Riding Swyftly Into The Night

This is The Startup Breakdown, the newsletter where we breakDOWN startUPs (just had to make sure you appreciated the word play). By joining this growing community of dozens of interested people, you're getting firsthand access to my observations and opinions on the current state of startups and venture. If you'd like to receive these newsletters directly in your email once a week, go ahead and subscribe to never miss an email!

Happy Monday, folks.

Pretty excited about today’s newsletter. Not only am I going to talk about a startup building one of the most interesting products I’ve seen yet, but I even enlisted some outside assistance to do it.

That’s right, today’s breakdown is written in part by my friend Michael Natelli, writer of Hope in Cities, a free weekly newsletter bringing you the latest in the world of urban planning. It’s crazy fascinating, and if you like hearing about companies like the one you’re about to read about, I highly recommend giving him a subscribe and checking him out on social media.

Before we get into it, though, an update on the AI wars is essential. If you’ve been living under a rock, OpenAI’s (and co-owner Microsoft’s) ChatGPT has become the world’s fastest growing consumer site with more than 100M users in just two months of launch…

Google has issued an internal code red over the technology’s potential to obliterate the search engine industry, and after publicly stating that it’s nbd and really not even that cool (🤨), the company is rumored to be prepping to launch its own AI-powered competitor to ChatGPT called Apprentice Bard as soon as this month.

In addition, the company is looking at putting some of the money once spent on free employee muffins to use and investing $300 M for a 10% stake in AI startup Anthropic. The company is developing its own version of the AI search engine called Claude and was actually founded by former OpenAI employees, namely a former vice president of research.

The deal was actually signed late last year but just made public this past week. It’s unclear whether the goal is to integrate “Claude” as the AI tool is called into Google’s platform like Microsoft is with ChatGPT, but as the adage goes, if you can’t beat them, invest hundreds of millions of dollars into technology to make the American labor force obsolete.

Maybe that rock doesn’t sound so bad, after all.

I’ve been digging into some venture numbers from 2022 over the last few issues, and the trend continues today with a deep dive into fundraising trends by state. While the US as a whole got backhanded to the tune of a 30% drop, not every state felt this pinch.

In fact, some even experienced growth. While the big three of California, Massachussetts, and New York were all hit hard, there were three big winners ready to take their place like Draymond, Klay, and Steph usurping Bosh, Wade, and Mario Chalmers.

Florida, North Carolina, and Texas all saw growth in fundraising efforts, a result of pandemic-era migration and a culmination of state investment in startup infrastructure over the last decade.

The Gator State (if only) saw the biggest rise, jumping 25% to $9.7B raised over 601 deals. The effort was aided by high fliers like Citadel, Fanatics, and Yuga Labs, representing industries across crypto, space, gaming, and cybersecurity. In addition to the mentioned catalysts, the state benefited from its growing status as the points of access to the growing LATAM market. Hey, the funds like Bad Bunny, too.

North Carolina’s successful year was carried like the Tar Heels were in football by quarterback Drake Maye as Fortnite parent company Epic Games had a $2B raise. This accounted for more than 20% of the $4.9 B raised across 234 deals, a 24% increase YoY. Leading industries included enterprise software, deep tech, AI, and fintech.

The Lone Star State might not seem all too impressive by comparison, only growing 1%. In part, this was impressive given the dramatic cliff dive just about everywhere else. However, the real reason for applause is the fact that the state saw a 105% jump in VC money in the year before. Upping the number to $10.3B this year brings it to number four overall among states. Big raises last year included Elon's The Boring Company ($675M), though industries like healthcare, fintech, enterprise software all boomed.

If it seemed like everyone on IG was moving to Austin and Miami, that’s probably because they were. The cost of living is cheaper, the lack of an income tax drew businesses and professionals alike, and when most states remained masked up until as late as March 2022, these three states had gotten rid of their N-95 tans like a year before.

The rise of remote work and VC firms prioritizing investments in non-hotbed areas also contributed to the boom, and directed investment in infrastructure and tax benefits contributed to thriving innovation ecosystems.

With this in mind, look to states Ohio and Arizona to be big movers in the years to come with the massive investments being made in part with legislative help for semiconductors.

