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In a twist that shocks absolutely no one and delights arsonists who like to see money burn, Elon Musk’s latest venture, xAI, has attracted $6 billion in incidental funding. Valor, a16z and Sequoia are putting money on the roulette table in the form of xAI, and Musk is spinning the wheel.
Ivan ponders whether Musk’s latest market foray will finally bring us such advanced artificial intelligence that our feeble human brains will be even more obsolete than they already are thanks to his other wild projects.
I think it’s completely crazy. These investors seem to be awash in cash and have just lost their skepticism. I can just imagine the pitch: “Imagine an AI so powerful it makes the HAL 9000 look like a Roomba.” And, of course, they threw money at it. Because, well… Honestly, I don’t see the logic.
What makes this especially crazy is that the $6 billion fortune 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 that’s why I’m a newsletter writer and podcast host (we talked about it today at Equity too) and not a VC. I’d think twice before betting on the guy who gave us self-driving cars that don’t spot fire engines and spaceships that sometimes land but sometimes explode in a fiery spectacle.
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The most interesting startup stories of the week
Welcome to the wild, wild west of fintech! Remember that bright shining star called the Synapse? Yes, it’s a supernova. Startup banking as a service was a segment that seemed to be plummeting into the stratosphere, and Synapse itself was backed by a16z — but that didn’t help. The company failed faster than my New Year’s resolutions. With 10 million consumers now left in the lurch and many fintech companies scrambling to pick up the pieces, it’s a disaster. It’s like Game of Thrones, but with more spreadsheets and fewer dragons. If you thought you had a rough week, spare a thought for those who are stuck trying to access their funds or save their jobs thanks to this mess. Buckle up — it’s going to be a rough ride for fintech!
- Drama drives the motorcycle: James Khatiblou, the 37-year-old owner and CEO of Onyx Motorbikes, died just as his company was going down the drain. With unpaid bills, an AWOL COO, angry customers demanding refunds for delayed e-bikes from China, and two former shareholders fighting for control of Onyx’s remaining assets… It’s been one hell of a ride.
- Abolition of jobs in the automotive industry land: Lucid Motors is downsizing again, laying off 400 employees (6% of its workforce) just in time for the launch of its first SUV. Apparently, they need to “optimize resources”. CEO Peter Rawlinson believes the smaller workforce will help create the world’s best SUV… Meanwhile, Fisker has laid off hundreds in a desperate fight for survival. Employees got a hint when they were suddenly told to work from home — presumably so no one could hear the collective sighs of despair during a joint meeting.
- Cash withdrawal to save cash: Relay just raised 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 mom-and-pop shops rather than tech startups — take that, Silicon Valley!
This week’s most interesting fundraisers
Firefly, a cloud asset management startup that aims to simplify your digital chaos with “infrastructure as code,” has raised $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 went on to quadruple their revenue in 2023. So basically, Firefly is now tackling cloud complexity and navigating real-world turmoil like absolute champs.
- That’s great: Google has just invested a casual $350 million in Flipkart, making it the latest VIP to back India’s e-commerce powerhouse, which is now valued at $36 billion.
- You get dinero! You get dinero!: Sending money home just got a whole lot chattier! Félix Pago, the fintech darling that makes remittances as easy as sending a WhatsApp, just received $15.5 million in funding. Forget downloading apps or navigating complex interfaces; this startup uses WhatsApp’s chatbot.
- A dictionary with a unicorn horn: More funding is pouring into AI-focused startups. DeepL, which makes automated translation and text writing tools that compete with Google Translate and Grammarly, has raised an additional $300 million. It is now valued at $2 billion.
Other must-see stories from TechCrunch…
Dreaming of tech IPO fortunes in 2024? Well, wake up and feel the increased interest rates! Despite Reddit, Astera Labs, Ibotta, and Rubrik all making it through the IPO door earlier this year, it seems most startups are still stuck at home in their PJs. Plaid’s CEO said they are staying private for now, and Figma and Stripe are busy making tender offers like they’re holding a bake sale instead of preparing for an IPO. Databricks has raised $500 million, but isn’t feeling the public market vibes either; maybe next year they will feel more extroverted. And Canva? It might take them so long to go public that by then we’ll be designing newsletters straight from our brain implants. Stay tuned as TechCrunch continues to track which startups will boldly go public or stay hidden behind their venture capital curtains!
More important news:
- What is happening in the land of messengers: Meredith Whittaker, the president of Signal, is fed up with the tech industry’s “frat boys” and their “dorm room giggles.” At VivaTech in Paris, she didn’t hold back on her concerns about everything from the takeover of AI by US companies to the EU’s misguided attempts to introduce regulation.
- AI in your ears: Welcome to the battle of generative AI gadgets, now with Iyo’s GenAI headset! Humane and Rabbit R1 have fallen harder than fish out of water, but Iyo thinks he can succeed where they failed. Unlike its predecessors’ bizarre lapels and overpriced handhelds that critics said should have been just apps, Iyo is betting on an already popular form: Bluetooth headphones.
- Dude, where’s my wallet?: Is that a bird? Is that a plane? No, it’s Ledger Stax, finally descending from the crypto heavens 18 months after its big announcement. This new premium hardware wallet features an E Ink display designed by iPod guru Tony Fadell — yes, they’re bringing back the e-reader vibes for your crypto needs.
- Wait, Foursquare had to lay off 105 employees?: Foursquare just fired 105 employees in an attempt to “streamline” the business 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 sum it up for you: Looks like Apple is back to its old tricks, ready to “sherlock” another innovative app feature. This time, The Browser Company’s Arc is in the crosshairs with its handy AI compression tools like “view for me” and “squeeze to compress”. 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.