3M settling hundreds of lawsuits for 'forever chemicals' / Starbucks workers planning a strike / Southwest Airlines agrees with mechanics union

Also, the Washington Wizards may have new minority owners

Inside Business For June 23, 2023

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Happy Friday, Insiders! Starbucks employees are striking because of the company's Pride Month agenda and 3M is paying out a huge settlement for "forever chemicals." These stories, plus Honda recalling 1.2 million vehicles, are just some of what you'll find in today's newsletter. Have a great weekend! Christopher p/chris951156

1 3M agreed to pay up to $12.5B in order to settle hundreds of lawsuits brought against the company. The lawsuits were brought by cities claiming the drinking water was contaminated by "forever chemicals." More: The national class-action settlement involves PFAS chemicals in firefighting foam.  3M will be required to pay between $10.5B and $12.5B, and the settlement will cover public water systems across the U.S. If paid out, this would be the largest settlement for something deemed a "health risk," more than any from lawsuits against the tobacco or opioid industries. The current cases stem from PFAS chemicals from firefighting foam that seeped into the ground in communities.  3M has manufactured and used PFAS for years, despite the fact that they are "forever chemicals," meaning they won't break down in the environment.  3M said that the agreement wasn't an admission of liability and that the company would be prepared to defend itself in the litigation if the agreement wasn't approved.

2 What the data says: Starbucks has seen an upward rise in revenue during Q1 of most years since 2020. The company $8.7B in the first quarter of this year, which jumped up over $1B from Q1 of 2022. Each quarter between those, the company saw growth as well. Relevancy: Starbucks employees at 150 stores announced they plan to go on strike next week following the company's decision to ban Pride Month decorations in its cafes. The call for the strike comes days after the union for employees said Starbucks had taken down some Pride Month decorations and flags at several stores. The company denied the claims on Friday and said that it was still encouraging store managers to celebrate Pride Month. Shares of Starbucks fell 3%. Other incidents: This isn't the first company to deal with backlash over anti-Pride Month rhetoric. Target received a lot of backlash after it removed Pride Month apparel and decorations in several stores following anti-LGBTQ outbursts from some customers. Bud Light has seen a boycott after conservative and anti-LGBTQ consumers argued against an ad campaign featuring a trans influencer. It remains to see how this will affect the upcoming earnings for both these companies.

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3 Southwest Airlines reached a tentative agreement with the union representing its mechanics, aircraft inspectors, maintenance controllers, and training instructors after ongoing labor deal negotiations. The agreement still needs to be approved by the workers. More: The agreements will cover more than 2,800 employees. Neither the union nor the airline disclosed the numbers or details of the agreement. "Our Mechanics & Related Employees work around the clock to safely maintain our aircraft, and we reached a Tentative Agreement that rewards them and helps Southwest maintain an efficient operation," Adam Carlisle, vice president of labor relations at Southwest, announced in a press release. Southwest is still in labor negotiations with the unions representing its flight attendants and its pilots.

4 JPMorgan Chase was fined $4M by the Securities and Exchange Commission for mistakenly deleting 47 million emails, many of which were part of probes by the regulator. The contents of some of the emails, which were not recovered because they were permanently deleted, were requested in subpoenas in over a dozen securities investigations. More: Emails from January to April 2018 were deleted in 2019 from 8,700 inboxes belonging to as many as 7,500 employees. Miscommunications between the company's corporate compliance technology division and an outside vendor tasked with archiving and deleting communications led to the accidental deletions. Once JPMorgan discovered this, it reported it to the SEC in 2020. "JPMorgan takes its record-keeping obligations seriously," said Veronica Navarro, who heads JPMorgan's corporate communications division. "We have taken steps to enhance our process and procedures."

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5 Honda is set to recall 1.2 million vehicles in the U.S. due to cable issues causing disruptions for the rear-view camera while the vehicles are in reverse. The company received nearly 274,000 warranty claims about the issues. More: Claims over the past three years were made for the Honda Pilot and the Honda Odyssey. Honda has stopped selling the vehicles in order to make repairs, as the fix requires a trip to a dealership. Honda said no injuries have been reported yet. Replacing parts may prove costly, as the company restated its operating profit for the fiscal year ending in March to ¥781 billion ($5.5B), down just over 10%, partly due to increased warranty expenses.

