This newsletter provides a briefing on recent technology and business news, highlighting significant events like Anthropic's court win regarding AI training data and Infinite Reality's acquisition of Napster. The report also covers substantial funding rounds for various startups across sectors such as healthcare, fleet management, and AI infrastructure, alongside notable personnel changes in venture capital firms. Additionally, it touches upon newly launched investment funds and a few instances of layoffs and IPO developments, offering a snapshot of current happenings in the tech and investment landscape

This collection of excerpts from a tech newsletter, StrictlyVC, provides a snapshot of recent happenings in the venture capital and technology landscape. It covers significant events like Meta's unsuccessful bid to acquire AI chip startup FuriosaAI and Meta's potential ad-free subscription model for Instagram in Europe. The newsletter also highlights the troubles at AI sales automation startup 11x, which is facing customer attrition and potential legal issues despite substantial funding. Furthermore, the report details numerous funding rounds for various startups across different sectors, along with information on new venture funds, acquisitions, and key personnel changes within prominent tech companies.

This edition of the StrictlyVC newsletter provides a concise overview of significant developments in the technology and venture capital landscape. Key themes include increased regulatory scrutiny of major tech companies (specifically Apple), substantial investments in AI infrastructure and startups, a flurry of funding rounds across various sectors, venture capital fund activity, notable exits and potential IPOs, and interesting personnel and industry news.

Main Themes and Important Ideas/Facts:

1. Regulatory Pressure on Big Tech:

• The European Union antitrust regulators have mandated that Apple take specific actions to open its ecosystem to competitors in the smartphone, headphone, and virtual reality headset markets.
• Apple expressed strong disapproval of this decision, stating: "Today’s decisions wrap us in red tape, slowing down Apple’s ability to innovate for users in Europe and forcing us to give away our new features for free to companies who don’t have to play by the same rules." This highlights Apple's concern about the impact on its innovation pace and competitive advantage.

2. Intense Competition in AI Infrastructure:

• A significant investment of $100 billion is being made by a consortium including Nvidia, xAI, Microsoft, BlackRock, and MGX to establish an AI data center initiative.
• This initiative is positioned as a direct competitor to the "Stargate" plan proposed by OpenAI, SoftBank, and Oracle, indicating a fierce race to build the foundational infrastructure for future AI development.

3. Continued Investment in AI Startups and Applications:

• Generalist AI: A stealth robotics startup founded by a former senior DeepMind robotics researcher, Pete Florence, has received investment from Nvidia. Their mission is “to make general-purpose robots a reality.” This signifies ongoing interest and investment in advanced robotics powered by AI.
• Arcade.dev: A one-year-old startup raised a $12 million seed round to develop AI systems that can perform tasks for users by connecting to various applications.
• Augment: Another young startup secured $25 million in seed funding for its AI assistant designed to help freight operators manage complex tasks.
• Proscia: An eleven-year-old company specializing in digitizing tissue samples and applying AI for disease diagnosis raised $50 million, emphasizing the growing application of AI in healthcare.

This newsletter provides a snapshot of recent happenings in the venture capital and technology sectors. It covers Alphabet's increased bid for cybersecurity firm Wiz and details legal disputes involving tech companies like Flexport and Rippling. The report also highlights significant funding rounds for various startups across different industries, including biotech and AI. Furthermore, it touches on Travis Kalanick's future vision for CloudKitchens involving AI, and notes consumer trends in using generative AI for shopping. Finally, the newsletter includes information on new venture funds, acquisitions like xAI buying Hotshot, and notable personnel moves within the tech world.

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This edition of the StrictlyVC newsletter covers a range of topics within the technology and venture capital landscape, including the ambiguity surrounding "AI agents," significant funding rounds, Klarna's long-awaited IPO filing, growing frustrations at Foxconn due to Trump-era tariffs, and other notable news items.

1. The Ambiguity of "AI Agents": A Central Point of Confusion

A significant portion of the newsletter focuses on the widespread use and lack of clear definition of the term "AI agent." While tech leaders from major companies like OpenAI, Microsoft, and Salesforce are bullish on the potential of AI agents to transform work, there is no consensus on what exactly constitutes an "agent."

• Bullish Predictions: The newsletter highlights the optimistic views of prominent CEOs:
• Sam Altman (OpenAI): Agents will “join the workforce” this year.
• Satya Nadella (Microsoft): Agents will replace certain knowledge work.
• Marc Benioff (Salesforce): Salesforce aims to be “the number one provider of digital labor in the world” via its “agentic” services.
• Lack of Definition and Dilution of Meaning: The authors, Maxwell Zeff and Kyle Wiggers, argue that the term "agent," much like other AI-related jargon, is becoming "diluted to the point of meaninglessness."
• Concerns about Confusion and Customer Frustration: This lack of a shared understanding could lead to significant issues: "An agent from Amazon isn’t the same as an agent from Google or any other vendor, and that’s leading to confusion — and customer frustration."
• Industry Skepticism: Ryan Salva, senior director of product at Google and former leader at GitHub Copilot, expresses strong negative sentiment towards the term: “I think that our industry overuses the term ‘agent’ to the point where it is almost nonsensical,” Salva told TechCrunch. “[It is] one of my pet peeves.”

