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The Big One: Startup shutdowns on the rise
With the booming Covid-era funding environment long in the rearview mirror, it's been tough sledding for many startups in 2023 as layoffs and, more recently, shutdowns hit the sector.
Carta, a cap-table management platform for startups, said the third quarter of 2023 saw the highest number of startup shutdowns since its service launched in 2012. There were 212 startup shutdowns on Carta last quarter, a 25% increase from the previous quarter and a 50% uptick from the same period last year.
Peter Walker, head of insights at Carta, called the shutdowns "tragic, but not unexpected." Startups that raised rounds in late 2020 and early 2021 are hitting the 18- to 24-month timeframe most startups take before raising their next fundraising round, Walker said. Now, with less capital available — particularly at the later stages — it's meant startups have had to make some difficult decisions.
Even big-name, well-funded startups have closed up shop in recent months. Convoy, a freight startup valued at almost $4 billion, shut down in October. Olive AI, another unicorn that raised $857 million in total funding, closed its doors in October as well. Home-construction startup Veev shut down in November after amassing $600 million in funding.
Startups haven't been the only players impacted by the tech downturn. Some venture-capital firms have also struggled, like Boston-based OpenView Venture Partners, which recently said it's winding down just nine months after closing its seventh fund at $570 million.
Are more shutdowns expected in Q4? Is there relief for the startup sector in sight?
Read the full story: Shutdowns, layoffs cap a tumultuous year for tech startups
Startups to Watch
- X.AI, the artificial-intelligence company owned by Elon Musk, has raised around $135 million in funding, according to a document filed with the U.S. Securities and Exchange Commission this week. The company said in the filing it intends to raise a total of $1 billion. The startup has built a chatbot called Grok, which aims to be a more humorous, less politically correct version of ChatGPT, Bay Area Inno reports.
- Liquid AI, a Massachusetts Institute of Technology spinoff developing a new generation of AI foundation models, raised a $37.5 million seed round led by the family office of Boston Celtics co-owner Steve Pagliuca. Other backers include Shopify co-founder Tobias Lütke and Github co-founder Tom Preston-Werner, BostInno reports.
- Sean Lane, the CEO of now-shuttered unicorn Olive AI, has revealed his next startup less than six weeks after his former startup closed its doors. Named Ghostdog, the startup is making software aimed at military and national security information. "We’re not the people on the front lines. ... We are their geek squad," Lane wrote in a LinkedIn post, according to Columbus Inno.
- Cambium Carbon, a Baltimore startup that repurposes wood meant for landfills, raised $5.3 million in funding. The company takes that wood and creates tables, floors and other construction products. It gets its wood from trees that fall during a storm or are cut down at construction sites, Maryland Inno reports.
- Clever Carnivore, a biotech looking to take the slaughter out of meat production, will be scaling up production next year after receiving $7 million in seed-round funding. The company makes pork, beef and chicken products using stem-cell biology and bioengineering, and is planning to unveil its prototype product, the Clever Bratwurst — a cultivated pork sausage — early next year, Chicago Inno reports.
Founders push for bill to stop 'rampant' discrimination, sexual harassment in VC
Massachusetts founders and investors testified in front of the state's Joint Committee on the Judiciary this week, urging legislators to push forward legislation extending anti-discrimination laws to investments.
The bill, filed in the House (H.1708) by Rep. Tram Nguyen and in the Senate (S.978) by Sen. Cindy Friedman, would make it unlawful for a professional investor in Massachusetts to engage in sexual harassment or discriminate against someone belonging to a protected class, including on the basis of race, gender, pregnancy and sexual orientation. This would include people funded by an investor or who are being considered for investment funding.
Advocates for the legislation say it would ensure investors are held to the same standards as other employers and workplaces, in a time when there are still huge inequities in venture-capital funding. Detractors have said it could lead investors to take fewer meetings with underrepresented founders.
Weird and Wired: Don't bring a legal pad to a meeting with 'Shark' Barbara Corcoran
If you're meeting with Barbara Corcoran to pitch her on investing in your business, don't bring a legal pad and take copious notes.
It's the "kiss of death," Corcoran said during an appearance recently in San Francisco at the Startup World Cup. She gives entrepreneurs a check and then leaves them alone, she said, as to not meddle too much in the business.
"I know a lot about business, I lived it, I can really help these people," she said. "But I'll tell you, when somebody feels obligated to listen to me, they second-guess that gut decision (and) things go awry ... When someone's sitting in my office and they bring a legal pad, it's the kiss of death. A legal pad and they write everything down. I'm like, 'Oh God, I lost that money.'"
Read the full story: Startups: Don't bring a legal pad to a meeting with 'Shark' Barbara Corcoran
