IPOs: Hot or Not?

This is The Startup Breakdown, the newsletter where we learn, laugh, and love startups. By joining this growing community of hundreds of future startup aficionados (think i spelled that right?), you're getting a beachside view of the ocean that is the startup and VC scene. This ain’t your grandpa’s newsletter, so prepare yourself for an inbox full of 4/20 jokes and Succession references.

Happy Thursday, folks.

So, you prolly noticed that you got two newsletters from me this week, a week after telling you that you’d only be sending one (free version) every other week. Way to stick to your word, Mr. Startup Breakdown Man.

On Tuesday, I sent out the Premium Edition to all subscribers, though only the Premium Tier subscribers actually had access to the content. It was some of my better content if I say so myself, really giving me the chance to dive into my own personal take on everything happening in the Middle East and its potential repercussions on the tech ecosystem. Not gonna lie, it’s kinda dark, but go and give it a read if you haven’t already.

Gotta pay the coffee bills somehow, folks. Sorry :(

As for this version, the results from the poll were pretty much neck and neck as to the direction that I should take the free version of The Startup Breakdown, but it seems like sticking to the latest startup news takes the belt.

I'm plugging the poll again to give you one last chance to vote if you missed it last week. It's a simple click to submit your preference—no extra work required. I'd appreciate your feedback. ❤️

This week was supposed to be an “off” week for the free version, but I wanted to keep you guys updated and give you one last chance to help determine the direction of the newsletter.

Also, though my ego will be crushed, I am going to purge the subs list to remove the less active among you. Chances are, if you’re reading this, you’re safe. But if you want to be infinitely more sure, shoot me a quick reply just to be safe.

As for the reason why, though high subscriber counts might seem like the holy grail for a creator, hundreds of you who have opened literally zero emails which actually does worse things to my email deliverability than gas station sushi does to my stomach.

Housekeeping done, let’s talk news.

Fundraising Still Sucks. Yay.

It's as if the market had been holding its breath, waiting for Starbucks to roll out the Pumpkin Spice Latte just so it could guzzle enough to regurgitate gourd-flavored chunks over every pitch deck that came its way in Q3. Frankly, that sight might be more appealing than the data.

Global deal count and value have dwindled yet again, clocking in at $73 billion, down from $81.4 billion in Q2 and a staggering $105.9 billion in Q3 2022.

Stateside, Q2’s $37 billion withered to $31.7 billion (from $46.4 billion Q3 2022). Canada saw similar declines, as did pretty much the entire ecosystem outside of Europe (who saw a modest rise from Q1 and Q2).

It's not merely a question of low birth rates. This year's startup mortality rate is turning every Mercury bank account into a graveyard that resembles Hubie DuBois' front yard.

In total, 212 startups went fins up in Q3, up from 170 in Q2 and 161 in Q1. Any one of those 3 would still be higher than any single quarter in the past four years.

Emperor Powell has given virtually every industry the proverbial gladiator thumbs-down. But what about startups aiming for a more successful exit? 🤔 

IP-Oh No

If only every camp counselor had bought stocks instead of socks with their Birks.

What many had initially hoped to be a golden tan quickly became Larry the Lobster red as the company’s stock dropped 12% during its debut on the public markets, ending just north of $40 after originally listing at $46.

Late summer and early fall seemed like the ideal seasons for some last second sandal line tans and public listings as various tech companies got a cool ticker. However, each has been a bit rocky, hopefully not instilling second thoughts in firms contemplating an exit and eager to infuse much-needed liquidity back into private markets.

Shining some sun on the possibility of this outcome was the news that fintech darling Stash is planning on listing, enlisting the services of an auditor to help ensure any holes in the hull have been wholly fixed. Holy moly that was a lot of 😮 sounds.

Stash last raised funds at a valuation exceeding $1 billion back in 2021.

And (A)I Will Always Love (E)U

Some AI news, rapid fire:

There’s been a lot of chatter for watermarks in AI-generated work, something big tech companies have pushed back against a bit cause like… how?

Now, they’re getting @s on social media from accounts with far more followers, this time from world leaders in the G-7 who are calling on AI companies to agree to third-party audits on their models and to watermarking their outputs.

Given the growing awareness of the harm biased data can cause, audits seem increasingly likely. Though, I’m sure @sama and the boys aren’t going to be thrilled about having their underwear drawers rummaged through.

While an agreed-upon method for distinguishing human- from machine-generated content seems inevitable (could this be a real use case for Blockchain? 👀), I believe the proposed approach falls short.

To my seventh-grade readers: if you're fond of Snap's My AI feature, you might be in for a disappointment in the UK.

The country (countries? literally have no idea still)’s privacy watchdog claims that the tool poses privacy risks to teens and children, arguing it should get the ol’ trunk. Sorry, boot for you Americans.

To that, I ask what was said when the app literally rolled out a map feature that showed your exact location to the world by default. Real champions of privacy, that Snap.

Finally, in probably the biggest AI news of the week, OpenAI hinted at the possibility of building its own chips. Rather than being an old family recipe for some potaters, these chips would be semiconductors to help run their billions of dollars worth of computing systems, the ones helping you get personalized answers to queries like “Write me a paper about the Founding Fathers that is at least 800 words and use MLA citation” or “Why is the sky blue?” on ChatGPT.

This would absolutely rock the semiconductor sector, dramatically impacting companies like Nvidia and AMD. Still early, but definitely something to keep an eye on as the company looks to build on its record-breaking download success and the now billion dollars in revenue that the “startup” now records.

VC's Dark Bet

To say that I have been disappointed with the reaction to the violence and conflict affecting the Middle East (and that which continues to impact Ukraine) would be an understatement.

However, as Israel has emerged as one of the world’s most concentrated startup hubs, geopolitics get tangled with tech, and we're looking at ripple effects that are impossible to ignore given their particular impact on the sector.

What's been happening, and what's in the pipeline?

Let’s get into it.

I’ve told you guys about my new gig at Infobot, and though I might still end up writing an entire newsletter about the company and why I believed in it enough to jump onboard, I wanted to end today instead by highlighting some of my favorite channels AND telling you guys about a golden opportunity to join the private Discord group where you could be one of only a few people, the others including a Pulitzer Prize winner and a two-time Grammy recipient.

Plus, two of our angel investors include Garry Tan and Paul Graham. If we can manage to teach both of them how to download Discord, think I feel pretty confident about their chances of hopping on, too.

Interested? Shoot me a reply.

Now for the content:

Cheers to another day,

Trey