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| Here's a look at today's Startups briefing. - 🤝 Microsoft signed a multi-year strategic partnership with Mistral AI
- 🏦 Startups are turning to other sources of funding as VC funding declines
- 🤖 AI-powered humanoid robot maker Figure AI is raising a $675M round at a $2B valuation
Thank you. Karan
p/karan-chafekar | |
| 1 | | Microsoft signed a multi-year strategic partnership with French AI startup Mistral AI to make the startup's AI models available to customers through the Azure cloud computing platform. The tech giant will get a minority stake in Mistral as part of the deal, sources informed Reuters. News of the partnership comes as Mistral launched its latest proprietary AI model, called Mistral Large. More: - The company says Mistral Large has "unique processing capabilities" and is fluent in five languages.
- The newest AI model is set to go up against OpenAI's ChatGPT-4 model and Anthropic's Claude-2.
- In December 2023, Mistral raised a $415M funding round from Andreessen Horowitz, Salesforce, Nvidia, and other investors at a valuation of $2B.
Zoom out: - Microsoft's new strategic partnership comes under growing political scrutiny over its ties with OpenAI, in which it invested roughly $13B last year.
- The EU and the U.K. government are probing Microsoft's relationship with OpenAI.
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| 2 | | With the VC funding dip impacting the previously immune seed-stage startups, founders are looking at alternative sources of funding to sustain their business through the economic downturn, per Carta. 
What the numbers say: New seed investment rounds that closed on the Carta platform reached the lowest quarterly level since Q1 2019, with only 462 new rounds closing in Q4 2023. Seed stage rounds have dropped consistently since reaching a peak of 902 transactions in Q4 2021. The median seed round sizes plummeted from $3.5M in 2022 to $3M in 2023. While round sizes have shrunk, median seed stage valuations touched $13.3M in Q4, up 11% YoY. What happened: Due to the lack of seed funding available, early-stage startups are looking at other sources of funding, including grants and crowdfunding. Emotional intelligence content edtech startup ThinkHumanTV tapped into grant funding from the National Science Foundation in 2019. It received another $1M grant in 2022 that helped it continue its research. The firm wanted to raise seed funding in 2023 but knew it could not match the metrics required by VC investors. As a result, the company is exploring a crowdfunding round, which could serve a dual purpose of raising fresh capital and bringing new customers on board to gain some initial traction for its app. | | | |
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| 3 | | HR software giant Workday entered a definitive agreement to acquire AI-powered talent management startup HiredScore. Financial details of the transaction were not disclosed. The acquisition will help Workday offer its clients comprehensive, transparent, and intelligent talent acquisition solutions. More: - Workday will merge HiredScore's talent orchestration solutions with its Workday Talent Management and Workday Skills Cloud product suite.
- Workday hopes the combination of the solutions will help clients leverage AI to solve recruitment challenges, manage the talent lifecycle, and streamline and expedite the hiring process.
- The acquisition is expected to close during the first quarter of this year.
Zoom out: - Workday also announced its financial results for the fourth quarter, beating analysts' expectations.
- The firm reported a 17% surge in revenue to $1.922B and stock compensation of $1.57 per share.
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| 4 | | AI-powered humanoid robot maker Figure AI is reportedly raising a $675M funding round at a pre-money valuation of $2B. The Sunnyvale, California-based firm received a commitment of $100M from Jeff Bezos' Explore Investments, with another $95M coming from Microsoft. Nvidia and an Amazon-affiliated fund invested $50M each. More: - ChatGPT maker OpenAI is reportedly set to invest $5M in the round.
- The firm had previously considered acquiring Figure AI.
- Figure AI has also been backed by Intel's VC arm, LG Innotek, Samsung, Parkway Venture Capital, Align Ventures, ARK Venture Fund, Aliya Capital Partners, and Tamarack.
- Parkway led the firm's first external round of funding worth $70M last year.
Zoom out: - Earlier this year, Figure AI inked its first commercial deal to deploy its humanoid robots in BMW's manufacturing facility in Spartanburg, South Carolina.
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| 5 | | South Korean telco giant SK Telecom will offer the paid version of Perplexity's AI-powered search engine to subscribers for free per a newly announced partnership between the two companies. The firm will also use Perplexity's proprietary models to build its own personal AI assistant. SK Telecom also hinted at future possibilities of a joint venture or investment in Perplexity. More: - Perplexity CEO Aravind Srinivas called it a "win-win situation" as the startup is getting access to SK Telecom's subscribers while the telco can give more value-added services to subscribers.
- The AI startup typically charges a $20 monthly fee for its paid version, which helps users unlock unlimited searches.
- The San Francisco-based startup had 45.6 million monthly visits to its site in December 2023.
- It last raised a $75.6M funding round led by IVP, with additional support from Nvidia and Jeff Bezos.
- Perplexity was valued at $520M at the last funding round.
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| 6 | | Geothermal startup Fervo Energy is in the process of raising a $221M funding round, per SEC filing documents seen by TechCrunch. The new funding round comes shortly after it set up a 3.5-megawatt grid-connected geothermal power plant in Nevada, which will power Google's data centers in the state. More: - While other geothermal startups have tapped into hot springs and rock formations closer to the surface, Fervo Energy drills wells deep into the ground, even using directional drilling techniques first seen in oil fields.
- The Houston-based startup has improved its speed and cost efficiency, taking just 21 days to drill a horizontal well in Utah for $21M, which is 70% less time and half the cost of the first well it dug in 2022.
- Earlier this month, the firm bagged a $25M grant from the Department of Energy.
- Fervo touched a valuation of $308M last July when it raised a $138M Series C round.
- Notable backers of the company include Breakthrough Energy Ventures, DCVC, Prelude Ventures, Jeff Bezos, Richard Branson, Bill Gates, and Masayoshi Son.
Zoom out: - The Department of Energy estimates that geothermal power plants could provide 90 gigawatts of electricity to the U.S. annually by 2050.
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| 7 | | Quick Hits: - Discover the trends shaping 2024 and learn how trust will be the key to business success. Shape your strategy and get ahead with this latest report.*
- Brazilian AI startup Darwin AI is building a conversational AI assistant for small businesses across Latin America that lack in-house IT expertise or the capital required to implement enterprise-level AI tools, such as OpenAI's ChatGPT or Anthropic's Claude.
- African vehicle financing startup Moove is in talks with Uber to raise between $75M and $100M at a valuation of $750M.
- Japan government-backed research group Leading-edge Semiconductor Technology Center (LSTC) roped in AI chip startup Tenstorrent to co-design a two-nanometer AI accelerator hardware solution. Tenstorrent will also license the IP. The chips could be produced by the government-backed startup Rapidus Corp.
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 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | This newsletter was edited by Aaron Crutchfield | |
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