Key Quote: "But no one can seem to agree on what an AI agent is, exactly."

2. Significant Funding Activity Across Various Sectors and Stages:

The newsletter details a flurry of funding rounds, indicating continued investment appetite in diverse areas of technology.

• Mega Rounds:Plata (Mexico City digital bank): $160 million Series A at a $1.5 billion valuation.
• Terabase Energy (solar power plant construction robotics): $130 million Series C.
• Big-But-Not-Crazy-Big Rounds: Several companies raised in the ~$40-50 million range, including:
• Alloyed (advanced metal alloys and 3D printing, UK): $47.9 million Series B.
• Curve (smart card and mobile app, UK): $47.9 million.
• RedotPay (cryptocurrency transactions, Hong Kong): $40 million Series A.
• Seed Funding: Noteworthy seed rounds include:
• Town (AI-powered tax advisor for small businesses): $18 million.
• Human Computer (video game studio): $5.7 million.
• OptimHire (AI-driven recruitment platform): $5 million.
• New Funds: Rex Woodbury's Daybreak Ventures announced a $33 million fund focused on early-stage consumer and enterprise startups.

3. Klarna Finally Files for IPO Amidst Modest Profitability:

After much anticipation, the Swedish payments company Klarna has finally filed to go public.

• Filing Details: Klarna filed despite reporting only "$21 million in net income on $2.81 billion of revenue for 2024." This suggests a move towards public markets even without robust profitability.

Key Fact: "Klarna, a 19-year-old Stockholm-based payments company, finally filed to go despite having just $21 million in net income on $2.81 billion of revenue for 2024."

4. Foxconn CEO Expresses Frustration over Trump-Era Tariffs:

Young Liu, CEO of the major contract manufacturer Foxconn, publicly stated the negative impact of the previous US administration's tariff policies on their customers.

• Impact on Customers: Liu noted that the tariff policy "is giving the CEOs of our customers a big headache now."
• Major Clients Affected: Foxconn's significant clients include Apple, Amazon, and Google, indicating a broad impact across the tech industry.

• AI Models: Artificial intelligence algorithms and systems trained on data to perform specific tasks, such as language processing or image recognition.
• Copyrighted Material: Creative works (e.g., text, images, music) that are legally protected, granting the owner exclusive rights to their use and distribution.
• PRC-produced: Refers to products or technologies originating from the People's Republic of China.
• Startup Accelerator: A program that provides resources, mentorship, and often funding to early-stage companies to help them grow and scale. Y Combinator is a prominent example.
• Demo Day: An event where startups participating in an accelerator program present their businesses to potential investors.
• AI Agents: Autonomous AI programs designed to perform specific tasks or assist users.
• Automated License Plate Recognition (ALPR): A technology that uses cameras to capture and identify vehicle license plates automatically.
• Gunshot Detection System: Technology that uses sensors to identify and locate the sound of gunfire.
• AI-powered Drug Discovery: The use of artificial intelligence algorithms to analyze biological and chemical data to identify potential drug candidates.
• Industrial X-ray CT Scanners: Advanced imaging devices used to create 3D representations of the internal structures of manufactured parts and products.
• Business Intelligence (BI): Technologies and practices for collecting, integrating, analyzing, and presenting business information to support better decision-making.
• Embedded Analytics: The integration of data analysis and visualization capabilities within other applications.
• Hosting Providers: Companies that provide the infrastructure and services for websites and other online content to be accessible on the internet.
• Digital Content Platforms: Online platforms where users can create, share, and consume digital content such as images and videos.
• Digital Asset Management (DAM): Systems used to store, organize, and manage digital assets like images, videos, and documents.
• Content Strategy: The planning, development, and management of content across various channels.
• Audience Development: Strategies and tactics used to grow and engage a specific group of people interested in a particular product, service, or content.
• Brand Partnerships: Collaborative relationships between brands for mutual benefit, often involving cross-promotion or content creation.
• Seed Round: The initial stage of funding for a startup, often used for early product development and market research.
• Series A, B, C, D, E Rounds: Subsequent rounds of funding for startups, typically used for scaling operations, expanding the team, and increasing market reach.
• Valuation: The estimated worth or market value of a company.
• Venture Capital (VC): A type of private equity funding provided to early-stage companies with high growth potential.
• Private Equity: Investment in companies that are not publicly traded on stock exchanges.
• Mergers and Acquisitions (M&A): Transactions involving the consolidation of companies or the purchase of one company by another.
• API (Application Programming Interface): A set of rules and specifications that allows different software applications to communicate and exchange data with each other.
• Stablecoin: A type of cryptocurrency whose value is pegged to another asset, such as a fiat currency like the US dollar, to maintain price stability.
• Arbitrator: A neutral third party who resolves disputes outside of court.
• Consumer Genetics Testing: Genetic testing services offered directly to consumers, providing information about their ancestry, health predispositions, and other traits.
• Layoffs: The termination of employees, often due to economic reasons or company restructuring.
• Freedom of Information Laws: Legislation that grants the public access to information held by government bodies.

