Thursday, February 15, 2024

Checkout.com reports five-fold higher losses / 5.2% funding went to European female-founded firms / Gig-worker-focused startups have raised $800M

Plus, investors are luring startups with access to GPU clusters

Inside Startups

For February 15, 2024

Here’s a look at today’s Startups briefing.

📉 Checkout.com reported five-fold higher losses in the U.K. in 2022.
🇪🇺 Female-founded startups in Europe raked in 5.2% of the funding.
🎣 Investors are luring startups by providing access to GPU clusters.

Thank you.

Karan
p/karan-chafekar

British fintech startup Checkout.com reported losses of $126M for the U.K. division in the year ending December 2022, five-fold higher than the previous year's figure of $25M per overdue accounts filed with Companies House. The firm attributed the losses to reduced consumer spending, customers' return to physical stores, and heightened inflation. Revenues dropped from $260M in 2021 to $246M in 2022.

More:

Checkout.com operates in 50 countries across Europe, North America, the Middle East, and Asia Pacific.
The startup is considered one of the most valuable fintechs in Europe and had a valuation of $40B in 2022.
- The firm slashed its internal valuation to $11B at the end of 2022.
Losses widened due to increased salaries, costing the company between $70M and $100M.
- Additionally, the firm reported a depreciation and amortization expense of $24.8M.

A 5.2% share of European VC funding went to startups founded by only women in 2023, per Pitchbook.

What the numbers say: Startups with at least one female co-founder bagged 20.2% of the total funding, closing 2,333 deals worth €10.6B ($11.37B) in 2023. The total funding allocated to female co-founded startups experienced a 28% dip in 2023. The dip in funding for female co-founded startups was modest compared to the 45.7% drop seen in the overall asset class in 2023.

Relevance: Angel and seed-stage startups accounted for 829 of the total deals. Late-stage startups raked in 31.1% of the total funding.

What happened: The U.K. emerged as a hotspot for female-founded startups, witnessing 781 deals in 2023. France and Germany also had a high number of deals involving female-led startups.

35 startups offering services for gig workers and freelancers have collectively raised $800M to date. Startups in the sector are mostly centered around helping independent workers find jobs and manage finances. The VC funding dip has also impacted this sector, with several startups forced to take down rounds.

More:

Freelancer-focused platforms Upwork and Fiverr, which had a collective valuation of about $20B two years ago, are currently valued at $2B and $1.1B, respectively.
Notable funding rounds for job-finding platform startups from last year include Instawork's $60M Series D, Qwick's $40M, Brigad's $30M Series B, and Zubale's $25M Series A rounds.
Startups offering finance management solutions for gig workers include Collective, Indy, and Hnry.

Zoom out:

Between 2016 and 2022, the proportion of independent workers increased by 25%
- Pre McKinsey's estimates, independent workers made up 36% of the American population in 2022.

Investors are luring AI startups by offering access to GPU clusters. Microsoft's developer platform, GitHub's former CEO Nat Friedman, and his investment partner Daniel Gross were among the first to develop this idea. They started offering startups access to its 4,000 GPU cluster, called Andromeda Cluster, for a fee below market price.

More:

The success of the Andromeda Cluster initiative spurred other investors, including Index Ventures, Microsoft's M12, and Y Combinator, to establish their own GPU clusters.
Index launched a program last fall, giving startups free access to its cluster run by Oracle.
Microsoft reportedly allocated "several thousand chips" for its venture arm M12, Y Combinator, and other early-stage funds.
Conviction Partners, led by founder Sarah Guo, also joined the trend, providing startups access to its small cluster.

Google revealed that it has selected 17 startups to join its second growth academy program for cybersecurity startups. This year's program, Growth Academy: AI for Cybersecurity, is centered around cybersecurity startups leveraging AI to develop innovative solutions.

More:

The three-month program will be delivered at the Google Safety Center in Munich, Germany.
Startups will work closely with Google AI and cybersecurity experts.
Startups joining the current cohort include app protection platform Alma Security, cyberattack prevention software Blacklight, access management firm Cakewalk Technology GmbH, autonomous ethical hacking platform Ethiack Ida, disinformation monitoring platform LetsData, and human risk mitigation firm Zepo.
Last year's cohort saw 15 startups participate in the program.
- The startups in the first cohort received 60 hours of one-on-one in-person and online mentoring from about 27 Google mentors.

Oncology biotech startup NextPoint Therapeutics extended its Series B funding round by $42.5M, which brings the total raised under the round to $122.5M. The firm will use the proceeds from the latest round to advance its two immuno-oncology lead treatments into clinical trial phases and further develop additional therapeutic modalities.

