Elon Musk’s xAI To Raise Billions At $40 Billion Valuation & OpenAI planning to build its first AI chip in 2026

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☕ Good Wednesday Morning. Welcome to today's quick rundown in the Venture Daily Digest Newsletter.

Scroll down to find

• xAI's staggering $40B valuation play

• OpenAI's secret chip ambitions for 2026, and

• Microsoft's explosive allegations against Google!

• Plus, a TikTok billionaire's rise to China's richest, OpenAI's surprising consumer revenue revelation, and the open-source AI world's new data mandate.

Today's essential VC intel: Global venture trends signal a shift as exit activity improves amid funding slowdown, AI investments reshape the decade, and why CAC is the new EBITDA. Bonus: Fintech's dramatic deal slump, the education factor in VC success, and hot startup opportunities you can't afford to miss!

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🗞️ Startup Funding Updates

Elon Musk’s AI company, xAI, is in talks to raise several billion dollars in new funding at a $40 billion valuation, nearly doubling its current $24 billion post-money valuation. xAI developed its first model, Grok, to power features on Musk’s social network, X, and offers an enterprise API. The company is training the next generation of Grok models on 100,000 Nvidia GPUs, leveraging X’s data for a competitive edge.

Infinite Machine, a NYC-based company building non-car vehicles, raised $9.3M in Seed funding. The round was led by Andreessen Horowitz through its American Dynamism fund, with additional participation from Adjacent Capital, Necessary Ventures, Otherwise Fund, the founders of Reformation, Replit, and HuggingFace and Formula 1 World Champion Nico Rosberg (Founder Rosberg Ventures).

Infraspeak, based in Porto, offers an all-in-one facilities management platform for seamless coordination of internal teams and external service providers. The startup raised $19.5 million in Series B funding, led by Endeit Capital, with participation from Bright Pixel Capital and others.

GMI Cloud, a Santa Clara, CA-based AI-native GPU cloud provider, raised $82M in total Series A funding. The round consisted of $15M in equity funding and $67M in debt financing in a Series A round led by Headline Asia, bringing its total capital to over $93M.

Petfolk, a Charlotte, NC-based provider of veterinary and urgent care through its network of “connected care” clinics, raised $36M in Series C funding. The round was led by Deerfield Management. Existing investors Movendo Capital, White Star Capital, Cutting Horse VC, Idea Farm Ventures, and Parkview International also participated.

HomeBoost, a San Francisco, CA-based provider of a home energy platform, raised $4M in Seed funding. The round was led by True Ventures, Gigascale Capital, and Incite.org.

Innoventric, a NYC-based company which specializes in transcatheter tricuspid regurgitation (TR) treatment, raised $28.5M in Series B funding. The round was led by RA Capital Management, with participation from the European Investment Committee (EIC), and returning investors BRM Group, JG Private Equity, and Mivtach Shamir Holdings.

Homee, a Tampa, FL-based provider of an AI-driven direct repair network for the Property and Casualty insurance industry, raised $12M in Series C funding. The round, which brought the total capital raised to more than $75M, was led by W.R. Berkley Corporation with participation from new investors The Institutes, and Sure, and existing strategic backers State Farm, Liberty Mutual, The Hartford and Desjardins.

Billd, an Austin, TX-based provider of financial solutions for commercial subcontractors, raised $17.5M in funding. The round was led by LL Funds and MissionOG, with RJT Credit, Ulysses Management, and HighSage Ventures also participating.

Duetti, a NYC-based provider of a music platform for catalog monetization for independent artists, raised $114m in funding. This includes $34m in equity financing led by Flexpoint Ford, along with participation from existing investors Nyca Partners and Viola Ventures.

Table22, a NYC-based provider of revenue-expanding e-commerce tools for merchants, raised $11M in Series A funding. The round was led by Lightspeed Venture Partners, with participation from institutional investors Footwork, Forerunner Ventures, and Alt Capital, among others, as well as individual participants including founders of and leaders from companies like Square, BentoBox, and SevenRooms.

