Perplexity AI Joins Hardware Race & Sequoia China's $9B Deployment Challenge

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

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• HongShan, spun out of Sequoia last year, is reportedly struggling to invest its huge war chest

• OpenAI's Sora leaked

• Perplexity AI Joins Hardware Race

• Elon Musk's AI company xAI is reportedly developing a standalone consumer app similar to ChatGPT

• OpenAI Secured 30 trademark registration including recent OpenAI o1

• Alibaba releases an ‘open’ challenger to OpenAI’s o1 reasoning model

Fresh from the analyst desk: We've got 50 slides of pure startup gold on co-founder equity and fundraising, Akash Bajwa's take on speed-to-value in AI, and Sarah Tavel's crystal ball on LLMs. Bonus: Finally, a SaaS metrics framework that actually makes sense. Fresh VC and startup opportunities just dropped!

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• What a successful process looks like to raise a pre-seed (Link)

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• Heads up — YC is doing a Fall batch for the first time ever (Link)

• Realize the long road you’re signing up for by fundraising (Link)

Startup Funding Updates

360Player, a Raleigh, NC-based provider of a digital platform for modern sports clubs, received a $25M investment from Five Elms Capital.

Biolevate, a Paris-based medical documentation platform using NLP and Computer Vision, raised €6M in Seed funding. The round was led by EQT Ventures.

Talus Network, a developer of a blockchain protocol to build autonomous AI agents performing tasks, raised $6M in funding, at $150M post-money valuation. The round was led by Polychain Capital, with participation from Foresight Ventures, Animoca, Geek Cartel, and Echo.

Recite Me, a Gateshead, UK-based provider of a website accessibility software business, raised £4.6M in Funding. The round was led by BGF.

OpenTrade, a London, UK-based provider of a platform for real world asset-backed stablecoin yield products, raised $4M in Seed extension. The round was led by AlbionVC.

Volta, a Milan, Italy- and Paris, France-based provider of an SaaS AI powered B2B distribution platform, raised $6.3m in pre-seed funding. The round was led by Emblem, with participation from Robin Capital, Founders Future, Sequoia, Andreessen Horowitz, as well as the family offices of Berlusconi and Agnelli families.

Barton Blakeley, a Harpenden, UK-based carbon utilisation tech company, raised £2.7M in funding. The round was led by Elbow Beach Capital.

Roon, a NYC-based company providing an access to a guide for health, raised $15M in Series A funding. The round was led by FirstMark Capital and Forerunner Ventures, with participation from early investors, including TMV and Sequoia Capital.

Circleback, a San Francisco, CA-based provider of an AI-powered app for meeting notes and automations, raised $2.5m in seed funding. Backers included Y Combinator, Rebel Fund, Pioneer Fund, and Transpose Platform, along with angel investors Kulveer Taggar, Oliver Jung, JJ Fliegelman, Rich Aberman, Jason Freedman, and others.

Montara, a Milpitas, CA- and Tel Aviv, Israel-based provider of a data development platform that enables organizations to deliver data products faster, raised $5.4M in Seed funding. The round was led by Norwest Venture Partners, with participation from Borge Hald.

Doron Therapeutics, a Chapel Hill, NC-based clinical-stage biotech company focusing on degenerative musculoskeletal conditions, raised $11M in Series A funding. The round was led by SPRIM Global Investments (SGI).

Molyon, a Cambridge, UK-based startup that specializes in building lithium-sulfur (Li-S) batteries, raised €4.3m in its first funding round. The round was co-led by IQ Capital and Plural.

Argil, a Paris, France-based video engine company for the creator economy, raised €4.9M in funding. The round was led by EQT Ventures, with participation from youtuber Kwebblekop, and Charles Gorintin.

Hyperheat, an Offenburg, Germany-based startup that develops electric heaters for steel, cement, and chemicals industries, raised $3.7m in funding. The round was led by Amadeus APEX Technology Fund, with participation from Finindus, Possible Ventures, E44 Ventures, and Breakthrough Energy Fellows.

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Venture Capital Updates

HongShan, the Chinese investment firm that separated from Sequoia Capital in 2023, is reportedly facing challenges in deploying its $9 billion capital pool, leading to frustration among limited partners who continue paying management fees on uninvested capital. While the firm has increased its stakes in existing Chinese portfolio companies like ByteDance and Xiaohongshu, and invested in Chinese robotics and AI startups, it's now actively expanding into Europe and North Asia, including plans for a Tokyo office. This geographic expansion, marked by the opening of a London office, suggests HongShan is seeking new investment opportunities beyond China's borders, potentially putting it in competition with its former partner Sequoia Capital.

Latest In Tech

Perplexity AI's CEO Aravind Srinivas has announced plans to develop a sub-$50 voice-based AI device after his social media post hit 5,000 likes. While this move follows a trend of AI startups venturing into hardware, with companies like Midjourney and OpenAI exploring similar initiatives, the track record for such ventures has been challenging, as evidenced by Rabbit's R1 facing distribution issues and Humane's Ai Pin struggling with poor reviews and recalls. Despite these industry setbacks, Perplexity appears poised to move forward with its hardware ambitions, backed by substantial funding and reportedly close to raising an additional $500 million.

Alibaba's Qwen team has released QwQ-32B-Preview, a new "reasoning" AI model with 32.5 billion parameters that outperforms OpenAI's o1 models on certain benchmarks like AIME and MATH tests. While the model excels at solving logic puzzles and math questions through self-fact-checking capabilities, it has limitations including unexpected language switching and struggles with common sense reasoning. Released under an Apache 2.0 license for commercial use, the model notably reflects Chinese political perspectives on sensitive topics, and its emergence comes amid increased industry focus on reasoning models and test-time compute as traditional scaling approaches show diminishing returns.

Artists who were beta testers have leaked OpenAI's Sora video model, protesting against unpaid labor and "art washing" claims by the company. The artists accuse OpenAI of exploiting their feedback for free without fair compensation, while the company emphasizes that participation in Sora's research preview is voluntary. OpenAI has not confirmed the leak's authenticity but continues to stress its commitment to balancing creativity with safety, aiming to release Sora once safety concerns are addressed.

Other News

OpenAI has filed a trademark application for "OpenAI o1" with the USPTO, following an earlier foreign trademark application in Jamaica made months before the model's announcement. While OpenAI has previously secured around 30 trademark registrations for products like ChatGPT, Sora, and DALL-E, it notably failed to trademark "GPT" due to its generic nature, and is currently engaged in a legal battle with Guy Ravine over the use of "Open AI," though a federal circuit court recently ruled in OpenAI's favor through a preliminary injunction.

Elon Musk's AI company xAI is reportedly developing a standalone consumer app similar to ChatGPT to provide access to its Grok chatbot, with the launch expected after closing a $5 billion funding round that could value the company at $50 billion, notably offering 25% of shares to Twitter acquisition backers like Fidelity, Larry Ellison, and Jack Dorsey as compensation for their loyalty.

In-Depth Insights

• Foundational equity: Co founders, first hires and fundraising 50 slides of startup data covering everything from co-founder equity through seed round fundraising.

• Time to Value in the AI Age Akash Bajwa explores how the speed of delivering measurable value is reshaping AI-driven businesses.

• The Future of LLMs Sarah Tavel explores the evolving use cases and challenges for large language models in diverse industries.

• The Power of Product Metrics Dive into actionable frameworks for defining and measuring product success metrics in the SaaS world.

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