and were joined by existing investor Foundamental and angel investors.
- Axial Shift, an Austin, Texas-based app that offers sales insights and labor management for restaurant workers and managers, raised $4 million from Silverton Partners.
- Invoke AI, an Atlanta, Ga.-based platform that enables artists and creatives to create visual content collaboratively or render it with the help of AI, raised $3.75 million in seed funding. Storm Ventures led the round and was joined by SignalFire and Universe Software.
- Verisoul, an Austin, Texas-based platform designed to help companies detect fake users and accounts, raised $3.25 million in seed funding. BITKRAFT Ventures led the round and was joined by King River, Third Prime, Haskey, and Mike Monovoukas.
- TeachMe.To, a San Diego, Calif.-based platform that connects sports players with local coaches for lessons, raised $2 million in seed funding. 1984 Ventures led the round and was joined by Common Metal, Alumni Ventures, and angel investors.
- Breezit, a Los Angeles, Calif.-based marketplace that connects clients with event planners, raised $2 million in pre-seed funding. Practica Capital led the round.
. . .
- Sierra Space, a Louisville, Colo.-based company building space transportation vehicles and habitats in space, raised $290 million in Series B funding. MUFG, Kanematsu Corporation, and Tokio Marine & Nichido Fire Insurance led the round and were joined by existing investors.
- Arc, a Los Angeles, Calif.-based company that manufactures and sells electric boats, raised $70 million in Series B funding. Eclipse led the round and was joined by Menlo Ventures and existing investors Andreessen Horowitz, Lowercarbon Capital, and Abstract Ventures.
- Kneron, a San Diego-based AI chip developer for self-driving cars, smart home products, and security products, raised $49 million in funding from Foxconn, Alltek, and others.
- Neara, a Sydney, Australia-based modeling platform that uses AI to create 3D models and simulations for electricity network infrastructure, raised $24 million in Series B funding from Prosus Ventures, Skip Capital, and Square Peg Capital.
- Infravision, a Sydney, Australia-based company that builds drones and software to automate power line construction, raised $23 million in Series A funding. Energy Impact Partners led the round and was joined by Equinor Ventures and Edison International.
- UnitX, a San Jose, Calif.-based developer of AI vision systems for manufacturing robotics, raised $5m from SE Ventures. www.unitxlabs.com
. . .
Unusually very quiet on US sustainability deal front this week.. Nothing major to report, but if I’m wrong reply to the email and I’ll share next week
Acquisitions & PE:
- Advantive acquired Proplanner, an Ames, Iowa.-based manufacturing consulting and solutions provider. Financial terms were not disclosed.
- Capstreet acquired PlanetBids, a Studio City, Calif.-based platform designed to help organizations automate and manage the bidding process for goods, services, and construction projects. Financial terms were not disclosed.
- ToolsGroup, backed by Accel-KKR, acquired Evo, a London, U.K.-based company that provides companies with AI models designed to help managers make better business decisions. Financial terms were not disclosed.
- Shopify (TSX: SHOP) invested an undisclosed amount in Faire, an SF-based curated wholesale marketplace previously valued at over $12b by VC firms like Sequoia Capital and Dragoneer. https://axios.link/3PSDxF8
- Wonder, a food truck company founded by Marc Lore, agreed to buy meal kit company Blue Apron for $103m in cash, or $13 per share (137% premium to yesterday's closing price). Wonder last year raised $350m in Series B funding at a $3.5b pre-money valuation led by Bain Capital Ventures.
- Industry Ventures raised $1.45b for its 10th VC secondaries fund, plus $260m for its second fund focused on direct investments in software companies. https://axios.link/46jO55W
- FUSE, a Seattle, Wash.-based venture capital firm, raised $250 million for its second fund focused on AI-enabled startups and software developers.
- Mercury Fund, an early-stage VC firm focused on SaaS startups, raised $160m for its fifth fund. https://axios.link/3ruenDw
Amazon Prime Video has joined the growing slew of streamers with ad-supported offerings, announcing plans to roll out the new tier in the US in early 2024. The service will set users back an extra $2.99 a month if they want to carry on enjoying The Marvelous Mrs. Maisel or The Boys ad-free.
It all ads up
Amazon has said that the limited ads will allow the company to continue its content spending, which soared 28% to $16.6 billion in 2022, after splashing out on mega shows like The Rings of Power. While commercial breaks might be new to Prime Video, advertising has been a burgeoning segment in Bezos’s behemoth for some time. Indeed, in the most recent quarter, ads on Amazon brought in nearly $10.7 billion, up 22% on last year. That haul makes it one of the largest advertising businesses in the world — bigger than YouTube, Snapchat and Twitter (now X), which combined for just $9.3bn of ad revenue in their most recent quarters.
Remarkably, Amazon’s ad business only made up ~8% of its whopping $134 billion net sales for the period, and some industry experts believe that margins in the ad division could be “well over 50%”, which would mean it brought in as much operating profit as the company's much-lauded AWS business in 2022.
Prime Video ads, on the other hand, are likely to be a lot less lucrative, as they won’t be shown to people with what the marketing industry calls “high intent”. When you search for “air fryer”, and Amazon shows you a sponsored air fryer brand in the search results, there’s a much higher chance that you’ll buy it than if you’d just seen it between episodes of your favorite show.
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.