by tyler | Apr 23, 2024 | Tech
Perplexity , the AI search engine startup, is a hot property at the moment. TechCrunch has learned that the company is currently raising at least $250 million more at a valuation of between $2.5 billion and $3 billion.
The news comes on the heels of two other big fundraises that have seen the company’s valuation leapfrog in the last four months: In January, the company raised nearly $74 million at a valuation of $540 million (up from $121 million in April 2023). And at the beginning of March, the company closed funding on a valuation of $1 billion — a raise that has been quietly public since then (it was on PitchBook’s database for one at $56 million), and which Bloomberg highlighted earlier today (no value noted), and CEO Aravind Srinivas noted was $62.7 million .
Those two reported rounds are not the full story. We understand from multiple sources close to the company that it is actually also raising this further round of at least $250 million to capitalize on the attention it’s getting in the market. NEA and IVP, both previous backers of the company, are among those looking to invest in this larger round, according to sources.
Whether they or other previous backers participate, a source said, may depend on how willing Perplexity is to work with existing investors rather than diversify, expanding its cap table to bring in new investors.
“They are growing very rapidly,” a partner from an existing investor said. “Yes we will look to participate.”
The core of Perplexity’s product is a generative AI-based search engine that provides results using a chatbot-style interface. It’s definitely not the only company in generative AI pursuing the search opportunity: That is essentially how many people are using products like ChatGPT and Microsoft’s Bing (powered by OpenAI), and Google is making a big push to improve search results with its Gemini LLM.
But Perplexity is building its algorithms incorporating a variety of LLMs, the idea being that this produces a more accurate and richer response.
Now it’s using these to build what it describes as a more advanced enterprise “pro” product, too.
“Unlike other enterprise tools for knowledge work like Microsoft Copilot, Perplexity Enterprise Pro is also the only enterprise AI offering that offers all the cutting-edge foundation models in the market in one single product: OpenAI GPT-4, Anthropic Claude Opus, Mistral, and more to come,” CEO and co-founder Aravind Srinivas noted earlier today in a tweet promoting the new offering. “This gives customers and users choices to explore and customize their experience depending on their use cases.” That “more to come” may well be including more from Hugging Face and Meta, if Srinivas’s public endorsements and investor lists are anything to go by.
Considering that the company has only been around since 2022, Perplexity’s current investor list is already long, running to 46 names according to PitchBook data.
In addition to IVP and NEA, it includes other notable VCs such as Sequoia, Bessemer and Kindred; strategic backers like Nvidia, Databricks and Bezos Expeditions; and many recognizable individuals such as Jeff Bezos, Meta’s chief AI scientist Yann LeCun, Naval Ravikant, Susan Wojcicki, Elad Gil, Nat Friedman and Clément Delangue from Hugging Face. A newer backer, Daniel Gross, led the $56 million round from March with other new backers Stanley Druckenmiller, Y Combinator head Garry Tan and Figma’s CEO Dylan Field also participating, among others.
One fundraise coming rapidly on the heels of another is reminiscent of rolling fundraising that we’ve seen from other big startups over the years. In the years leading up to its IPO during a time of rapid growth and major attention, Snap regularly appeared to be raising money on an ongoing basis. These days, it appears to be all about AI, with companies like OpenAI , Anthropic and Mistral all raising at a rapid pace and seeing their valuations skyrocket along with that.
In the case of Perplexity, the startup is standing out in the market for a couple of reasons. Most obviously, it’s one of the ambitious, albeit smaller, hopefuls in the race to build generative AI services. Its unique position in the market is that it’s not focused on the race to build multipurpose large language models. Instead, taking a page from one of the biggest technology companies in the world today, it is tackling one specific product, at least for now: search.
Perplexity is not the only startup in AI that is building on very focused opportunities and by targeting enterprise. Synthesia in the U.K. is taking a similar approach with AI video tools, aiming them specifically at the business market, for the building of training and customer support video content.
In the case of Perplexity, the startup offers its tools on free and enterprise, paid tiers, and so far it has processed 75 million queries this year and is currently on ARR of $20 million, according to Bloomberg .
Its reason for raising again so soon? Yes, perhaps to capitalize on customer and investor interest at what one investor described as a “zeitgeist moment” for the startup. But also because of the mechanics of building any kind of AI service right now.
“C ompute is very expensive, so they may need to raise” for that reason alone, one said.
We have reached out to Srinivas for comment and will update this post as we learn more.
by tyler | Apr 23, 2024 | Tech
Keeping homes and offices at just the right temperature requires a lot of energy. Buildings generate about a third of the carbon pollution in the U.S., most of which comes from heating and cooling.
Bedrock Energy , co-founded by Jocelyn Lai, thinks it has found at least a partial solution. The startup seeks to decarbonize climate control by installing geothermal heating pumps. Today, it’s focused on large commercial buildings, but the core technology could drive nearly any HVAC system.
Lai appeared on TechCrunch’s Found to discuss her company and its hopes of driving down the cost of a proven technology to address the climate crisis.