6 Moody's Analytics, the rating agency, warned that the private credit industry is about to face its "first serious challenges." The $1.4T industry is set for trouble as tens of billions of dollars in loans underwritten at the top of the market in 2021 are being strained by higher interest costs and a slowing economy. More: Moody's singled out two specific companies, funds managed by Ares and Owl Rock, as ones to be concerned about. These loans were generally written when interest rates were close to zero nearly two and a half years ago. This has changed since the Federal Reserve raised interest rates to cool U.S. inflation. Even though Moody's issued this warning, it did not change the ratings for Ares or Owl Rock, which are publicly traded lending funds. Since the 2008 financial crisis, the private credit industry has changed as lenders are more focused on small and midsized takeovers.

7 Quick Hits: Combine traditional project management with your docs, knowledge base, and AI.* Danish brewing company Carlsberg is selling its business operations in Russia.  CNBC highlights why flavored e-cigarette sales are soaring. The Qatar Investment Authority offered to buy a minority stake in Monumental Sports & Entertainment. *This is a sponsored post.

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Christopher Hachey Freelance Editor Christopher Hachey is a freelance writer and editor based in the New York City area. He has spent most of the past 15 years in newsrooms covering all kinds of topics like sports, tech, business, finance, and commerce. He's now returning to his broadcast journalism roots by diving into podcasting news. Reach out to him at chris@inside.com This newsletter was edited by Aaron Crutchfield

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Robinhood to acquire X1 for $95M / Early-stage funding roundup / Acryl raises $21M

Plus, crypto startup Pillow to cease operations by next month

Inside Startups For June 23, 2023

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Hey Insiders, Today we are taking a look at Robinhood's acquisition of X1, Acryl's $21M funding round, and the reason behind Pillow's shutdown. We have also rounded up the top early-stage funding rounds of this week. Scroll down for some quick hits, and then let us know what other content you'd like to see in future issues.  Karan p/karan-chafekar

1 Robinhood is planning to acquire credit card startup X1 for $95M. X1 issues income-based credit cards with rewards and single-use credit cards. More: The deal is expected to be completed in September. On July 18, X1 reported $50M in monthly volume, expecting to reach $1B in annualized spend by the end of the year. X1 said it had 500,000 people on its waiting list in 2022. The credit card startup follows Robinhood's acquisition of newsletter MarketSnacks in 2019, crypto exchange Cove Markets, hiring firm Binc, and shareholders' platform Say Technologies in 2021, and U.K. crypto exchange Ziglu in 2022. NOTE: Inside.com founder and CEO Jason Calacanis is an investor in Robinhood.

2 VCs deployed $812M in early-stage North American startups this week from June 19 to June 23, per Crunchbase data. Mining startups raked in 24% of the funding this week. Biotech, IT, and healthcare startups nabbed 18%, 14%, and 8% of the financing, respectively.  Here are the top 10 largest rounds announced this week:  Berkeley, California-based mining startup KoBold Metals, which leverages AI for battery mineral exploration, cemented its unicorn status with a $195M funding round led by T. Rowe Price. Existing backers Andreessen Horowitz, Breakthrough Energy Ventures, and Bond participated in the current round. The firm was valued at $1.15B.  Alamar Biosciences and Frazier Life Sciences formed a new biotech startup called Attovia Therapeutics to focus on immune-mediated disease and cancer treatment biotherapeutics. The firm launched with $60M Series A funding led by Frazier, with participation from venBio and Illumina Ventures.  Computerized maintenance management systems developer Limble nabbed $58M in Series B funding led by Goldman Sachs Asset Management at a $450M valuation.   San Francisco-based cloud startup Render closed its Series B round with $50M in funding. Bessemer Venture Partners led the current round, with participation from existing backers General Catalyst, South Park Common Fund, and Addition.  Delve Bio, a startup developing metagenomic sequencing for infectious diseases, emerged from stealth with a $35M Series A round led by Perceptive Xontogeny Venture Fund II. Section 32 and GV participated in the round.  Oncolytic virus startup Calidi Biotherapeutics raised a $25M Series B funding led by Jackson Investment Group.  Kleiner Perkins led a $25M Series B funding round into AI-powered video creation platform Captions. Sequoia Capital, Andreessen Horowitz, and SV Angel participated in the funding round.   Vehicle-secured credit card platform Yendo closed its Series A funding round at $24M. FPV Ventures led the funding round with participation from Human Capital and Autotech Ventures.  Real-estate investing integrated technology provider Picket announced a $20M Series B funding round led by LL Funds.  British voice AI startup ElevenLabs raised $19M in Series A funding led by Andreessen Horowitz, Nat Freidman, and Daniel Gross.

