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| Here's a look at today's Startups briefing. - 📦 Amazon aggregator startup Thrasio is preparing to file for bankruptcy.
- 🏥 Ajax Health, KKR, and Hologic launch Maverix Medical.
- 👨🏻💼 Microsoft joins AI startup OpenAI's board as a non-voting observer.
Thank you. Karan
p/karan-chafekar | |
| 1 | | British AI startup Stability AI's investors, including Coatue Management, have called upon CEO Emad Mostaque to step down. Investors are also pressuring the firm to explore sale options. According to sources, the firm has held initial discussions with multiple companies, including Canadian AI startup Cohere and Jasper. A spokesperson has denied reports that the firm is exploring a sale. More: - Stability AI, the firm behind AI-powered image generation tool Stable Diffusion, has had a tumultuous few months, causing the departure of several senior managers.
- Coatue, which led Stability AI's funding round valued at $500M, and other investors are concerned about the firm's financial stability.
- As of October, the firm's monthly expenses, including bills and payroll, amounted to $8M.
- It made $1.2M in revenue in August, a figure that was reportedly expected to double to $3M this month.
- The firm later cemented its unicorn status when it raised a $101M funding round in 2022.
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| 2 | | Thrasio, the biggest and most valuable Amazon aggregator, is reportedly preparing to file for bankruptcy. 
What the numbers say: Thrasio had raked in $3.4B funding out of the $15.3B equity and debt funding raised by all Amazon aggregators to date. Notable investors that backed the firm include Advent International, BlackRock, Silver Lake, Oaktree Asset Management, and Goldman Sachs Asset Management. Funding for the sector plateaued in 2022 due to the VC funding pullback, slowing e-commerce growth, and changing consumer preferences. Aggregators typically leveraged a mix of equity and debt to acquire new brands. However, the drop in VC funding highlighted the unsustainable business models of aggregators that found it difficult to turn a profit despite leveraging economies of scale from several brands. Relevance: Thrasio was the most valuable Amazon aggregator, once valued at $10B. Its failure highlights the difficulties faced by aggregators. As a result, several aggregators are now looking to merge with other groups or diversify away from Amazon. SellerX acquired Elevated Brands, and Suma Brands merged with D1 Group earlier this year. Meanwhile, Forum Brands and OpenStore are looking at other digital marketplaces, such as Walmart and Shopify. | | | |
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| 3 | | OpenAI's biggest shareholder, Microsoft, is joining the board of directors as a non-voting observer, recently reinstated CEO Sam Altman informed employees through a blog post. Interim CEO Mira Murati has also been reinstated to the CTO role. OpenAI's co-founder Greg Brockman will also return as the company's president. More: - The board of directors was overhauled a week after a board power struggle, which resulted in the ousting of Altman.
- Adam D'Angelo, a key figure in Altman's departure, will continue as a director, while the rest of the previous board members, Ilya Sutskever, Helen Toner, and Tasha McCauley, have been dismissed.
- Additions to the board include former Salesforce co-CEO Bret Taylor (chairman) and former U.S. treasury secretary Larry Summers.
- OpenAI will work on enhancing the firm's governance structure after it received criticism for being able to oust the company's CEO without consulting with its largest shareholders.
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| 4 | | Generative AI startup Together AI, officially known as Together Computer Inc., closed its Series A funding round at $102.5M. The firm intends to use the proceeds to build the open-source infrastructure for generative AI model development in a bid to become "the fastest cloud platform for generative AI applications." More: - Kleiner Perkins led the round with additional support from Nvidia, Emergence Capital, NEA, Prosperity 7, Greycroft, and 137 Ventures.
- Seed investors Lux Capital, Definition Capital, Long Journey Ventures, SCB10x, SV Angel, Factory and Scott Banister also participated in the round.
- Social media search company Topsy Labs' founder Vipul Ved Prakash founded Together AI along with Ce Zhang, Percy Liang, and Chris Re.
- Apple acquired Topsy Labs in 2013.
Zoom out: - A report from International Data Corp. predicts that generative AI startups will rake in $143B in funding by 2027.
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| 5 | | Menlo Park, Calif.-based healthcare startup Ajax Health launched a new startup called Maverix Medical along with investment firm KKR and medtech company Hologic. KKR and Hologic have invested an undisclosed sum into the new startup, which aims to build diagnostics and medical devices to treat lung cancer. More: - Ajax's founder, Duke Rohlen, will lead Maverix as its CEO.
- Ajax Health launched a new startup to unbind it from the larger organization, which can help it become agile and bring solutions to the market faster.
- Rohlen said that large medtech companies must focus on maximizing earnings per share, which can impede their ability to innovate and fund research.
- Ajax Health had previously launched a medical accelerator startup called Cordis-X, which it created to supply products to Cordis, which it acquired from Cardinal Health for $1B along with KKR and Hellman & Friedman.
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| 6 | | British hedge fund startup Shiprock Capital Management has earned a 26% return by investing in bonds from distressed emerging markets, such as Ukraine, Pakistan, and Sri Lanka. Per Bloomberg's estimates, the returns are nine times higher than the average returns from emerging market hedge funds. More: - The $187M British startup attributes its recent success to actively positioning "the portfolio in either very short-dated bonds or in special situations with near-term catalysts," per co-founder and chief investment officer Andrey Pavlichenkov.
- Shiprock Capital generated 103% returns by investing in dollar bonds from El Salvador.
- Pakistan delivered the second-highest returns, followed by Sri Lanka, Zambia, and Argentina.
Zoom out: - Per Bloomberg, only five out of the 444 emerging-market fixed-income funds have generated returns above 20% this year.
- The average return for debt-focused hedge funds was 2.95% this year.
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| 7 | | Quick Hits: - Competitors are killing your efficiency. Read how Greenhouse gained $85M in revenue from reps who used Klue over non-Klue users.*
- D2C flavored water brand Cirkul is talking to strategic and institutional investors to raise another round of capital before it pursues an IPO listing.
- Cross-border payments startup Paysend raised $65M funding from Mastercard, Infravia Growth Capital, One Peak, and Hermes GPE Innovation Fund.
- FirstMark Capital led a $9M Series A funding round into property management startup Revela.
- Battery materials startup Sila opened a new manufacturing facility in Moses Lake, Washington. The firm has received a $100M grant from the U.S. Department of Energy.
*This is sponsored content. | | | |
 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | This newsletter was edited by Vibha Chapparike | |
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