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| Here's a look at today's Startups briefing. - 🚫 Anthropic declined OpenAI's merger offer.
- 🌉 San Francisco Bay Area bagged 41% of the total funding deployed across the U.S.
- 📜 Defunct startup sued Amazon Web Services for unlawfully ending the web-traffic agreement.
Thank you. Karan
p/karan-chafekar | |
| 1 | | OpenAI's board of directors reportedly approached rival Anthropic about merging the two AI startups, sources informed The Information. The board also offered OpenAI's CEO role to Anthropic's CEO, Dario Amodei, which he turned down. Amodei also declined the offer to merge the two companies. More: - The outreach came amid OpenAI's ongoing leadership turmoil, which began when the board abruptly fired Sam Altman as the CEO last Friday.
- The board initially promoted CTO Mira Murati as the interim CEO before offering the same position to Twitch co-founder and former CEO Emmett Shear.
- Since the board ousted Altman, over 700 employees have threatened to resign unless the board reinstates him.
- On Sunday, Microsoft – OpenAI's largest investor – hired Altman to lead a new advanced AI research team.
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| 2 | | San Francisco Bay Area-based startups bagged 41% of the entire VC funding deployed across the U.S., per Crunchbase. 
What the numbers say: Startups in the Bay Area raised $49.3B in total funding from seed to growth funding rounds so far this year. While overall funding across the U.S. has slumped by 40% YoY, funding for Bay Area startups has remained robust, which helped them increase their share compared to previous years. Bay Area startups had raked in a 37% share of the funding in 2019 and again in 2021. The region has seen a VC funding dip of 25% YoY, better than the national average. What happened: The Bay Area funding surge is driven by the increased investor interest around AI. The region's biggest fundraiser in the space has been OpenAI's $10.3B investment from Microsoft. OpenAI's funding alone accounts for a fifth of the total funding. AI startups such as Anthropic and InflectionAI have also raised $2.65B and $1.3B, respectively. At least 27 Bay Area companies have raised funding rounds of $100M or more. | | | |
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| 3 | | Defunct network optimization startup Subspace Omega has filed a lawsuit against Amazon Web Services in a Seattle federal court, seeking $417M in damages. The lawsuit alleges that AWS violated U.S. antitrust and federal laws by abruptly terminating a web-traffic agreement, which ultimately led to Subspace's shutdown in 2022. More: - Since AWS ended the peering agreement, Subspace couldn't provide optimization services to Fortnite game developer Epic Games, which was its biggest client.
- The termination prevented Subspace from meeting its contractual obligations to Epic Games, as the startup could not switch its cloud computing and hosting provider once committed to AWS.
- Subsequently, AWS later took over Subspace's network optimization services for Epic Games.
- Subspace added that its business model became unviable after Amazon refused to continue the peering agreement.
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| 4 | | Swedish gaming conglomerate Aonic Group acquired virtual reality game developer startup nDreams. Aonic paid $110M for the British startup. With the acquisition, Aonic will be able to further cement its market position in the VR gaming sector. More: - In Mar. 2022, Aonic invested $35M in nDreams for a minority stake.
- nDreams used the proceeds to acquire the immersive games studio Near Light.
- Hampshire, U.K.-based nDreams had raised $46.7M in total funding to date.
- Besides Aonic, the other notable backer of the firm was Mercia Asset Management Plc.
- nDreams started out initially as a traditional game developer in 2006 before pivoting to VR games in 2013.
- The firm has four studios and a team strength of 195 game developers.
Zoom out: - Aonic already owns the digital game and animation development studio Milky Tea and the gaming-focused performance marketing network Exmox.
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| 5 | | German AI venture studio Merantix announced a new €100M ($109.6M) fund. The firm was initially focused on incubating startups. A quarter of the fund will be earmarked for co-investing in external startups, with another quarter set aside for incubated startups. The remaining half of the fund will be set aside for follow-on investments. The firm will primarily invest in European pre-seed to Series A startups. More: - The firm has reached out to existing investors, including SoftBank, the Robert Wood Johnson Foundation, and the Kellogg Foundation.
- As a venture studio, the firm offered €1M ($1.1M) to incubated startups in return for 15% equity.
- Notable incubated startups include AI-powered breast cancer detection startup Vara and AI-driven designer protein company Cambrium.
- The firm last raised a €35M ($38.4M) fund in 2020, two-thirds of which has been deployed.
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| 6 | | Former Adyen executive Brian Dammeir will succeed Ripsy Bandourian as U.S. fintech startup Plaid's new head of Europe. Dammeir said, "When we think about Europe, it's about how can we be more relevant globally… how can we find more and more use cases outside of our starting point in fintech. Right now, that's really about expanding into account-to-account payments as well as into lending and traditional banking." More: - Plaid, last valued at $13.4B, provides a data transfer network to power fintech and digital finance products.
- In 2023, payment volume processed through Plaid's platform surged by more than 90%.
- Bandourian, who joined Plaid as the company expanded into Europe and expanded its product offerings, left the firm to "pursue other passions."
Zoom out: - Dammeir was the former global head of unified commerce for Dutch payments company Adyen.
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- Cybersecurity startup Dream Security secured $33.6M in funding at a valuation of $200M. Aleph and Group 11 co-led the funding round.
- AI-powered event intelligence platform Vendelux raised $14M in Series A funding led by FirstMark Capital.
- Global tech companies, entrepreneurs, and investors have created Circles of Dialogue, an online platform and community network to support the Israeli tech ecosystem. Investors have pledged more than $100M in capital and free services.
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Term of the Day Cryptocurrency: A cryptocurrency is a decentralized virtual currency built using a blockchain. Cryptocurrency tokens can be traded or used to make purchases. Question of the Week What perks would convince you to return to the office? Join the conversation |
 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | This newsletter was edited by Vibha Chapparike | |
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