1. Elon Musk attributed the X outage to a "massive cyberattack," suggesting it was potentially the work of a large, coordinated group or even a country. He claimed this external malicious activity was the reason for the platform being unavailable to many users.
2. President Trump stated that the U.S. is engaged in discussions with four different groups regarding a possible sale of TikTok. This suggests ongoing negotiations and potential changes in the ownership structure of the popular social media platform within the United States.
3. Tesla's stock experienced a significant drop of 15% on the reported day, marking its worst single day of trading since September 2020. This indicates a substantial negative shift in investor confidence for the electric vehicle company on that particular day.
4. OpenAI has signed a five-year, $11.9 billion agreement with CoreWeave, a cloud service provider specializing in GPUs. This includes OpenAI receiving $350 million worth of equity in CoreWeave. The deal is significant as it provides OpenAI with crucial computing resources for AI development and helps CoreWeave diversify its customer base beyond Microsoft, potentially improving its IPO prospects.
5. Two companies with significant funding rounds are: 4C Medical, which raised $175 million to develop minimally invasive treatments for structural heart diseases, particularly mitral regurgitation; and Nirvana Insurance, a commercial trucking insurance startup utilizing AI and telematics, which raised $80 million.
6. ServiceNow, a company providing enterprise workflow automation, is acquiring Moveworks for $2.85 billion in cash and stock. Moveworks uses artificial intelligence to help businesses streamline IT support, HR, and other enterprise workflows.
7. The new book is titled Careless People. It alleges that Sheryl Sandberg crossed professional boundaries and that Meta considered sharing user data with China.
8. Former Google CEO Eric Schmidt is the new CEO of Relativity Space. The company aims to build low-cost, reusable rockets to compete with companies like SpaceX and Blue Origin in the space launch market.
9. D-ID is an eight-year-old Tel Aviv startup that specializes in generating and animating digital avatars using deep learning and image processing. The company is laying off 22 employees, which is approximately 25% of its workforce.
10. A significant trend in U.S. tech job postings this year is the high demand for employees with artificial intelligence skills, with nearly 1 in 4 tech jobs seeking such expertise.

. The Impact of AI on Startup Funding:

• Y Combinator Founders Raising Less: A notable trend is emerging where some Y Combinator founders are intentionally seeking less venture capital funding. This is attributed to the rise of AI, which enables startups to achieve significant revenue with leaner teams and lower overhead.
• Investor Terrence Rohan from Otherwise Fund notes a "vibe shift" among founders, stating one felt, “People used to climb Everest and they needed oxygen. Today, people climb it without oxygen. I want to summit Everest and use as little oxygen (VC) as possible.”
• This isn't necessarily due to a lack of VC interest, as Rohan clarifies that the specific founder's round was "oversubscribed."
• Alexis Ohanian, founder of Seven Seven Six and co-founder of Reddit, reacted to this sentiment with "Smart founder."
• Leaner Teams and Faster Growth: The newsletter highlights stories of AI startups "quickly reaching tens of millions in revenue with headcount as low as 20 people." This efficiency is inspiring some founders to adopt a more capital-efficient approach.

2. AI Development and Strategic Moves by Tech Giants:

• Meta Testing In-House AI Chips: Reportedly, Meta is actively "testing its own AI chips in order to lessen its dependence on Nvidia." This signifies a growing trend among major tech companies to control more of their AI infrastructure and potentially reduce costs associated with relying on third-party chip manufacturers.
• Anthropic's Growth and Google Ties: Anthropic, often positioned as an independent player in the AI race, has experienced significant growth, increasing its "annualized revenue by 40% to $1.4 billion" since the beginning of the year. Additionally, the newsletter points out that Anthropic has "deeper ties to Google than previously known," suggesting potential collaborations or strategic dependencies in the AI landscape.
• AI as a Tool, Not the Answer: Mark Cuban, at SXSW, cautioned against viewing AI as a panacea, stating, "AI is never the answer... AI is the tool." This emphasizes the importance of strategic application and human oversight in leveraging AI technologies.
• Concerns Regarding AI Accuracy: A Columbia Journalism Review study revealed significant inaccuracies in AI-powered search engines, with Grok providing "incorrect citations of news articles 94% of the time." This raises concerns about the reliability of information sourced through AI and the potential for misinformation.