More:

The funding round comes just two weeks after NextPoint hired Ivan Cheung, former U.S. CEO of Japanese pharma Eisai, as its next CEO.
- Cheung departed Eisai after an 18-year tenure at the firm, of which he spent the first five to 10 years working on its oncology division.
Catalio Capital Management led the new tranche, joined by Arkin Holdings, WTT Investment, MPM BioImpact, Leaps by Bayer, Sanofi Ventures, Invus, and others.

Quick Hits:

If your business accepted Visa or MasterCard from Jan. 1, 2004, to Jan. 25, 2019, you may be entitled to a share of the historic $5.6 billion settlement.*
Y Combinator published its revised list of 20 types of startups it wants to join its accelerator program. The firm is calling for AI-powered robotics, spacetech, defense technology, climate tech, spatial computing, enterprise AI software, ERP, and healthcare startups.
Rasa, an enterprise-focused dev platform for building conversational AI assistants, raised a $30M Series C round co-led by StepStone Group and PayPal Ventures. Andreessen Horowitz, Accel, and Basis Set Ventures participated in the round.
Seattle-based investment firm Breakwater Ventures emerged from stealth with a $10M fund to invest in pre-seed and seed-stage startups in data/AI, enterprise, fintech, and marketplaces. Average check sizes will range between $250,000 and $1M.
California-based startup H2MOF is leveraging advancements in the field of molecularly engineered materials to develop hydrogen storage solutions. The firm is backed by Nobel laureate professor Fraser Stoddart.
Conquer any Kubernetes challenge with the Kubernetes Cookbook. Get your copy from DoiT, a global team of cloud experts.*

*This is sponsored content.

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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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Explore

NYC sues tech giants over youth mental health crisis / Private lander headed to the moon / Apple AI tool animates images

Plus: Chipmaker Nvidia is now worth more than Alphabet and Amazon.

Inside Tech

For February 15, 2024

Here's a look at today's tech briefing:

New York City sues tech companies over youth mental health crisis.
SpaceX rocket launches Intuitive Machines' moon lander.
Meta to pass on Apple 30% fee for boosted posts.
Nvidia is now worth more than Alphabet and Amazon.

Beth
p/beth-duckett

New York City has sued Meta, Google, Snap, and TikTok, alleging that their platforms undermine the mental health of young users. The lawsuit accuses the tech companies of public nuisance, negligence, and gross negligence, alleging violations of city laws through the addictive design and marketing of their products.

More:

The lawsuit claims the social media platforms are "endangering our children's mental health, promoting addiction, and encouraging unsafe behavior."
Mayor Eric Adams said NYC is the first major U.S. city to take steps "of this magnitude" to directly address these dangers, comparing it to surgeon general's warnings on tobacco and guns.
Through the suit, the Adams administration is asking tech companies to compensate for the city's youth mental health services, which are estimated to cost over $100M annually.

Response:

Both Google and Meta said they frequently consult with youth safety experts and offer tools for parental control.
Meta, which owns Instagram and Facebook, claims to provide over 30 supportive tools and features to protect young people online.
A Snap spokesperson said the platform prioritizes communication between close friends along with camera-first interaction, differing from traditional social media feeds.

SpaceX's Falcon 9 rocket successfully launched a robotic lunar lander toward the moon on Thursday. The Odysseus lander is now en route to the moon's south pole, a key scientific area due to water ice, with an expected landing on Feb. 22.

More:

If the spacecraft developed by Houston-based Intuitive Machines completes its mission, it will mark the first U.S. moon landing since the 1972 Apollo 17 mission.
The lander developed under NASA's Commercial Lunar Payload Services (CLPS) program would also become the first privately-owned spacecraft to ever make it to the moon's surface.
Odysseus is carrying a CubeSat camera system from Embry-Riddle University for dust plume analysis and Jeff Koons' "Moon Phases" mini-moon sculptures, touted as the "first authorized artwork on the Moon."
The mission's payload also includes a Laser Retro-Reflector Array and a radio navigation beacon for the CLPS program, which can help it gather crucial data to support NASA's goal of returning humans to the moon in 2025.

Zoom out:

Thursday's launch, postponed by a day due to a methane fuel error, comes just over a month after a failed moon landing by another American company, Astrobotic Technology.

Photo credit: Intuitive Machines, Inc.

Meta will begin charging a 30% fee on advertisers who boost the visibility of their posts on Facebook and Instagram's iOS apps, passing on Apple's fee to customers. However, Meta notes that users can avoid the Apple fee by buying the boosts through Instagram and Facebook desktop or mobile sites, rather than through the iOS apps.

