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In a development that will surprise no one but excite arsonists who love to watch money burn, Elon Musk's latest venture, xAI, has raised $6 billion in funding. Valor, a16z, and Sequoia are piling money into an xAI-shaped roulette table, with Musk spinning the wheel.
Ivan thinks Musk's latest market foray will eventually result in AI so advanced that, thanks to his other outlandish projects, our puny human brains will become even more obsolete.
I think it's totally ridiculous. These investors seem flush with cash and were just skeptical. The sales pitch seems to be nothing more than “imagine an AI so powerful it makes HAL 9000 look like a Roomba.” And naturally, they put their money into it, because, well… I honestly don't understand the logic.
This is especially crazy because the $6 billion bonanza is just the latest chapter in Musk's epic saga of “how to get the world to fund my sci-fi fantasy.” The more Musk stories that come out, the more likely people are to hesitate to invest. But maybe this is why I'm a newsletter writer and podcast host (I spoke about this again today on Equity) and not a venture capitalist. I would think twice before betting on the man who invented self-driving cars that don't notice fire trucks, or spaceships that sometimes land but sometimes explode and burst into flames.
Today is the last day to save up to $800 on Disrupt passes, so reserve your early bird pass by tonight at 11:59PM PST.
This week's most interesting startup stories
Welcome to the Wild Wild West of Fintech! Remember that shining star called Synapse? Yes, it went supernova. Banking-as-a-service startups are a segment that seems to be soaring into the stratosphere, and Synapse itself was backed by a16z, but that didn't help. The company collapsed faster than my New Year's resolutions. With 10 million consumers in dire straits and many Fintechs frantically picking up the pieces, the world is in a state of carnage. It's like Game of Thrones, but with more spreadsheets and fewer dragons. If you thought this week was tough, just think about all those trying to access funds or keep their jobs because of this chaos. Fasten your seatbelt. Things are going to be rough in Fintech!
Drama on the bike: James Katibrou, 37, owner and CEO of Onyx Motorcycles, died just as the company was on the brink of collapse. Unpaid invoices, a missing COO, angry customers demanding refunds for delayed e-bikes from China, two former shareholders fighting for control of Onyx's remaining assets… It's a tough situation. Cutting jobs in the car industry: Lucid Motors cuts again, firing 400 employees (6% of its workforce) to coincide with the launch of its first SUV. Apparently, the company needs to “optimize resources.” CEO Peter Rawlinson thinks that a smaller workforce will help them deliver the best SUV in the world… Meanwhile, Fisker has fired hundreds of employees in a bid to survive. Employees found this out when they were suddenly ordered to work from home, lest anyone hear their collective sigh of despair during an all-hands meeting. Raising cash to save cash: Relay has raised a $32.2 million Series B funding round to help small businesses do more than just fill their bank accounts while they worry. Their secret? Focusing on mom-and-pop shops, not tech startups. Take a look, Silicon Valley!
Synapse has powered many startups. Then it stopped happening. Image credit: Synapse
Most interesting fundraising this week
Firefly, a cloud asset management startup aiming to simplify digital disruption with “infrastructure as code”, has raised $23 million in funding. This comes after the unimaginable tragedy of co-founder and CTO Joseph “Sefi” Genis being murdered by Hamas at a music festival. Despite this, the Firefly team chose resilience over retreat, continuing to grow revenue 4x in 2023. In other words, Firefly is now untangling the complexities of the cloud and weathering real-world disruptions like an absolute champion.
This is huge. Google invested $350 million in Flipkart. It becomes the latest VIP to back the Indian e-commerce giant, which is now valued at $36 billion. Get Money! Get Money!: Sending money back home is now a chat-style thing! Félix Pago, the fintech darling that makes sending money as easy as sending a WhatsApp, has raised $15.5 million in funding. Forget downloading apps and navigating complicated interfaces. This startup uses a WhatsApp chatbot. Dictionary with a unicorn horn: More money is being pumped into AI-focused startups. DeepL, which develops an automatic text translation and writing tool to rival the likes of Google Translate and Grammarly, has raised another $300 million. It is now valued at $2 billion.
Image credit: Anindit Mukherjee/Bloomberg/Getty Images
More TechCrunch articles you shouldn't miss…
Are you dreaming of a tech IPO bonanza in 2024? Now wake up and smell the rising interest rates! Even though Reddit, Astera Labs, Ibotta and Rubrik managed to walk through the IPO door earlier this year, most startups still seem to be stuck at home in their pajamas. Plaid's CEO declared that they will remain private for now, and Figma and Stripe are busy with tender offers as if they were holding bake sales rather than preparing for an IPO. Databricks raised $500 million but is not feeling the stock market vibe either. Maybe next year they will be more extroverted. And what about Canva? It took so long to go public that by then we might be designing newsletters directly from brain implants. TechCrunch will continue to track which startups will bravely run down the stock market runway or remain hidden behind the venture capital curtain. Stay tuned!
Other top stories:
What's happening in the messenger world: Signal president Meredith Whittaker is tired of the tech industry's “frat boys” and their “dorm room rackets.” At VivaTech in Paris, she didn't hide her concerns about everything from US companies' AI power grab to the EU's misguided attempts to regulate. AI in your ear: Welcome to the battle of generative AI gadgets. Now comes Iyo's GenAI earbuds! Humane and Rabbit R1 flopped like fish out of water, but Iyo thinks it can succeed where they stumbled. Unlike its predecessors' weird lapel pins and pricey handhelds that critics said should have been app-only, Iyo is betting on an already beloved form factor: Bluetooth earbuds. Hey, where's my wallet?: Is it a bird? Or a plane? No, it's Ledger Stax. 18 months after a big reveal, it's finally descended from crypto heaven. This new high-end hardware wallet features an E Ink display designed by iPod guru Tony Fadell. Yes, they're bringing back the e-reader vibe for your crypto needs. Wait, Foursquare just fired 105 staff?: Foursquare has fired 105 employees in an effort to “streamline” operations and put itself on a stronger financial footing. CEO Gary Little, who seemed to have just pressed send and vanished without a trace, didn't reveal much about what's coming next. In summary, it looks like Apple is back to its old tricks and is ready to “Sherlock” another innovative app feature. This time, Arc from The Browser Company is being targeted with its snazzy AI summarization tools, including “Browse and Summarize” and “Pinch to Summarize.” Apple's rumored “Smart Summarization” in iOS 18 sounds suspiciously similar and could turn Safari into a one-stop shop for AI-driven summarization of everything from web pages to missed notifications.
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