3. Government and Regulatory Landscape:

• Trump's Warning to Tesla Protesters: President Donald Trump announced a strong stance against violence targeting Tesla dealerships, stating he will "instruct the U.S. government to charge any violent acts against Tesla dealerships as domestic terrorism." He further warned, “You do it to Tesla, and you do it to any company, we’re going to catch you, and you’re going to go through hell.” This highlights the potential for government intervention in protecting specific technology companies from politically motivated actions.
• Trump Praises Musk and Considers Buying a Tesla: In the same context, Trump reportedly "praised Tesla CEO Elon Musk at a White House event" and indicated he "would purchase a Tesla himself," signaling a potentially positive relationship between the former president and the electric vehicle company.
• Proposed Bitcoin Act: A "recently unveiled Bitcoin Act sponsored by six Republican senators would authorize the federal government to buy over $80 billion worth of Bitcoin," indicating a growing interest and potential government involvement in the cryptocurrency space.

This newsletter provides a snapshot of recent tech and business news, covering topics such as Microsoft exploring alternatives to OpenAI, and Figma considering an IPO. It highlights significant funding rounds for AI-focused startups across various sectors and reports on companies planning to go public, including Kraken.

The newsletter also touches upon concerns regarding AI's impact on social connections and mentions other noteworthy events, such as a Presidential order on cryptocurrency and a unique Cheeto selling for a high price.

Quiz

Answer the following questions in 2-3 sentences each.

1. Which company is building its own AI chips after landing Meta as a customer, according to the Financial Times?
2. Which AI company is facing a lawsuit from Condé Nast and McClatchy?
3. What is the value of the unsolicited offer from Elon Musk’s x.AI to buy OpenAI?
4. What are Apptronik's robots designed to do?
5. What does Candid Health's automated platform simplify for healthcare providers?
6. What mental health conditions is Newleos Therapeutics developing oral medications for?
7. What is ACCURE Battery Intelligence's AI-based software designed to do?
8. What does Antithesis's platform identify in complex software systems?
9. Which company acquired Zilla Security, and for how much?
10. What did Meta's CTO, Andrew Bosworth, say to Meta employees who felt disrespected by the changes to DEI policies?

1. Arm Holdings, owned by SoftBank, is building its own AI chips after landing Meta as a customer. Arm licenses chip designs and instruction sets for electronic devices.
2. Cohere is the AI company facing a lawsuit from Condé Nast and McClatchy. The publishers are claiming copyright infringement, like other similar suits against AI firms training their models on copyrighted work.
3. Elon Musk's x.AI offered to buy OpenAI for $97.4 billion. This offer was part of Musk's attempt to block OpenAI's planned conversion from a nonprofit.
4. Apptronik develops humanoid robots designed to work alongside humans in warehouses and manufacturing plants. The goal is to automate tasks and improve efficiency in these environments.
5. Candid Health's automated platform simplifies medical billing for healthcare providers. This can help providers save time and money while also reducing errors.
6. Newleos Therapeutics is developing oral medications for mental health conditions such as generalized anxiety, social anxiety, substance use disorders, and cognitive impairment. The company focuses on mental health and neurological disorders.
7. ACCURE Battery Intelligence's AI-based software monitors and analyzes lithium-ion batteries. This enhances their safety, performance, and lifespan through data analysis.
8. Antithesis's platform identifies and reproduces bugs within complex software systems. It's an autonomous software testing platform.
9. CyberArk, a publicly traded cybersecurity company specializing in identity security and privileged access management, acquired Zilla Security. The deal was for $165 million in cash plus $10 million through an earn-out.
10. Andrew Bosworth said that if Meta employees felt disrespected, "You should quit if you feel that way, I mean it." This was in response to employee concerns about the changes to Meta's DEI policies and internal dissent.

Consider these questions for deeper analysis and discussion:

1. Analyze the trend of younger founders in the AI space, as alluded to in the title of the newsletter. What factors might be contributing to this trend, and what are the potential implications for the industry?
2. Discuss the significance of Arm Holdings' decision to build its own AI chips. How might this impact the competitive landscape in the semiconductor industry and the development of AI technologies?
3. Examine the legal battle between Elon Musk and OpenAI. What are the core issues at stake, and what are the potential consequences for the future of AI development and governance?
4. Based on the funding rounds mentioned in the newsletter, what are the most promising or potentially disruptive areas within the tech and startup ecosystem? Provide specific examples to support your argument.
5. Evaluate the "Essential Reads" section, focusing on the claims made by The Markup regarding Match Group and the New York Times' coverage of the Murdoch family. What do these stories reveal about the ethical and governance challenges facing major tech and media companies?