Early users of Bedrock included those like real estate firms with net-zero goals, Lai said. In the Northeast, the company works with Con Ed to help reduce power demand. The company drills up to 2,000 feet below Earth’s surface to tap into temperatures that consistently hover around 75 to 85 degrees F. In the future, it could expand to serve residential customers as well.
Lai decided to help launch Bedrock in 2020 because she believed there was an increased need for decarbonization-oriented sustainability startups.
“Geothermal heating and cooling has been around for a really long time,” she said. “The fact that this technology is about scaling something so cool and so efficient and so beneficial for society, and that there isn’t really risk in whether or not it works — it’s just about, how do we build technology that makes it more accessible in more buildings, more affordable, more available for many building owners.”
Fundraising has been easy for Bedrock, in part because there remains a steady interest in climate technology, Lai said. Last October, TechCrunch reported that the company raised an $8.5 million seed round.
Bedrock Energy thinks the solution to decarbonizing skyscrapers is 1,500 feet underground
In the podcast, Lai also recalled the highs and lows of being a first-time founder, learning about the importance of hiring the best talent, investing in good software and building a strong engineering team. Her first hires were from the oil and gas industry, who were able to bring expertise in subsurface energy modeling to the company. They’ve been key additions to the team, and their transition to climate tech shows how talent from existing industries can help drive decarbonization in the U.S. and around the world.
by tyler | Apr 23, 2024 | Tech
News that the former founder of HeadSpin is headed to prison for fraud was further evidence that the last boom in the paired worlds of startup and venture capital led to more than just a little bit of fraud. Manish Lachwani, founder in question, is getting prison time and a massive fine for lying to investors, lies that allowed his company to raise nine-figures’ worth of funding.
The company persists, and would likely prefer to let the entire situation fade from the public eye. Fair enough, but the tale of Lachwani — The New York Times reports that Lachwani inflated “HeadSpin’s revenue nearly fourfold, making false claims about its customers and creating fake invoices to cover it up” — is not an isolated case.
Even past the somewhat dated frauds at Theranos and Rothenberg Ventures , there’s been a lot to cover lately. From investor complaints about Bolt’s fundraising , to BloomTech , Nikola , Binance and FTX , we’ve seen a lot of financial shenanigans. Why are we seeing so much fraud and related behavior from upstart tech companies?
Pace, in a sense. In a historically abnormal period of low interest rates, capital hungry for yield flooded into the venture capital world. As a result, investors got very busy with their checkbooks and sometimes spent less time on diligence. Recall that many very young startups are more ideas and potential than hard assets and historical cash flows, so what counts as diligence for a PE firm looking to buy, say, gas stations, is different than doing diligence on a seed-stage startup. But capital poured into late-stage startups too, leading to a lot of capital moving very quickly. Mistakes were made, or, put another way, some founders saw the boom time as a period in which they could bend the rules.
One thing to keep in mind is that as a market reaches its peak, you will often see fraud explode. Consider it a top warning. Hit play, let’s talk about it!
by tyler | Apr 23, 2024 | Tech
X, the company formerly known as Twitter, is launching a dedicated TV app for videos uploaded to the social network soon. X CEO Linda Yaccarino announced on Tuesday that the new app will bring “real-time, engaging content to your smart TVs.” The app’s interface looks quite similar to YouTube’s, as seen in a teaser video shared by Yaccarino.
The app will feature a trending video algorithm that is designed to help users stay updated with tailored popular content, along with AI-powered topics that will organize videos by subject. The app will also support cross-device viewing, which means you can start watching a video on your phone and then continue watching it on your TV.
Yaccarino says the app will feature enhanced video search and be available on “most smart TVs.” Although there isn’t an official launch date for the app, the executive says it will be available “soon.”
From the small screen to the big screen X is changing everything. Soon we’ll bring real-time, engaging content to your smart TVs with the X TV App. This will be your go-to companion for a high-quality, immersive entertainment experience on a larger screen. We’re still building it… pic.twitter.com/QhG6cVDpZ8
— Linda Yaccarino (@lindayaX) April 23, 2024
The upcoming app launch is part of Yaccarino’s efforts to turn the social media site into a free-speech “video first” platform. The social network currently features an original show hosted by former congresswoman Tulsi Gabbard and another by former Fox Sports host Jim Rome. Last month, Musk canceled a talk show deal with former CNN anchor Don Lemon after he was interviewed for the first episode of the show.
The announcement comes a week after Truth Social, the social media platform owned by Donald Trump’s media company, also unveiled its plans to launch a live TV streaming platform. The platform will focus on “news networks” and “religious channels,” along with “ content that has been canceled” or “is being suppressed on other platforms and services,” the company had said.
Trump’s Truth Social plans to launch a live TV streaming platform
by tyler | Apr 23, 2024 | Tech
Tesla investors, still digesting a 43% drop in share price since the beginning of the year, are gearing up for what will likely be unimpressive financial results for the first quarter and a shift in priorities for CEO Elon Musk, who is making more moves to go “balls to the wall for autonomy.”
Tesla is expected to report earnings after markets close Tuesday. The company’s earnings call is scheduled for 5:30 pm ET.
