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| Here’s a look at today’s Startups briefing. - 💰 OpenAI CEO Sam Altman is in talks with investors to raise capital for a new chip startup.
- 🚀 Median Series A round sizes and valuations continued to grow for three consecutive quarters.
- 🦄 ElevenLabs enters the unicorn club with a $80M Series B funding round.
Thank you. Karan
p/karan-chafekar | |
| 1 | | OpenAI CEO Sam Altman is speaking with several investors, including G42 and SoftBank Group, to raise billions of dollars for a new chip startup, sources informed Bloomberg. The firm intends to use the proceeds to accelerate chip fabrication and set up semiconductor manufacturing factories. More: - Altman believes the current production forecasts will not likely be able to meet the growing demand for AI-related chips.
- An earlier Bloomberg report suggested the firm would raise about $8B to $10B from G42.
- According to sources, OpenAI's largest investor, Microsoft, is interested in participating in the round.
Zoom out: - Manufacturing semiconductors is extremely costly, which is why even larger tech giants like Amazon, Alphabet, and Microsoft outsource their manufacturing to outside companies.
- Intel Corp., Taiwan Semiconductor Manufacturing Co., and Samsung Electronics Co. are the leading manufacturers of semiconductor chips.
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| 2 | | The median size of Series A rounds that closed on Carta grew to $11.3M in Q4 2023, up from $10M in Q3. 
What the numbers say: Along with the deal sizes, valuations of Series A startups also increased from $39.8M in Q3 to $44.8M in Q4. Both deal sizes and valuations of Series A startups have surged for three consecutive quarters. Relevance: The deal size in Q4 was just 14% away from the record high of $13.1M from Q4 2021. Additionally, the median valuation was just 7% lower than the high of $48.2M from Q1 2022. What happened: Due to the lack of venture funding available in the market, startups are opting for bridge or extension rounds. Median valuations of bridge rounds raised by Series A startups increased by 37% to $48.1M. This suggests that Series A startups will not need to lower their valuations than their previous round when raising bridge rounds. | | | |
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| 3 | | AI startup ElevenLabs entered the unicorn club after raising a $80M Series B funding round. The firm was valued at $1.1B at the current round, which marks an 11x jump over its previous valuation of $100M from 2023. ElevenLabs will use the proceeds to accelerate product development, expand the infrastructure and team, increase AI research, and develop safety measures for the platform. More: - The British company's primary solution, AI Speech Classifier, helps generate audio content in different languages and accents.
- In addition, the firm has a product used for dubbing movies.
- Andreessen Horowitz led the current round with additional support from GitHub CEO Nat Friedman, entrepreneur Daniel Gross, Smash Capital, SV Angel, and Sequoia Capital.
- The British startup counts Storytel, Paradox Interactive, and The Washington Post as its most notable clients.
- Including the current round, the firm has raised a total of $101M to date.
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| 4 | | Cloud security services company Zscaler is in talks to acquire Israeli startup Avalor, per Calcalist. Zscaler is reportedly offering between $250M to $300M for the acquisition. More: - Avalor emerged from stealth last year with a $25M Series A round led by TCV.
- Kfir Tishbi and Raanan Raz co-founded the Israeli startup.
- Raz's previous startup, Dataroma, was acquired by Salesforce for $820M in 2018, while Tishbi was the founding member of the AI lab at Playtika.
- Avalor's systems integrate data from data lakes, warehouses, SQL databases, applications, and other disparate data sources.
Zoom out: - This is Zscaler's third acquisition after acquiring Trustdome and Canonic for $40M and $50M, respectively.
- Zscaler has annual revenues of $2B and has a current market capitalization of $34B.
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| 5 | | A new California-based startup, Shareholder Vote Exchange, is offering investors a marketplace platform to sell their proxy voting rights. The marketplace has witnessed transactions involving the exchange of 200,000 proxy votes. While selling voting rights is legal for most startups across many U.S. states, critics expressed concerns about its potential for misuse. More: - Shareholder Vote Exchange's marketplace allows investors to monetize their stakes and earn additional income.
- Proxy voting rights offered on the platform start from $0.01 per share.
- Critics argue that organizations could misuse these votes to overturn or exert undue influence over the board's decisions.
- To offset this, the startup has instilled some safeguards.
- The platform does not accept buyers that hold net long positions in a company's stock.
Zoom out: - Per Broadridge Financial Solutions, only 30% of shares held by individual investors are typically used for voting.
- Lawndale Capital Management's Andrew Shapiro said, "Many retail investors throw their votes away because they don't want to read the proxy or because they feel their votes don't matter."
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| 6 | | Steve Burns, the founder of bankrupt EV startup Lordstown Motors, has launched a new EV startup under the name of LandX Motors. Burns claims the company will build "the future of mobility." More: - Lordstown declared Chapter 11 bankruptcy in June 2023, after going public with a SPAC merger in 2020.
- Burns acquired most of Lordstown's assets, including its electric pickup trucks, through a holding company, LAS Capital, for about $10M.
- LandX's cars will be built on the same platform underpinning the Endurance pickup trucks being built by Lordstown.
- 13 of LandX Motor's 16 employees used to work at Lordstown.
Zoom out: - Lordstown's Endurance vehicles were recalled shortly after their debut, and there was a falling out with Foxconn Technology over the development of the vehicle.
- The SEC is seeking $45M for violating securities laws.
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- Elon Musk denied reports that his AI startup xAI Corp. has secured $500M in funding. An earlier Bloomberg report suggested that the firm was planning to raise $1B in funding at a valuation between $15B and $20B.
- Indonesian waste management startup Octopus is dealing with a growing number of complaints about unpaid salaries and fees. In addition, the company is facing allegations of questionable business practices.
- Hong Kong-based fintech startup FundPark upsized its debt facility with Goldman Sachs to $500M. The firm had availed the initial $250M debt facility in 2022.
- Forager's founder and former CEO, Matt Silver, launched a new cross-border logistics startup called Cargado. The new venture has already raised $3M in pre-seed funding.
- Indian B2B harvest-to-retail marketplace Captain Fresh is in talks with Nekkanti Sea Foods, SBI Investment, Evolvence, Tiger Global, and Prosus Ventures to raise up to $50M in fresh funding. The firm was last valued at $500M when it raised a $100M round in March 2022.
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 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | This newsletter was edited by Vibha Chapparike | |
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