TripFactory, a Singapore-based global travel platform, raised $50M in Series A funding. The investor was an unamed International Corporate Group headquartered in India. The deal values the company at half a billion dollars.

Latii, a NYC-based proptech startup for high-end dealers, architects, and homeowners, raised $5M in Seed funding. The round, which brings Latii’s total funding to $8.3m, was led by Leadout Capital, with participation from Era Ventures, Act One, Nine Four Ventures, and RADV.

Moondream, a San Francisco, CA-based maker of an open-source vision-language model to incorporate AI into applications, raised $4.5M in Pre-Seed funding. The round was led by Felicis, alongside the M12 GitHub Fund and Ascend.

Zenity, a Tel Aviv-Yafo, Israel-based company which specializes in securing agentic AI, raised $38M in Series B funding. The round, which brought the total amount to $55M, was led by Third Point Ventures and DTCP. It followed the recent strategic investment by Microsoft’s venture arm, M12, with support from existing investors Intel Capital and Vertex Ventures.

Matia, a Miami, FL-based data operations platform providing ingestion, reverse ETL, observability and catalog capabilities, raised $10.5M in funding. The round was led by Leaders Fund and Secret Chord Ventures, with participation from Cerca Partners and Caffeinated Capital.

Alimetry, a Minneapolis, MN-based medical solutions company, raised US $18M in Series A2 funding. The round was led by GD1 (Global from Day One), with participation from the American Gastroenterological Association (AGA) GI Opportunity Fund, Olympus Innovation Ventures, IceHouse Ventures, and existing investors.

Andium, a NYC-based provider of Industrial Internet of Things (IIoT) remote-field monitoring and communications technologies, raised $21.7M in Series B funding. The round was led by Aramco Ventures with participation from existing investors Climate Investment, Intrepid Financial Partners, and individual investors including former Citadel CIO, Thomas Miglis.

DoorLoop, a Miami, FL-based property management software company, raised $100M in Series B funding. The round was led by JMI Equity.

Brightwave, a NYC-based provider of an AI financial research platform, raised $15M in Series A funding. The round was led by Decibel Partners with participation from OMERS Ventures.

Cruisebound, a NYC-based company providing digital cruise assistant services for first-time cruisers, raised $13M in funding. The round was led by Thayer Ventures with participation from Link Ventures, former Booking Holdings Chairman and CEO Jeff Boyd, PAR Capital Ventures, Tripadvisor co-founder and former CEO Steve Kaufer, Flybridge, Plug & Play Ventures and others.

Auquan, a London, UK-based AI innovator for financial services, raised additional $4.5M in Seed funding. The round, which brought the total amount to $8M, was led by Peak XV with continued participation from Neotribe Ventures.

Semble, a London, UK-based provider of an integrated clinical system and innovator in healthtech, raised $15M in Series B funding. The round was led by Mercia Ventures with participation from Octopus Ventures, Smedvig Ventures and Triple Point.

📰 Venture Capital Updates

Olivia Wilde, renowned for her roles in "Tron: Legacy" and "Don't Worry Darling," has ventured into the investment sector by launching Proximity Ventures. She co-founded the firm with Neil Sirni, formerly of Roc Nation's venture division Arrive; Jason Mack, formerly of Mack Ventures; and musician Santi White, known as Santigold. Proximity Ventures focuses on early- and growth-stage investments in consumer and enterprise sectors and has already made four investments, including in biotech company Pendulum Therapeutics. The firm anticipates its first close next month.

Krafton India has anchored IMM Investment's first India fund, marking its third venture partnership in the country after 3one4 Capital and Lumikai, with over $170 million already invested and $150 million earmarked. IMM Investment India, led by Prakhar Khanduja, will back Series A and later-stage startups in sectors like consumer, tech, SaaS, and gaming. Its first investment was in Sugar, a leading cosmetics brand.

Crosscut Ventures, led by Brian Garrett, has launched a new $100 million seed fund focused on frontier tech, including energy, space exploration, advanced manufacturing, and climate solutions. The firm has seen talented founders emerge from companies like SpaceX and Anduril, driving its focus on hardware-centric technologies. Crosscut plans to bring on a partner with expertise in growth and project finance to support its hardware startups beyond the typical venture lifecycle.