Tesla shares rose Tuesday morning more than 2% ahead earnings, a brief rosy sign amid an otherwise downward trend that’s accelerated since early March. The falling share price comes as Musk pushes forward with a renewed focus on automated driving on two fronts: selling more customers on its advanced driver assistance system known as “Full Self-Driving,” or (FSD) and a moonshot effort to bring a robotaxi to market.
Over the weekend, Tesla dropped the price of its Full Self-Driving (FSD) advanced driver-assistance system to $8,000, down from $12,000. That price cut is in addition to last week’s drop of the FSD monthly subscription to $99 , down from $199. The push to get FSD into more cars could be a bid to collect more data as Tesla works to boost the neural networks that will power fuller-scale autonomy. FSD today can perform many driving tasks in cities and on highways, but still requires a human to remain alert with their hands on the wheel in case the system requires a takeover.
Tesla faces narrowing profits as it places a major and expensive bet on autonomous driving technology. Last week, Tesla laid off 10% of its staff in a move to reduce costs in preparation for the company’s “next growth phase,” per an email Musk sent to all employees.
Earlier this month, Musk abruptly announced on X that Tesla was pausing the development of its $25,000 electric vehicle in favor of a robotaxi that he promised to reveal in August. Sources within Tesla have confirmed to TechCrunch that they didn’t have prior warning from Musk on this sudden shift and that internal restructurings reflect a new ethos that puts robotaxi development at front and center.
All of this is happening as Tesla zigzags on its EV pricing strategy.
Last week, Tesla ditched EV inventory price discounts, but over the weekend slashed prices on the Model 3 and Model Y by as much as $2,000 in the U.S., China and Germany. As we saw during the first quarter of 2023 , those price cuts are taking their toll on Tesla’s income and margins .
The company will need to convince investors that its shift in priority to autonomous vehicles is a silver lining in the cloud of declining margins, rather than just smoke and mirrors.
Tesla’s lower first-quarter delivery figures combined with price cuts are ingredients for a smaller profit pie. And analysts seem to agree.
Analysts polled by Yahoo Finance expect earnings of $0.51 per share on $22.15 billion in revenue. As a reminder, Tesla generated $25.17 billion revenue in Q4 and $23.3 billion in the first quarter of 2023.
Tesla delivered 386,810 vehicles in the first quarter of 2024, down 20% from the 484,507 it delivered in the final quarter of 2023. It’s worth noting that this wasn’t just a quarter-over-quarter blip. Tesla delivered fewer cars than the first quarter of 2023 — the first year-over-year drop in sales in three years.
Tesla’s Q4 results show a company already grappling with shrinking profit margins due to its price-cutting strategy, rising costs of its Cybertruck production launch and other R&D expenses.
The automaker reported net income, on a GAAP basis, of $7.9 billion in the fourth quarter — an outsized number caused by a one-time, non-cash tax benefit of $5.9 billion. The company’s operating income and its earnings on an adjusted basis provided a clearer picture of its financial performance.
Tesla reported operating income of $2.06 billion in the fourth quarter, a 47% decrease from the same year-ago period. On an adjusted basis, the company earned $3.9 billion, a 27% drop from the same period last year.
The question is whether Tesla can prevent that profit pie from shrinking to profit muffin.
Since Tesla reported its Q1 2024 production and delivery numbers, the company has continued to pull various financial levers aimed at attracting new buyers and inducing existing customers to pay for FSD — all while reducing costs and maintaining profit margins.
Those opposing goals coupled with Musk’s “wartime CEO mode” status are bound to make the Q1 earnings call entertaining. Beyond that potential theater, there are pressing long-term questions about how Tesla delivers on autonomy and if it will be enough to convince investors that it can still lead and innovate.
by tyler | Apr 23, 2024 | Tech
Tesla has officially revealed a new Performance variant of the recently refreshed Model 3 sedan as the company looks to fight off receding demand.
The new version of the Model 3, which starts at $52,990, has a new active damping system and adaptive suspension for better handling and comfort, 296 miles of battery range and can travel from 0 to 60 miles per hour in 2.9 seconds with 510 horsepower on offer.
Compared to the previous Model 3 Performance, the new version has 32% more peak power and 16% more peak torque, and 5% less drag. It does all this while consuming less energy than its predecessor, according to Tesla. That’s thanks in part to a new-generation drive unit and a rear diffuser and spoiler. The front and rear ends of the car have also benefited from a slight face-lift, separating it from the other versions of the newly tweaked Model 3 revealed last year .
The Model 3 Performance still carries with it the wholesale changes made with that recent refresh. That means there’s an ambient light bar wrapping around the cabin interior, better sound dampening and upgraded materials throughout, a stalk-less steering wheel and a new touchscreen display.
Tesla is launching the new Model 3 Performance at a time when the company is coming off one of its worst quarters for deliveries in recent memory, having dropped 20% compared to the fourth quarter of 2023 . The impact of that disappointing first quarter is set to be revealed Tuesday when the company publishes its financial results after the market closes.
The company is also just one week removed from announcing sweeping layoffs of more than 10% of its global workforce, with the cuts affecting seemingly all corners of the company.
Orders placed Tuesday, at least at the time of publication, show an estimated delivery window of May/June 2024 in North America.
