| Here’s your daily Startups briefing: - ⚖️ The jury ruled in favor of EV aircraft startup Zunum in its lawsuit against Boeing
- 📜 Seven creditors sued AI mortgage startup LoanSnap, claiming that the AI-powered mortgage startup owes them over $2M
- 📋 Co-living startup Common filed for Chapter 7 bankruptcy protection and plans to liquidate assets
Thank you. Karan
p/karan-chafekar | |
| 1 | | A federal court jury in Seattle ruled in favor of failed electric airplane startup Zunum in its lawsuit against Boeing. The jury awarded the firm $81M in damages, which the judge has the option to triple to $235M. Zunum alleged that Boeing, which invested seed money in the startup to support its hybrid-electric plane development, engaged in a "targeted and coordinated campaign" to gain access to Zunum's proprietary information and trade secrets. More: - Zunum further accused Boeing of sabotaging its efforts to secure funding from aerospace suppliers Safran and United Technologies and undermining its attempts to build a business.
- The jury found that Boeing had misappropriated Zunum's trade secrets and breached its contract with the startup, determining that Boeing's actions were "willful and malicious."
- The jury also awarded Zunum $12M for Boeing's interference with its relationship with Safran.
- Boeing denied the allegations and stated its intent to challenge the verdict, asserting that it is not supported by law or facts.
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| 2 | | Seven creditors, including Wells Fargo, have sued LoanSnap since Dec. 2020, claiming that the AI-powered mortgage startup owes them over $2M. 
What happened: Several state and federal agencies have levied fines on the startup and revoked its license to operate in Connecticut, per Techcrunch. Additionally, the firm was evicted from its headquarters in Southern California after the company stopped paying rent, resulting in unpaid dues of nearly $405,000. At the start of this year, the company missed payroll and suffered from high staff attrition. Despite the troubles, LoanSnap has not officially shut down. What the numbers say: Since its founding in 2017, the startup managed to raise $100M from prominent investors, including Richard Branson's Virgin Group, Reid Hoffman, Mantis Ventures, and Baseline Ventures. LoanSnap issued 1,300 loans worth almost $500M in 2021. The startup only originated 122 loans in 2023. Relevance: In 2021, the Federal Housing Administration (FHA) alleged that LoanSnap violated norms after failing to notify the firm when its operating loss crossed the 20% threshold in fiscal year 2019. LoanSnap agreed to pay a fine of $25,000 to settle the complaint. Despite these issues, LoanSnap managed to raise an additional $19M from Forté Ventures in July 2023, raising questions about the due diligence done by VC firms. | | | |
| 3 | | British challenger bank Monzo reported its first-ever annual pretax profit of £15.4M ($19.7M) for the year ending March 31. This marks a significant turnaround from the £116.3M ($147.8M) loss recorded in the previous financial year. The fintech unicorn's revenue more than doubled to £880M ($1.1B), driven by higher interest rates and a 84% increase in its loan book. More: - While expenses also surged by 51%, Monzo's strong financial metrics position it as one of the few profitable European unicorns and a potential candidate for an IPO.
- Earlier this March, the company raised a £340M ($430M) funding round and followed it up with another £150M ($190M) at a valuation of $5.2B.
- Monzo is eyeing international expansion, including a renewed attempt at entering the U.S. market and expanding its presence in Europe, starting with Ireland, where it expects to open a new office soon.
- Recently, the company hired former Cash App product head Conor Walsh to lead its U.S. expansion plans.
- Monzo partnered with Sutton Bank to hold its customer deposits.
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| 4 | | Co-living startup Common has filed for Chapter 7 bankruptcy protection and plans to liquidate its assets to repay creditors. The New York-based company, which was once the largest co-living operator in North America, cited mounting overhead costs and rising interest rates as key factors that drove it out of business. More: - In its Chapter 7 bankruptcy filing in Delaware, Common listed assets of up to $10M against liabilities of as much as $50M.
- Common had raised over $100M in venture capital funding and operated 5,200 co-living units across 12 cities.
- Notable backers of the firm include Kinnevik, Norwest Venture Partners, 8VC, and Maveron.
- Luca Bovone, CEO of Habyt, the Berlin-based parent company that acquired Common in early 2023, blamed the company's failure on its contracts and business model.
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| 5 | | Data management and analysis software provider Cloudera acquired Verta for an undisclosed sum. The venture-backed startup develops tools for building AI applications. The acquisition aims to strengthen Cloudera's team and accelerate its operational AI capabilities as the company bolsters its data and AI solutions. More: - Verta, which raised over $15M from investors like Intel Capital, offers a namesake software platform that provides prepackaged AI models, datasets, and sample prompts to speed up AI development projects.
- Its platform also includes features like RAG (retrieval-augmented generation) for expanding neural networks' knowledge bases without retraining and PromptBrew for automatically generating prompt variations to improve AI output quality.
- The acquisition of Verta's technology complements Cloudera's existing machine-learning features and prepackaged AI building blocks (AMPs) within its data platform.
- By integrating Verta's capabilities, Cloudera aims to enhance its offerings and provide customers with more advanced tools for streamlining AI application development and deployment processes.
- Two private equity firms acquired Cloudera two years ago for $5.3B.
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| 6 | | Enterprise AI company Xembly announced it is discontinuing its "customer-facing services," including its AI assistant that automated tasks like meeting notes, scheduling, and action items. The startup blamed the abrupt shutdown on the "recent changes in underlying AI platforms" that made it difficult to continue operating. Xembly will stop its enterprise AI service on June 1. The firm announced that it is working on a "new chapter" and plans to "push the boundaries of AI." More: - Founded in 2020, Xembly had raised $20M from investors like Norwest Venture Partners, Lightspeed Venture Partners, Ascend, Seven Peaks Ventures, and Flex Capital.
- It last raised a $15M funding round in Oct. 2022.
- Its AI assistant, Xena, worked across platforms to automate customer administrative tasks, including Salesforce, Qualtrics, and Twilio.
- Conversational analytics company Marchex's former CEO Pete Christothoulou co-founded the firm in 2020 and leads it as its CEO.
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- Venture Hub, a British AI startup operated by ANC Research & Development, is planning to launch a $50M private credit fund to buy servers equipped with Nvidia's high-powered H200 graphic processing units. The startup plans to initially establish a cluster of at least 96 servers that can help it process the large data sets needed for AI.
- New York-based information and analytics company LexisNexis Legal & Professional is set to acquire European legal tech startup Henchman. The firm plans to integrate Henchman's Retrieval Augmented Generation 2.0 solution with Lexis+ AI and Lexis Create platforms.
- OpenAI, the AI startup behind ChatGPT, is planning to purchase electricity from fusion startup Helion to power its data centers. Helion is currently working on the seventh prototype of its fusion reactor. The firm has also inked contracts to supply electricity to steel producer Nucor and tech giant Microsoft.
- OrCam, an Israeli startup developing an AI-powered visual aid device, laid off about half of its workforce. The layoffs impacted 100 employees, primarily in the marketing and sales divisions. The layoffs come just four months after it fired 50 employees.
*This is sponsored content | | | |
 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | This newsletter was edited by Karan Chafekar | |
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