I’m tired of seeing useless startups working on fake problems like financial access for the unbanked and saving our planet from the effects of climate change…

It’s refreshing to finally see one with an impact, and that’s exactly what Enigma Labs’ newest app for reporting UFO sightings is providing. Using deep-learning AI (+5 for the buzzword), the app will analyze user submissions of sightings and grade them on their verifiability.

Not only will the app allow your uncle to finally spread the word on those aliens that have been experimenting on him every night, but it will even serve as a historical log of documented encounters as the team has already loaded every report from the last 100 years into the platform. TBD whether the team was able to accomplish this without storming Area 51.

Enigma Labs hopes to be the Wikipedia for UFO sightings. Sign me up.

Before we get into our startup of the week, I wanted to plug Michael’s newsletter one more time. If you find the topic of urban planning fascinating and want to learn more about the importance of building our cities around people rather than cars, highly recommend subscribing:

Growing up in Texas meant that getting literally anywhere was a 10 minute drive, and that was just to see the nearest building. Unfortunately, this reliance on SUVs and pickup trucks is the reality for many in the United States’ car-centric society, something I hadn’t realized until spending some time abroad and seeing how much other countries were constructed in ways which encouraged walking, and when longer transits are required, how cheap, efficient, and widely utilized public transportation is.

In addition to being more environmentally friendly than fume-emitting automobiles, the pros of widely available public transportation include:

1. Improved health from increased activity

2. Decreased traffic (@ Austin)

3. Lower financial costs for drivers

4. Job creation

5. Equity benefits (often overlooked) from expanding economic opportunity to people unable to access many jobs and services which are currently only reachable by owning cars

So why don’t we make the transition to public transportation?

Talk about sci-fi… and yet, few mobility startups in the space are as practical as Swyft Cities.

In addition to the benefits for consumers, the service claims to cut infrastructure costs to 5% of their current expense, and the lightweight, green capsules and lines are easy and cheap to construct.

The company is pre-revenue, and the team has been heads down at work building a super cool product. Luckily, with the backing of Google and partnerships with leading organizations in the tech and mobility spaces like Holmes Solutions to spread awareness of what they are building to potential customers like college and corporate campuses across the country, they have the runway to ensure that Swyft is ready before launching.

This contained, dense market is the type of customer the team is targeting, and it makes sense given the massive need for short-distance solutions. It’s also a way to stand out in a mobility market centered around longer distance innovation.

In fact, the short-distance mobility market is estimated to be around $50 billion and growing at 10% annually. There’s a clear need, and the product is differentiated enough to position itself to capture a massive percentage of this once it launches.

On the topic of competition, there truly is no company doing what Swyft Cities is doing. In fact, nobody is building anything close.

90% of the competition in the short-term transportation space is dominated by electric scooters like Lime and Bird, and in addition to not shutting down and littering cities like Miami (lol @ Usain Bolt), it is far more accessible than forcing customers to balance on a scooter.

As mentioned by Michael, the team is a group of former Googlers, so in terms of smarts and technical ability, they pass test 1. Rather than being the byproduct of a late night, Red Bull-powered coding session, the product arose out of an existing need and concerted effort as the company realized that it needed a solution to its own internal transportation issue on its campus. Rich company problems.

CEO Jeral Poskey was a vet at Google where he started with business operations and transitioned into leading the team’s transportation planning ambitions. Co-founders Clay Griggs and Catrine Machi have the engineering and urban planning sides of the business covered, completing an absolute rockstar of a team that is more than equipped to bring Swyft from concept to concrete.

This is the solution to our urban spaces issue. Super excited to see the type of innovation that could emerge from the mobility space. Here’s to hoping it’s Swyft.

Again, big thank you to Michael for putting me on such a cool concept and providing the type of insight that I could never provide. Go check out his full article on Swyft and subscribe here.

TLDR: Swyft Cities is building the future of short-distance urban transportation with sci-fi-esque gondolas that are cheap, quick, and green. Born from a team of Google execs, engineering masterminds, and transportation whizzes, the team has all the makings of one capable of dominating the mobility space of college and corporate campuses around the world.

Do you like me? Check yes or no.

But seriously, did you enjoy the collab format? If so, who would you want me to bring in next? Shoot me a reply and let me know what you think. Lookin’ forward to hearing from ya.

Cheers to another day,

Trey