Startups Weekly: Musk raises $6 billion for AI and fintech dominoes are falling

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In a twist that surprises no one and excites arsonists who love to watch money burn, Elon Musk’s new company xAI has raised $6 billion in serendipitous funding. Valor, a16z and Sequoia are stacking the money on the xAI-shaped roulette table, with Musk spinning the wheel.

Ivan wonders if Musk’s latest market attempt will finally bring us AI so advanced that our puny human brains will become even more obsolete than they already are thanks to his other crazy projects.

I think it’s completely crazy. These investors seem flush with cash and just emerging from skepticism. I can only imagine the pitch: “Imagine an AI so powerful it makes the HAL 9000 look like a Roomba.” And, naturally, they threw money at him. Because, well… Honestly, I don’t see the logic in it.

What makes this particularly crazy is that the $6 billion bonanza is just the latest chapter in Musk’s epic saga about “how to get the world to fund my sci-fi fantasies.” The more stories that come out about Musk, the more you’d think people would start to hesitate before investing. But apparently, this is why I’m a newsletter writer and podcaster (we talked about this today on Equity too) and not a VC. I’d think twice before betting on the guy who gave us self-driving cars that don’t detect fire trucks and spaceships that sometimes land but also explode in a fiery spectacle.

Today is your last day to save up to $800 on your Disrupt pass. Reserve your early pass by 11:59pm PST tonight!

The most interesting startup stories of the week

Welcome to the wild west of fintech! Remember that bright star called Synapse? Yes, it was a supernova. The banking-as-a-service startup was a segment that seemed to be hurtling into the stratosphere, and Synapse itself was backed by a16z, but that didn’t help matters. The company collapsed faster than my New Year’s resolutions. With 10 million consumers now in the lurch and many fintechs struggling to recover, the situation is a full-blown catastrophe. It’s like “Game of Thrones” but with more spreadsheets and fewer dragons. If you thought your week had been tough, think about those trapped trying to access their funds or save their jobs thanks to this disaster. Buckle up – it’s going to be a bumpy ride for fintechs!

  • Drama rides a motorcycle: James Khatiblou, 37-year-old owner and CEO of Onyx Motorcycles, passed away just as his company was going down the drain. With unpaid invoices, a COO AWOL, angry customers demanding refunds for delayed electric bikes from China, and two former shareholders fighting for control of Onyx’s remaining assets… This is one hell of a ride.
  • Job cuts in the automotive sector land: Lucid Motors is cutting costs once again, laying off 400 employees (6% of its workforce) just in time for the launch of its first SUV. Apparently, they need to “optimize resources.” CEO Peter Rawlinson believes a smaller workforce will help produce the world’s best SUV… Meanwhile, Fisker has laid off hundreds in a desperate bid to survive. Employees took the hint when they were suddenly told to work from home, presumably so that no one could hear the collective sighs of despair during the general meeting.
  • Raise cash to save money: Relay just raised a $32.2 million Series B funding round to help small businesses do more than just nervously update their bank balances. Your secret sauce? Focusing on mom-and-pop shops instead of tech startups – take that, Silicon Valley!
Synapse powered many other startups. Until it wasn’t.
Image credits: Synapse

This week’s most interesting fundraisers

Firefly, the cloud asset management startup aiming to simplify digital chaos with “infrastructure as code,” has raised $23 million in funding. This comes after an unimaginable tragedy: co-founder CTO Joseph “Sefi” Genis was killed by Hamas at a music festival. Despite this, the Firefly team chose resilience over retreat and continued to grow its revenue fourfold in 2023. Essentially, Firefly is now untangling the complexities of the cloud and navigating through real-world turmoil like champions. absolutes.

  • That’s great: Google just invested a casual sum of $350 million in Flipkart, making it the latest VIP to back the Indian e-commerce powerhouse, which now has a valuation of $36 billion.
  • You will get money! You will get money!: Sending money home just got a lot more fun! Félix Pago, the fintech darling that is making remittances as easy as sending a WhatsApp, just secured $15.5 million in funding. Forget about downloading apps or navigating complex interfaces; This startup uses the WhatsApp chatbot.
  • A dictionary with a unicorn horn.: More funds are being invested in AI-focused startups. DeepL, which creates automated text writing and translation tools that compete with Google Translate and Grammarly, raised an additional $300 million. It is now valued at $2 billion.
Image credits: Anindito Mukherjee/Bloomberg/Getty Images

Other must-see stories from TechCrunch…

Dreaming of tech IPO booms in 2024? Well, wake up and smell the high interest rates! Even though Reddit, Astera Labs, Ibotta, and Rubrik managed to get through the IPO door earlier this year, it seems like most startups are still stuck at home in their pajamas. Plaid’s CEO stated that they will stay private for now, and Figma and Stripe are busy with public offerings as if they were hosting a bake sale instead of preparing for an IPO. Databricks raised $500 million, but it’s also not feeling the vibes of the public market; maybe next year they will feel more extroverted. And Canva? They may take so long to become public that by then we’ll be designing newsletters directly from our brain implants. Stay tuned as TechCrunch continues to track which startups will defy the stock market trail or remain hidden behind its venture capital curtains!

More top stories:

  • What is happening in the land of the messengers?: Meredith Whittaker, president of Signal, is fed up with the tech industry’s “frat boys” and their “bedroom antics.” At VivaTech in Paris, she did not hold back her concerns about everything from the power grab of AI by American companies to misguided attempts at EU regulation.
  • AI in your ears: Welcome to the battle of generative AI devices, which now includes Iyo’s GenAI headset! Humane and Rabbit R1 fell harder than a fish out of water, but Iyo believes they can succeed where they stumbled. Unlike the strange lapel pins and expensive wearables of its predecessors that critics say should have just been apps, Iyo is banking on an already beloved form factor: Bluetooth headphones.
  • Dude, where’s my wallet?: It is a bird? It is a plane? No, it’s the Ledger Stax, which finally descends from the cryptocurrency sky 18 months after the big announcement of it. This new high-end hardware wallet features an e-ink display designed by iPod guru Tony Fadell; Yes, they are bringing back the e-reader vibes for your crypto needs.
  • Wait, Foursquare had 105 employees to lay off?: Foursquare just laid off 105 employees in a bid to “streamline” operations and put itself on firmer financial footing. CEO Gary Little, who might as well have hit send and then disappeared into thin air, didn’t shed much light on what’s coming next.
  • Let me summarize that for you.: It seems like Apple is up to its old tricks, ready to “lock down” another innovative feature of the app. This time, it’s The Browser Company’s Arc that’s in the spotlight with its fancy AI summarization tools like “find for me” and “pinch to summarize.” Apple’s rumored “smart summaries” in iOS 18 sound suspiciously similar, which could make Safari a one-stop shop for AI-powered summaries of everything from web pages to missed notifications.

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