Welcome to Startups Weekly. subscription here Get it in your inbox every Friday.
You know what’s not a great idea for my energy levels? Enjoy a week of TechCrunch Disrupt and then hop right on board for a startup event in Oslo, Norway. You’ve just gotten over the jet lag, so it’s time to get back on the plane and do it again. Hrrrrgh. I gotta really love startups.
In 2016, I spent some time in Oslo as well He complained about the lack of sophistication in the Norwegian startup ecosystem. I was curious if they even figured out how to get started. the answer? Yes kind of. Startups themselves are much more efficient than they were seven years ago, and it’s amazing what seven years of development does to an ecosystem. There are some great accelerators, good support systems and even a number of investors starting to emerge.
I was somewhat horrified, and somewhat surprised, to find a competitor wearing the “let’s destroy this fragile startup ecosystem” crown: investors. Obviously not all of them, but many of the people I spoke to had an amazing tendency to myopic thinking. Specifically, I saw a common repetition of a mistake I’ve seen repeatedly in the UK ecosystem for the past 15 years or so: angels and pre-seed investors negotiating for too much equity in companies. This is not a good idea – not in an industry where the financial model is run by outliers. Simply put: venture capital works even if most startups give poor returns, but only if a few startups in the portfolio are able to achieve local success. It’s a numbers game that falls apart if your deal structure virtually guarantees that later-stage investors will take one look at the cap table and realize that if they invest, the founders are at risk of losing interest. Greed now leads to bad returns later.
In other words, demanding a 30% stake in a startup is shortsighted, and founders should not stand for it. Fortunately, the problem can be easily solved by a savvy investor willing to take a smaller stake in companies for the same amount of money. This does two things: it is more convenient for founders, and it means that the investment becomes significantly more competitive against other investors. Founders just need to know that it’s okay to back out of unreasonable terms, and hopefully investors will realize that they’ll be in it for the long term.
With that discontent out of the way, let’s take a look at what else happened in startup land this week!
Disable the disabled
Image credits: M. Reinertson / Photo Collection for TechCrunch / Flickr
Yes, yes, it was TechCrunch Disrupt last week, but our treacherous crew of keyboard warriors have been hard at work, recapping and extracting some session gems you may have missed. also! There’s plenty of fun video content available, in case you can’t be there in person this year.
Here are some of our most-read stories from Disrupt:
Keep the artificial intelligence on you: Devin reports that Signal’s Meredith Whittaker believes AI is essentially a “surveillance technology.”
Developers, we still need you: Paul reports on GitHub CEO saying that despite AI gains, demand for software developers will still outstrip supply.
Open a ticket: I interviewed the CTO at Atlassian (b I conspired with him To bring it back to the Disrupt stage next year, which I found funny, and the Disrupt planning team probably wouldn’t agree with), and I addressed how Atlassian was late in moving to the cloud, but on the ball with AI.
Investors? We don’t need any steenkin’ investors:Domenic Madori reports that Bootstrapping is cool again.
Will technology go back to what it used to be?
![Image of a red piggy bank in the rain with two people holding red umbrellas above it](https://techcrunch.com/wp-content/uploads/2023/08/GettyImages-912366968.jpg)
Image credits: Erhui 1979 / Getty Images
So Talkdesk may have just made its third round of layoffs in less than 14 months, but the tide appears to be turning: Alex reports numbers that seem to indicate that layoffs in tech are a thing of the past. Layoffs in January of this year were nearly 90,000, but September so far is just over 3,000. Does this mean everything is fine? Well, not quite, but maybe the deep cuts have been made, and everyone is waiting for it.
Anecdotally, it is very difficult to raise a venture capital fund at the moment, but over the past couple of weeks, there has been no shortage of new fund announcements. Here are some highlights:
Return the string to the paths: Jacqueline reports that Blockchain Capital has launched two new funds totaling $580 million.
Fresh shower for Cascadia: Kyle reports that VC firm Fuse has closed a $250 million fund to invest in startups in the Pacific Northwest.
Make it rain in Africa: Tage reports that African contrarian investor P1 Ventures has achieved a $25 million seed close on its second fund.
NI Gural Fund: Christine reports that Mythos Ventures has secured $14 million for its AI fund.
Shopping fun: Connie reports that Industry Ventures just raised $1.7 billion to acquire more stakes and companies.
2 What now?: For TC+, I took a look at the new numbers from Carta, which show that while the “2 and 20” fee structure is the most common, there are definitely a bunch of exceptions.
The ghost in the shell
![Captcha, I'm not a robot on your laptop screen.](https://techcrunch.com/wp-content/uploads/2023/09/GettyImages-1356934365-e1695303681636.jpg)
Image credits: Oleksandr Hruts/Getty Images
Another week, another wall of AI coverage from me and my colleagues, as it continues to be a darling of the startup world, with some stratospheric valuations this week. OpenAI is said to have raised over $80 billion, and AI-based market intelligence company AlphaSense has raised a price tag of $2.5 billion. User!
Devin interviewed Anthropic’s Dario Amodei on the Disrupt stage, and the company’s CEO shared the startling realization that he’s not sure there are any limits to what AI can do. Equity’s podcast team jumped into the love fest in this week’s episode titled “Everybody Loves Anthropists,” and it makes sense — Amazon is writing a check for up to $4 billion at the company.
Other AI stories you’ve read a lot this week:
Well, computer: Paul reports that OpenAI gives ChatGPT a voice for oral conversations.
Amnesty International sees what YouTube did there: Sarah reports that YouTube Shorts will be getting a creative AI feature called Dream Screen.
Hit: Amanda is informed that the writers’ strike is over. She took a look at how AI negotiations work. This was an interesting story after a conversation I had with an AI executive in the film industry, who claimed that “no one has lost their job because of what we do.”
Top reads on TechCrunch this week
Swipe up and right: Sarah reports that snobby Tinder users can now pay $499 a month to be matched with the “most popular” profiles.
Ka-splunk: Ron reports that Cisco plans to acquire Splunk in a massive $28 billion deal, giving shareholders a big bonus along the way.
Sorry we almost took you out of the financial world. Can we still be friends?: Kirsten points out that Uber is getting tougher with taxi companies.
Well done, you have a top boat: Amanda reports that Reddit will start paying users real money for popular posts.
Look over your shoulder: Zach mentions that, yes, you should update your Apple devices again, because spyware is bad.