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3 Acryl Data, the company behind the open-source data project DataHub, announced it raised a $21M Series A led by 8VC. The startup works on a cloud data management platform that enables central controls across the decentralized data stack. More: DataHub is used by companies such as Pinterest, Optum, and Stripe. The startup's cloud product clients include Zendesk, Notion, Riskified, and MYOB.  The round included participation from the CEO of Vercel, Guillermo Rauch, and Sherpalo Ventures. The company previously raised $9M in 2021 from 8VC, LinkedIn, Insight Partners, and BossaNova Investimentos.

4 Accel India-backed crypto startup Pillow will cease operations by July 31, citing regulatory uncertainty. The company was headquartered in Singapore but was founded and operated primarily in India. Crypto startups have found it difficult to continue operations in India after its central bank, the Reserve Bank of India (RBI), pushed lenders to stop engaging with crypto startups.   More: The crypto investing platform allowed users to invest in Bitcoin, stablecoins, and altcoins for up to 18% returns.  As the crypto markets started to drop, the firm lowered its returns to 14%.  Pillow had raised $21M from investors to date, the last of which came through an $18M Series A funding round last October.  In addition to Accel, the firm was also backed by Quona Capital, Elevation Capital, and Jump Crypto.  Zoom out: Pillow's rival decentralized finance (DeFi) platform, Flint Labs, shut down last month, citing regulatory challenges and "negative market sentiment." The RBI suspended UPI support for Coinbase less than four days after its trading platform launched in the nation.

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5 On Friday, the U.K. government announced the creation of a £21M ($26.75M) fund for artificial intelligence tools to be applied to the National Health Service. "The use of AI decision support software in the initial stages of stroke care means patients get interventions quicker, reducing the likelihood of disability and saving the brains," said the national clinical director for stroke medicine at the NHS, Dr. Deb Lowe. More: The U.K. government previously set up a £100M fund for startups to develop AI applications for healthcare and education, among other areas. The agency is seeking image recognition tools that diagnose heart conditions, cancer, and strokes.  NHS Trusts would be able to apply for the use of any AI diagnostic model that would justify the spend, according to the agency.

6 Lithuania is building a €100M ($109.6M) tech campus in the capital of Vilnius as it sets its target to become Europe's major tech hub. The 55,000 square meters (592,015 square feet) campus is set to snatch the title for Europe's largest tech hub from Paris' Station F.  More: The tech campus, called Tech Zity, will house 5,000 workers and likely open in 2024.  The Lithuanian government has decided to capitalize on the growing number of startups in the region and published a €13M ($14.1M) open tender earlier this March to entice an "internationally acclaimed startup accelerator" to set up shop in the nation.  Notable startups from the region include used clothes marketplace Vinted, which is raising $562M at a $4.5B valuation, and NordVPN, valued at $1.6B last year.  €30M ($32.7M) has already been committed to Tech Zity, 80% of which was given by Vinted's co-founder and COO Mantas Mikuckas, with the other 20% coming from Tech Zity founder Darius Žakaitis.

7 Quick Hits: Combine traditional project management with your docs, knowledge base, and AI.* Amazon earmarked $100M towards the AWS Generative AI Innovation Center, a fund designed to help AWS customers ideate and launch generative AI products and services.  Andreessen Horowitz and Shield Capital co-led a $16M Series A funding round into satellite bus manufacturing startup Apex Space.  Seattle-based booking, payroll, and tax workflow products maker Heard secured $15M in Series A-2 funding led by Headline. GGV, Footwork, Founders Co-Op, Act One, and Heron Rock participated in the funding round.  German space startup Atmos Space Cargo closed its oversubscribed seed round at €4M ($4.3M). High-Tech Gründerfonds and the Amadeus APEX Technology Fund led the round, with additional backing from Seraphim Space, E2MC, Ventis, and another.vc. *This is sponsored content

Upcoming Events JUN 27 The No Code Revolution Virtual Register Here JUN 29 Inside.com Book Club - Automate Your Busywork (June 2023) Virtual Register Here * This is a sponsored event

Knowledge Hub Term of the Day Commercial real estate: Commercial real estate (CRE) is property used to generate profit through capital gain or rental income. Read More Question of the Week How do you feel about the phrase "The customer is always right"? Join the conversation

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Karan Chafekar Analyst Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot.  Nicolas is a Sr. Analyst at Inside, covering startups and transportation trends. He is an avid map maker and data nerd. Nicolas has worked in the shared-scooter space, as well as advised e-bike and moped start-ups.  This newsletter was edited by Beth Duckett

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