As part of Salesforce’s massive tech conference, Dreamforce, taking place this week in San Francisco, its VC arm, Salesforce Ventures just announced a new $500 million fund dedicated to AI companies. This is significant for several reasons. First, in June 2023, Salesforce Ventures doubled its AI fund from $250 to $500, so the additional $500 million brings the AI fund to $1 billion. This compares to $5 billion total deployed in its first 15 years, since its 2009 launch.
Salesforce Ventures is also among the forces making San Francisco such a hot spot for AI companies that startups worldwide are relocating to the city. Like many VC firms, for example, the venture arm hosts dinners for its portfolio companies and Fortune 500 executives (aka prospective customers). Not surprisingly, perhaps, its AI portfolio is already notable, including Anthropic, Hugging Face, Runway, and Together AI, among others.
Keep reading the article on Tech Crunch
Insight Partners is reportedly on the cusp of on more than $10 billion in capital commitments for its 13th fund, per the FT.
The FT report notes that two of Insight’s portfolio companies were acquired in the last week. One of these, the threat intelligence company Recorded Future, which sold to Mastercard for $2.65 billion, was wholly owned by Insight Partners; it acquired the company in 2019 for $780 million.
The other, Own, a startup specializing in tools for backing up data in cloud-based applications, sold to Salesforce for $1.9 billion, roughly half the $3.5 billion valuation it was assigned by investors in 2021.
Insight, which is headquartered in New York and whose current portfolio includes the buzzy cybersecurity outfit Wiz, may ultimately close its new fund with roughly $12 billion, says the FT. That’s a big number but still far less than the $20 billion that Insight announced for its 12th fund in 2022, when fundraising was in overdrive across the venture industry.
Keep reading the article on Tech Crunch
Nick Frosst, the co-founder of $5.5 billion Canadian AI startup Cohere, has been a musician his whole life. He told TechCrunch that once he started singing, he never shut up. That’s still true today. In addition to his full-time job at Cohere, Frosst is also the front man of Good Kid, an indie rock band composed entirely of programmers.
Good Kid isn’t just a group of friends jamming on the weekends in someone’s garage. The band has 2.3 million monthly Spotify listeners and recently played at Lollapalooza. It was nominated for the Canadian Academy of Recording Arts and Sciences breakthrough group of the year at the Juno Awards this year and opened for Portugal. The Man’s Canadian tour last fall.
Good Kid was formed at the University of Toronto in 2015 as a hobby, Frosst told TechCrunch. All of the members were in the computer science program except one, guitar player David Wood, but they all convinced him to switch. Good Kid launched its first single, Nomu, at the end of 2015. Nomu’s musical medley sounds like a nod to indie pop rock group Two Door Cinema Club, with Frosst’s vocals ringing out in a style that could be compared to Bloc Party front man Kele Okereke. Both Bloc Party and Two Door Cinema Club are inspirations for the group.
“We didn’t really have high hopes for it,” Frosst admits about releasing that first single. “We just wanted to create something that we liked, instead of recording a bunch of songs. It did much better than we thought it would.”
Good Kid dropped a handful more singles until releasing its first self-titled EP in 2018. The band has gone on to release four more albums, the latest of which came out earlier this year.
About a year after the band’s debut album came out in 2018, Frosst launched Cohere with Aidan Gomez and Ivan Zhang. Cohere has since grown into a top-watched startup offering AI models for enterprises. The company has raised more than $970 million in venture capital from backers like Salesforce, Nvidia, Cisco, and Oracle, and is currently valued at $5.5 billion. Although Good Kid’s profile has continued to grow, Frosst said that he’s privileged to be able to be a musician at that level, but Cohere and working in AI is his real career.
“Cohere is my life’s work,” Frosst said. “I spend the vast majority of my time [on] Cohere and music is a thing I get to do and unwind and relax.”
Frosst said finding balance between the two hasn’t been too difficult. The band meets twice a week for two-hour practices. When Good Kid goes on tour, the band bangs out a full day of remote work — everyone works as a programmer — from the bus before taking the stage at night to play shows. Frosst said he actually feels he might be able to focus better on his work for Cohere when they go on tour because it prevents him from having too many meetings.
“I think they are additive,” Frosst said. “I really think being able to play music helps me with my job at Cohere. It clears my mind and gives me a dedicated time to focus and makes me a smarter person.”
But even when the members of the band are focused on making music they are still thinking about AI. In the band’s first single Nomu, produced years before Cohere was founded, that first song used the line “languages lost, tokens unknown,” a reference to the tech upon which Frosst’s company would one day be found.
When the band got to play on the last day of Chicago’s Lollapalooza festival in August, Frosst said it was an incredible experience. He admitted that prior to that, he actually had never even attended a musical festival, let alone played at one. Good Kid went on at 1:45 p.m. and opened the set with No Time to Explain, playing just hours before one of their inspirations, Two Door Cinema Club, took the stage.