More:

Influencers and small business owners buying boosts on iOS will soon be billed through Apple, which takes the 30% service fee on the total ad payment before taxes.
Meta says the changes, which stem from a 2022 App Store update, force it to "either comply with Apple's guidelines, or remove boosted posts from our apps."
The company is also requiring users to add prepaid funds for boosting posts through its iOS apps before publication.
The new process will debut in the U.S. this month, with plans to expand to other markets and countries later this year.

Zoom out:

Meta and Apple have long disputed whether boosted posts are ads, as Meta argues, or in-app purchases subject to Apple's 30% fee.
Like Epic Games and Spotify, Meta wants to challenge Apple's in-app sales commission by advocating for alternative payment options and pushing for regulatory changes.

Nvidia's market capitalization surpassed Amazon's on Tuesday and Alphabet's on Wednesday, making it the world's fourth most valuable company after Microsoft, Apple, and Saudi Aramco. Nvidia's stock was worth $1.83 trillion at Wednesday's close, eclipsing Alphabet's $1.82 trillion, as it continues to ride the wave of the AI boom.

What the numbers show: On Wednesday, Nvidia shares climbed 2.5% to $739, outpacing Alphabet's $145.94 finish. Fueled by AI excitement, the U.S. chipmaker has seen its stock rise 49% this year and more than 400% since the start of 2023.

The bigger picture: Nvidia dominates about 80% of the market for high-end AI chips, including those used to build the world's most advanced AI models. The company developed the H100 chip, used by OpenAI, Amazon, and Meta CEO Mark Zuckerberg recently announced Meta's plan to purchase 350,000 H100 chips by year's end. The graphics cards used for AI training and inference reportedly cost around $30,000 apiece, amounting to billions of dollars.

Still: Dave Sekera of Morningstar warned that any threat to Nvidia's rapid growth could have a "very negative impact" on the company's valuation, advising investors to be cautious.

Cisco Systems is cutting 4,000 jobs as it predicts slower demand for its internet products and services over the next several months. The digital communications giant believes customers will exercise "a greater degree of caution" due to the uncertain economic outlook.

More:

The layoffs — part of a restructuring to realign its business and invest in critical areas — represent 5% of Cisco's workforce of 84,900 employees worldwide.
Cisco, headquartered in San Jose, California, announced the layoffs alongside its quarterly results on Wednesday.
Cisco reported a 5% decline for the quarter compared to the previous year, with revenue dropping 6% to $12.8B.

Zoom out:

In late 2022, Cisco cut 5,000 jobs ahead of its $28B purchase of cybersecurity firm Splunk.
Management now expects to complete that deal by April 30.

Apple researchers debuted "Keyframer," a generative AI tool that animates images using natural language prompts. According to a pre-print research paper, the AI tool allows users to animate static 2D images based on provided motion descriptions.

More:

To create the AI tool, the researchers merged design principles for language prompts with LLM's code-generation abilities.
Keyframer uses GPT-4 to generate CSS animation code for animating Scalable Vector Graphics (SVG) images or resizable illustrations that maintain quality.
Users can edit the animation by directly editing the code or providing more text prompts, with no coding experience required.
Keyframer is not yet available to the public.

Zoom out:

Last week, Apple and UC Santa Barbara researchers detailed an AI model that edits photos based on typed user instructions.
The "MGIE" model can do various edits, including modifying, resizing, cropping, flipping, and filtering images through simple natural language commands.

QUICK HITS

If your business accepted Visa or MC from Jan. 1, 2004 to Jan. 25, 2019, you may be entitled to a share of the historic $5.6 billion settlement.*
Elon Musk says SpaceX is switching its incorporation from Delaware to Texas after a Delaware judge voided the CEO's $56B Tesla pay package.
Broadcom CEO Hock Tan and former Enron executive John Arnold are joining Meta's board of directors.
Google is opening an AI hub in Paris with 300 researchers and engineers.
YouTube's latest feature allows users to remix music videos into Shorts.
Conquer any Kubernetes challenge with the Kubernetes Cookbook. Get your copy from DoiT, a global team of cloud experts.*

*This is a sponsored post.

Upcoming Events

MAR
7

Portfolio Diversification - Learn from knowledgable experts on the latest trends in alternative investment assets like private equity, crypto, real estate, and the art market.

Virtual

MAR
27

Discover how generative AI can speed up your enterprise, expand your business model, and improve your value proposition. Network with hundreds of AI leaders.*

Fontainebleau, Las Vegas

* This is a sponsored event

Beth Duckett

AI and technology writer

Beth is a contributing editor and writer of Inside's AI and Tech newsletters. She has written for notable publications like USA Today and the Arizona Business Gazette. During her time as a public policy reporter at The Arizona Republic, she received recognition with a Pulitzer Prize nomination and a First Amendment Award for her collaborative reporting on pension cost increases. You can reach her at Beth.Duckett@yahoo.com.