Pre-Money: May 27th, 2024

Founder knows best, hungry LLMs, IPO Radar, Humane sale & more

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The Vibe

The week’s most important happenings

Investors took a breath before settling into today’s Memorial Day recharge. Plenty of action up ahead and here’s what we’re tracking:

  • LLMs hungry for content

  • More fintech foibles

  • Founder Knows Best

  • The IPO Radar Screen

  • Humane seeks a sale

  • Missed Moon Landings

  • and more…

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The week’s top performance indicators

Based on publicly available data from Thompson Reuters, NASDAQ, CNN Business & other third-party sources.


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Dots & Lines

The week’s top takeaways

  • Content still king, for now: LLMs need to train on relevant, accurate content, and to cite it to back up assertions. This need for quality data is driving a race by AI companies to strike content deals, like OpenAI and NewsCorp’s $250M pact. Terms haven’t been disclosed, and unless these deals are exclusive it’s hard to see how licensing provides LLMs with long-term defensibility. And it’s easy to imagine how blending partisan media into answers could lead to even more misinformation than Google’s early missteps, like recommending people eat rocks. How leading AI models integrate diverse information and data is an important trend for investors to track, as it will impact AI as well as media business models.

  • Founder knows best: Numerous businesses that grew too fast in the heyday of 2021 are going back to basics. Techstars announced that Founder David Cohen is back in the CEO seat, after a year in which the leading accelerator downsized and confronted multiple challenges across its geographic and sector programs. Notable founders came back to lead other high-profile businesses in the past year, including Ryan Petersen at Flexport and Greg Solano at Yuga Labs. Bringing a founder back in after a “professional CEO” wasn’t able to continue a company’s zero to one trajectory is likely to get a business back on track, though also an admission that the scaling strategy calling for outside leadership was flawed or too early.

  • Fintech reeling from a misfiring Synapse: The bankruptcy of a16z-backed Synapse is rippling through the fintech world, disabling products and stranding customer funds. Synapse provides banking-as-a-service (BaaS), making it easy for startups to implement deposits, payments and other common banking features into their apps through simple APIs and tools. As the business declined, the company filed for bankruptcy and sought a buyer earlier this year. But the deal fell apart, and the downstream effects are impacting functionality across the fintech world. Companies like Juno and Mainvest have been unable to service customer banking needs, with some consumers wondering where their cash went. The issue is likely to bring a spotlight to the counter-party reliance common in fintech and where regulatory responsibility lies when things go bad.

  • Time for Tempus: The next Pre-IPO company to test public markets is likely to be Tempus AI, as the healthcare data company started and run by Groupon Founder Eric Lefkofsky filed its S-1. The Chicago-based business initially filed IPO paperwork in 2021. It boasted $532M in 2023 revenue - growing 65% year-on-year - along with net losses of $214M. Tempus has raised more than $1.5B of venture funding, including a $200M infusion from SoftBank Vision Fund that came out in the prospectus. Roughly two thirds of its revenue comes from providing access to its broad data sets to leading pharma companies, with most of the rest derived from lab testing. Only a tiny fraction of its revenues comes from AI services, but it leans heavily into the story of revolutionizing health through AI to support the IPO, mentioning the term 228 times in the prospectus. Stay tuned to how markets receive this message.


Smart Humans explores venture capital

In this episode of Smart Humans, Slava Rubin talks with Carry's Ankur Nagpal about tax optimization and getting the best return from your investments.

Deal Points

A few items of interest

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Mid-stage dealmaking is once again on the uptick, with Series C cash raised up 197% from Q4 to Q1, per Carta’s Q1 Report

The Forecast

Looking ahead to this week

During the week of May 27th, take a look at:

  • Earnings from Box ($BOX), Mongo ($MDB), Ooma ($OOMA) and Salesforce ($CRM)

  • Consumer confidence on Tuesday

  • Q1 GDP on Wednesday

  • April personal income and spending data on Friday

  • Liquidity Summit with top GPs and technologists starts Sunday in Napa

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