Thursday, May 23, 2024

Humane is looking for a buyer / VCs interest in smart home startups fades away / DeepL doubles valuation to $2B

Plus, Copper forced to discontinue banking services after Synapse filed for bankruptcy

Inside Startups

For May 23, 2024

Here’s your daily Startups briefing:

🧐 AI startup Humane is looking for a buyer weeks after launching its wearable AI device, Ai Pin
📉 VC investor interest in smart home startups is fading away due to the recent startup failures
⏫ AI-powered language translation startup DeepL doubled its valuation to $2B

Thank you.

Karan
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Wearable AI device maker Humane is reportedly looking for a buyer and has roped in a financial adviser to assist with the transaction, sources informed Bloomberg. The talks are in the very early stages. The AI startup is expecting a price between $750M and $1B. The talks about a potential sale come just weeks after the company launched the Ai Pin, an AI-powered wearable gadget with a projected display for the price of $699.

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The Ai Pin failed to match expectations, with several tech reviewers criticizing the product's reliability and practicality.
Humane is working on solving the battery life, overheating, response accuracy, and response time issues.
Founded by two Apple veterans, Imran Chaudhri and Bethany Bongiorno, the startup has raised $230M in total funding to date from several prominent investors, including OpenAI's CEO Sam Altman, Microsoft, Qualcomm Ventures, and Marc Benioff.
Humane was valued at $850M by investors last year, per the Information.
CTO Patrick Gates left Humane with 4% of its workforce in January.

Smart home startups are struggling to raise capital as investor interest in the sector has faded away, per Crunchbase.

What the numbers say: VCs have invested less than $100M in U.S.-based smart home startups so far this year. The current pace puts 2024 on track to secure the lowest annual investment over the past 10 years. Notable rounds to close this year include a $35M Series A funding for electrical heat pump maker Quilt and a $30M Series B capital injection into building energy usage and management platform maker Kode Labs. Funding for the sector peaked at $2.05B in 2022.

What happened: Investors' appetite for smart home startups faded due to the failure of several well-funded companies. Several startups failed to thrive due to the poor adoption rate of smart home technology among the masses. Per Statista, only 15% of American households had a large smart appliance, 14% had a connected thermostat, and 20% had smart security cameras in 2023. Only 15% of households have a large smart appliance, like a refrigerator or stove, and only 14% have a connected thermostat. Earlier this month, smart home startup Brilliant laid off its entire staff while View, which makes smart glass for buildings, went private and filed for Chapter 11 bankruptcy. Home automation systems maker Veev shuttered and sold off assets to long-time investor Lennar.

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AI-powered language translation startup DeepL doubled its valuation to $2B after raising a $300M funding round led by Index Ventures. The German startup intends to use the fresh capital for business expansion into the U.S., Asia, and Latin America. Additionally, it will use part of the capital to strengthen its commercial operations and research divisions.

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DeepL claims to have more than 100,000 customers, the most prominent of which are Japanese media company Nikkei, edtech company Coursera, German railway company Deutsche Bahn, and software firm Zendesk.
The startup currently has 900 employees across its offices in Germany, the Netherlands, Poland, the U.K., Japan, and the U.S.
ICONIQ Growth, IVP, Atomico, World Innovation Lab, and Teachers' Venture Growth participated in the funding round.
DeepL was last valued at $1B in Jan. 2023 when it raised a $100M funding round.

Food supply chain startup Silo laid off 30% of its workforce. The layoffs impacted more than two dozen employees. A customer defaulted on its loan, causing Silo's banking partner to pause the loan product. The overall pause in lending resulted in a drop in revenues, forcing Silo to reduce its headcount. While the company has resolved the issue and restarted its lending product, it is on the lookout for a buyer.

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Founded in 2018, the Bay Area startup helps organizations automate their food and agricultural business operations.
Silo has since expanded its scope to include payment products, inventory management, ledger accounting, and financing.
The firm held potential M&A discussions with a few buyers last year but later shelved plans after raising $32M through a Series C round from Initialized, Haystack, Tribe Capital, KDT, and a16z.

Fintech startup Copper is pivoting away from banking services as its middleware provider Synapse filed for bankruptcy last month. A small subset of Copper's customers are currently unable to access their deposit accounts. Synapse's bankruptcy filing accelerated Copper's plans to discontinue debit cards and deposit accounts and pivot to a newer "Earn" product, which helps users make money from surveys and games.

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The startup is not deviating from its financial wellness mission but will generate revenue through white-label partnerships, enabling banks to offer Copper's products under their own brand.
Copper has seen a 160% YoY growth in revenue, primarily driven by its "Earn" offering.
Copper had raised $29M in 2022, when its banking app had over 800,000 users.
To date, the Seattle company has raised $42M from investors, including Fiat Ventures, Insight Partners, Invesco Private Capital, Index Ventures, Maven Ventures, and Samsung Next.

Indian budget hotel chain startup Oyo withdrew its IPO application with the Securities and Exchange Board of India on May 17, per Techcrunch. This is the second time Oyo has shelved its IPO plans after it withdrew its first application in 2021. Oyo is now in talks with investors to raise a fresh round of funding at a valuation ranging from $2B to $2.3B, down from the $3B valuation it targeted a month ago.

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Oyo has raised $3B in equity and debt funding to date and was once valued at $10B.
In recent years, the startup received criticism for its questionable business practices.
In 2020, it laid off thousands of employees in a bid to cut down costs.
Notable investors who have backed Oyo include SoftBank, Peak XV, Lightspeed, Airbnb, and Microsoft.

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Amazon Web Services (AWS) roped in AI startup Hugging Face to make it easier to run AI models on Amazon's custom Inferentia2 chips. With the latest partnership, Hugging Face will streamline the AI models to make them run in the most cost-effective way on Inferentia2 chips.
3D design, engineering, and construction software maker Autodesk acquired CG character design and visual effects startup Wonder Dynamics for an undisclosed sum. Wonder Dynamics' flagship tool Wonder Studio lets creators make complex 3D characters using AI-driven image analysis.
Peer-to-peer laundry startup Loopie is selling parts of its business to two companies. The startup is selling its Portland customer list to HappyNest and the customer list for Seattle and other active cities to competitor Rinse, a San Francisco, Calif.-based startup that is active in 12 cities. Loopie will retain its IP, software, and branding.
Link-in-bio startup Linktree crossed the 50M users milestone this week. The startup has been growing consistently, crossing the 41M user mark last December and touching 47M users this March. Linktree launched the beta version of its social commerce offering, which lets creators add storefronts to their bio pages and take 12% to 15% commission on sales.
Turkish fintech startup Colendi secured a $65M Series B funding round at a valuation of $700M. Investors providing the funding include Citi Ventures, Sepil Ventures, Re-Pie Asset Management, Finberg, and Hedef Holding. The firm expects to reach the $1B valuation mark by the end of this year.