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🤖 Latest In Tech

OpenAI is collaborating with TSMC and Broadcom to build an in-house AI chip, with plans to launch it as early as 2026. The company has abandoned plans to establish its own chip manufacturing factories, instead focusing on in-house chip design. OpenAI is also beginning to use AMD chips through Microsoft's Azure cloud platform for model training, moving beyond its previous reliance on Nvidia GPUs.

OpenAI generates the vast majority of its revenue from consumers, with Chief Financial Officer Sarah Friar stating that roughly 75% comes from consumer subscriptions, including a paid plan for its chatbot ChatGPT that starts at $20 per month. Friar noted that ChatGPT currently has 250 million weekly active users, converting free users to paid at a rate of 5% to 6%. OpenAI recently closed a $6.6 billion fundraising round and is working on infrastructure plans to support AI, advocating for a significant data center build-out in the U.S.

🪄 Other News

Microsoft has accused Google of secretly funding groups to produce biased studies discrediting Microsoft and misleading antitrust authorities, according to a blog post by their lawyer. The blog claims that an astroturf group named the Open Cloud Coalition, allegedly backed by Google, is being posed as led by small European cloud providers for misleading appearances. This behavior is part of a broader pattern where Google allegedly funds campaigns like the Coalition for Fair Software Licensing, which targets Microsoft’s cloud services, Microsoft claimed.

The Open Source Initiative (OSI) has defined "open" AI as systems that provide complete access to training data, source code, and training settings, posing challenges for tech companies like Meta. Meta's model Llama does not meet OSI's standards as it restricts commercial use and does not offer training data, leading to disagreements with OSI's new open AI definition. This definition aims to prevent "open washing" by companies and has sparked discussions on AI openness, with industry leaders like Hugging Face supporting the emphasis on transparency in training data.

ByteDance founder Zhang Yiming is China's richest person, with a personal wealth of $49.3 billion, according to the Hurun China Rich List. He surpassed bottled water magnate Zhong Shanshan, whose fortune dropped to $47.9 billion. Despite challenges in the real estate and renewables sectors, ByteDance's global revenue grew 30% to $110 billion last year, contributing to Zhang's rise in wealth.

🧐 In-Depth Insights

• The Big Book of Venture Capital (Q3 2024) report highlights improving exit activity and a healthier secondary market, with more startups acquiring other startups. However, global funding has declined, especially in Europe, where new fund formations have dropped sharply. AI is attracting a large portion of VC dollars, but valuations are inconsistent, and many investors are hesitant to deploy capital despite having funds available.

• Ten Years of AI Venture Capital Deals and Exits Visual Capitalist takes a look at the rise of AI investments over the past decade, with a focus on key deals and exits.

• CAC is the New CapEx: EBIT-CAC Should Be the New EBITDA General Catalyst argues that Customer Acquisition Cost (CAC) is becoming the new CapEx for many companies, and suggests that EBIT-CAC should replace EBITDA as a core financial metric.

• State of Fintech Q3’24: Deal Volume Hits 2017 Lows Fintech deal volume has reached its lowest point since 2017 as investors shift their focus to emerging opportunities in other sectors, according to CB Insights' Q3 2024 report.

• Emerging VC Fundraising: The Influence of Educational Background: Alex Samson examines how the educational backgrounds of emerging VCs influence their fundraising success and strategies.

📬 Venture Daily Digest Picks

• How many hours do Y Combinator founders work? A poll from YC’s internal forum. (Read)

• Y-Combinator's Framework for Building a Successful MVP. (Read)

• How much time should founders typically allocate to fundraising, from Elizabeth Yin (Hustle Fund Cofounder)? (Read)

• Venture Capital Due Diligence Questionnaire. (Read)

• Framework: How VCs See Your Startup? The Ladder of Proof. (Read)

• The playbook teams are using to crush viral app growth (Link)

• Building Cap Table As A Founder: Template to Download. (Read)

• Duolingo on how to win with gamified design. (Read)

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