From TechCrunch
By Haje Jan Kamps
May 31, 2024
Startups Weekly: Musk raises $6B for AI and the fintech dominoes are falling
Welcome to Startups Weekly — Haje‘s weekly recap of everything you can’t miss from the world of startups. Sign up here to get it in your inbox every Friday.
In a twist that shocks absolutely no one and thrills pyromaniacs who love seeing money burn, Elon Musk’s newest venture, xAI, has snagged a casual $6 billion in funding. Valor, a16z, and Sequoia are stacking the money on the xAI-shaped roulette table, with Musk spinning the wheel.
Ivan ponders whether Musk’s latest market stab will finally bring us an AI so advanced, our puny human brains will be even more obsolete than they already are thanks to his other wild projects.
I think it’s completely bonkers. These investors seem to overflow with cash and are fresh out of skepticism. I can only imagine the pitch: “Picture an AI so powerful, it makes HAL 9000 look like a Roomba.” And, naturally, they threw money at it. Because, well … Honestly, I can’t see the logic.
What makes this particularly nuts is that the $6 billion bonanza is just the latest chapter in Musk’s epic saga of “how to get the world to fund my sci-fi fantasies.” The more stories that come out about Musk, the more you’d think people would start to hesitate before investing. But apparently, this is why I’m a newsletter writer and podcast host (we talked about this on Equity today as well) and not a VC. I’d think twice before betting on the guy who gave us self-driving cars that fail to spot fire trucks and spacecraft that sometimes land but also sometimes explode in a fiery spectacle.
Today is your last day to save up to $800 on your Disrupt pass. Book your early-bird pass by 11:59 p.m. PT tonight!
Most interesting startup stories from the week
Welcome to the Wild, Wild West of fintech! Remember that bright shiny star called Synapse? Yeah, it supernova’d. The banking-as-a-service startup was a segment that seemed to be careening toward the stratosphere, and Synapse itself was backed by a16z — but that didn’t help any. The company collapsed faster than my New Year’s resolutions. With 10 million consumers now left in the lurch and many fintechs scrambling to pick up the pieces, it’s a full-blown catastrophe out there. It’s like “Game of Thrones” but with more spreadsheets and fewer dragons. If you thought your week was rough, spare a thought for those stuck trying to access their funds or save their jobs thanks to this mess. Buckle up — it will be a bumpy ride ahead for fintech!
Early Bird Sale | Last Day To Save
Early Bird Sale | Last Day To Save
- Drama rides a motorcycle: James Khatiblou, the 37-year-old owner and CEO of Onyx Motorbikes, passed away just as his company was circling the drain. With unpaid bills, an AWOL COO, angry customers demanding refunds for delayed e-bikes from China, and two former shareholders battling for control over Onyx’s remaining assets … This is a hell of a ride.
- Job cuts in automotive land: Lucid Motors is trimming the fat yet again, laying off 400 employees (6% of its workforce) just in time for the launch of their first SUV. Apparently, they need to “optimize resources.” CEO Peter Rawlinson believes a lower headcount will help deliver the world’s best SUV … Meanwhile, Fisker has laid off hundreds in a desperate bid for survival. Employees got the hint when they were suddenly told to work from home — presumably so no one could hear the collective sighs of despair during the all-hands meeting.
- Raising cash to save cash: Relay just pulled off a $32.2 million Series B funding round to help small businesses do more than just nervously refresh their bank balances. Their secret sauce? Focusing on the mom-and-pop shops rather than tech startups — take that, Silicon Valley!
Most interesting fundraises this week
Firefly, the cloud asset management startup that’s all about simplifying your digital chaos with “infrastructure as code,” has snagged $23 million in funding. This comes after an unimaginable tragedy — co-founder CTO Joseph “Sefi” Genis was killed by Hamas at a music festival. Despite this, Firefly’s team chose resilience over retreat and continued to grow their revenue fourfold in 2023. So basically, Firefly is now untangling cloud complexities and navigating through real-world turmoil like absolute champs.
- That’s flippin’ great: Google just dropped a casual $350 million into Flipkart, making it the latest VIP to back the Indian e-commerce powerhouse, which now has a valuation of $36 billion.
- You get a dinero! You get a dinero!: Sending money back home just got a whole lot chattier! Félix Pago, the fintech darling that’s making remittances as easy as sending a WhatsApp, just snagged $15.5 million in funding. Forget downloading apps or navigating complex interfaces; this startup is using WhatsApp’s chatbot.
- A dictionary with a unicorn horn: More funding is being poured into startups focused on AI. DeepL, which builds automated text translation and writing tools that compete against the likes of Google Translate and Grammarly raised an additional $300 million. It is now valued at $2 billion.
Other unmissable TechCrunch stories…
Dreaming of tech IPO bonanzas in 2024? Well, wake up and smell the elevated interest rates! Despite Reddit, Astera Labs, Ibotta, and Rubrik managing to squeeze through the IPO door earlier this year, it looks like most startups are still stuck at home in their PJs. Plaid’s CEO declared they’re staying private for now, and Figma and Stripe are busy with tender offers like they’re hosting a bake sale instead of prepping for an IPO. Databricks raised $500 million but isn’t feeling the public market vibes either; maybe next year they’ll feel more extroverted. And Canva? They might take so long to go public that we’ll be designing newsletters directly from our brain implants by then. Stay tuned as TechCrunch continues to track which startups will brave the stock market runway or stay hidden behind their venture capital curtains!
More top stories:
- What’s happening in messenger land: Meredith Whittaker, the president of Signal, has had it up to here with tech industry “frat boys” and their “dorm room high jinks.” At VivaTech in Paris, she didn’t hold back on her concerns about everything from AI power grabs by U.S. companies to the EU’s misguided attempts at regulation.
- AI in your ears: Welcome to the battle of generative AI gadgets, now featuring Iyo’s GenAI earbuds! Humane and Rabbit R1 flopped harder than a fish out of water, but Iyo thinks it can succeed where they stumbled. Unlike its predecessors’ bizarre lapel pins and overpriced handhelds that critics said should’ve just been apps, Iyo is betting on an already beloved form factor: Bluetooth earbuds.
- Dude, where’s my wallet?: Is it a bird? Is it a plane? No, it’s the Ledger Stax, finally descending from the crypto heavens 18 months after its grand announcement. This new high-end hardware wallet features an E Ink display designed by iPod guru Tony Fadell — yes, they’re bringing back e-reader vibes for your crypto needs.
- Wait, Foursquare had 105 staff to lay off?: Foursquare just gave 105 employees the boot in a bid to “streamline” operations and put itself on firmer financial footing. CEO Gary Little, who might as well have hit send and then vanished into thin air, didn’t shed much light on what comes next.
- Let me summarize that for you: It looks like Apple is back to its old tricks, ready to “sherlock” another innovative app feature. This time, it’s The Browser Company’s Arc that’s in the crosshairs with its snazzy AI summarization tools like “browse for me” and “pinch to summarize.” Apple’s rumored “smart recaps” in iOS 18 sound suspiciously similar, potentially turning Safari into a one-stop shop for AI-powered summaries of everything from web pages to missed notifications.
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