Frosst says he feels grateful to be having such a successful musical career without the fear that it won’t work out, a dynamic not common in the music industry.
“Getting to come to music for fun, getting to come from creativity and not for career aspirations, I’m very lucky to have found myself in this situation,” he said.
Keep reading the article on Tech Crunch
It’s looking increasingly likely that OpenAI will soon alter its complex corporate structure.
Reports earlier this week suggested that the AI company was in talks to raise $6.5 billion at a $150 billion pre-money valuation. Now Reuters says the deal is contingent on whether OpenAI can restructure and remove a profit cap for investors.
In fact, according to Fortune, co-founder and CEO Sam Altman told employees at a company-wide meeting that OpenAI’s structure is likely to change next year, bringing it closer to a traditional for-profit business. OpenAI is currently structured so that its for-profit arm is controlled by a non-profit, which seems to frustrate investors.
“We remain focused on building AI that benefits everyone and as we’ve previously shared we’re working with our board to ensure that we’re best positioned to succeed in our mission,” OpenAI said in a statement. “The nonprofit is core to our mission and will continue to exist.”
Keep reading the article on Tech Crunch
In early 2018, VC Mike Moritz wrote in the FT that “Silicon Valley would be wise to follow China’s lead,” noting the pace of work at tech companies was “furious” and that China offered “investment opportunities in the best companies.”
Soon after, it all imploded. Worse, as the FT notes in a new piece, between the pandemic, the bursting of a real estate bubble, tensions between the U.S. and China and, most of all, a sweeping government crackdown on tech companies, China may never fully rebound, even as the government claims to be done with its alleged clean-up efforts. It’s just not worth it to entrepreneurs to rebuild what they’ve lost.
Says one former mogul to the FT about the state of China today, entrepreneurs know that “their money is the country’s money.” As for the VCs and PE execs who fueled the earlier boom, another source tells the outlet: “Now they’re depressed. You don’t see them anymore.”
Keep reading the article on Tech Crunch
Welcome to Startups Weekly — your weekly recap of everything you can’t miss from the world of startups. Want it in your inbox every Friday? Sign up here.
This week once again proved that the startup world isn’t homogeneous when it comes to risk-taking. Let’s have a look.
Layoffs after an acquisition or controversy after a risky decision aren’t exactly a surprise, but there is more encouraging news on the innovation front.
Shrinking teams: Italy-based app company Bending Spoons is planning to lay off 75% of the staff of WeTransfer, the Dutch file transfer startup it bought in July. This follows earlier job cuts at other companies it acquired: Evernote, Filmic, and Meetup.
Warped views: Warp, a YC alum payroll startup, found itself embroiled in controversy and ultimately disavowing one of its affiliate accounts on X, where it seemed to have been following an unusual — and risky — marketing strategy.
Level-headed: Sydney-based Neurode developed a headband that uses light electrical stimulation in the prefrontal cortex to treat ADHD symptoms such as lack of focus. Currently in private beta, the company hopes its wearable will become an FDA-approved medical device.
The market is how it is, but fundraising is still happening — even if in some cases, it’s actually a mix of equity and debt.
Fauxmage: Berlin-based food tech startup Formo raised a $61 million Series B round to keep scaling production of its dairy-free cheese.
Less paper: Frankfurt-based startup Qualifyze raised a $54 million Series B round that it will use to grow, specifically in the U.S., and add more analytics and AI to its products, which help pharmaceutical companies control their supply chains.
Insurtech: Neat, a Paris-based embedded insurance startup, raised €50 million in debt and equity funding. The Series A round is led by Hedosophia.
Smart cat: Smartcat, a vendor of automated translation tools geared toward enterprises, raised a $43 million Series C led by Left Lane Capital. This will help the startup grow its team and invest in its product, marketing, and sales.
One more round: Finally, a Miami-based AI-enabled bookkeeping, accounting, and finance startup targeting SMBs raised a $50 million Series B round of funding and secured a $150 million credit line.
Optionality: London-based VC firm Atomico raised $1.24 billion across two funds. One, Atomico Venture VI, will mostly invest in Series A rounds; the other, Atomico Growth VI, will be for Series B through pre-IPO — and, presumably, for more risk-averse limited partners.
Follow-on: Alpha Partners announced a $153 million third fund that will double down on what was once a novel idea — helping seed investors exercise pro rata rights in later rounds by writing $5 million to $10 million checks alongside them.
The U.S. is a more fragmented legal environment than it may seem. Startups are learning this the hard way, as some of them are getting fined, and sometimes banned, by individual states. As TechCrunch’s Rebecca Szkutak noted, “the upshot is that state-level regulations need to be factored into a founder’s business plans as soon as feasible, be it through investing in compliance software or through hiring legal experts.”
Keep reading the article on Tech Crunch