December 20th Newsletter

Before we unpack this week’s actions, click here for our deck on the 2024 Year in Review for the AI Industry inclusive of financials from selected public companies.

The final Stepmark newsletter of 2024 brings a whirlwind of updates from the financial, political, and tech worlds as we head into the holiday season. The Federal Reserve’s cautious stance on further rate cuts after a 25-basis cut, shook markets this week. Meanwhile, the U.S. economy exceeded expectations with a 3.1% GDP growth in Q3 and low unemployment claims, showcasing resilience amidst uncertainty. On the global stage, Germany braces for early elections following Chancellor Olaf Scholz’s confidence vote loss. In the U.S., the Supreme Court prepares to hear TikTok’s case against potential bans while the FTC’s crackdown on junk fees promises transparency for consumers. In the tech world, AWS unveiled a $10B investment in Ohio’s data infrastructure. Finally, AT&T joins the return-to-office trend with a strict five-day policy.

We have recently published our Edtech and HCM market maps. Access both here.

Stepmark Partners wishes you a Merry Christmas and a Happy New Year, our newsletter will return on January 10th!

Top 5 AI highlights

[1] 🤖 Google unveiled advancements in AI with Veo 2, a video generation model offering up to 4K capabilities, and Imagen 3, its highest-quality image generator, now accessible via Vertex AI on Google Cloud. Google also announced Project Astra, enhanced with Gemini 2.0, gains multilingual dialogue and integration with Search, Lens, and Maps. Gemini 2.0 Flash thinking, Google’s reasoning model, rivals the capability of OpenAI’s o1 full capability. This week’s new release adds to Google’s impressive string of announcements last week, including Willow and Gemini 2.0. More details here and here

[2] 🖼️ Elon Musk’s xAI launched an upgraded Grok 2 chatbot, boasting faster speeds, improved accuracy, and multilingual capabilities, alongside price cuts for its enterprise API to bolster competitiveness. Integrated into X (formerly Twitter), Grok includes a new “Grok button” for real-time context and trend insights. xAI also added its image generator, Aurora, currently in beta, to its API, enhancing its AI ecosystem. These developments underscore Musk’s strategy to position X as a leading platform for social and AI integration while intensifying competition with rivals like OpenAI. More on TechCrunch.

[3] 💰 AI-powered search engine Perplexity raised $500M, valuing it at $9B, amid intensifying competition with OpenAI's ChatGPT Search and Google's AI advancements. The funding supports Perplexity's expansion, including acquiring Carbon, a startup linking AI to external data. However, Perplexity also faces a copyright infringement lawsuit. In comparison, Google is reportedly planning to take a more aggressive move, aiming to build a chatbot-like “AI mode” directly into Google Search, highlighting the growing competition in search engine applications. More information.

[4] 🧠 Nvidia’s Jetson Orin Nano Super delivers 67 TOPS (Total Operation Per Second) at $249, offering 70% more performance at half the cost of its predecessor’s 40 TOPS for $499. Powered by a 6-core Arm Cortex-A78AE CPU, 1,024 CUDA cores, and 32 Tensor cores, it excels in AI tasks like large language models and vision transformers. Its compatibility with Raspberry Pi GPIO, dual M.2 slots, and camera integration make it ideal for robotics, IoT, and edge AI applications. By combining affordability with top-tier performance, Nvidia positions itself as a leader in enabling real-time AI innovation across industries. Watch Jensen’s demo here.

[5] 🎓 Ilya Sutskever, previously OpenAI’s co-founder, announced at NeurIPS that “pre-training as we know it will end,” likening finite internet data to AI’s “fossil fuel.” He predicted next-gen AI will reason step-by-step, act autonomously, and scale in ways akin to human evolution. Highlighting data scarcity, he emphasized shifts in training methods and ethical reflections on AI. Sutskever also suggested future AI will surpass pattern recognition, becoming more unpredictable yet capable of understanding limited data, much like humans. Read more information.  Dhruv Batra, an AI pioneer, thinks otherwise. Details on X.

Founder’s Corner

93% of the acquisitions in 2024 were between Seed and Series C

What we read this week

• Amazon faces strike threats as a Senate report accuses it of prioritizing profits over worker safety in "uniquely dangerous warehouses." (Arstechnica) The Senate report is here. Drivers from seven Amazon delivery hubs went on strike on Thursday, demanding better pay and conditions, while Amazon disputes its obligation to negotiate. (NYT)

• Donald Trump and SoftBank CEO Masayoshi Son announced a $100 billion U.S. investment plan over four years. (WSJ) Trump joked about how about $200 billion, to which Son replied, ”I’ll try my best.”

• Japanese automakers Nissan and Honda are considering a potential merger under a holding company; Nissan shares soared 24% while Honda declined to comment. (CNBC)

• McKinsey & Company has agreed to pay $650 million to settle a federal probe into its opioid consulting for Purdue Pharma, while a former partner has pled guilty to obstruction of justice. (CNBC)

• Meta urges California's attorney general to block OpenAI's nonprofit-to-for-profit shift, citing significant implications. (TechCrunch)

Special Section: OpenAI’s 12-day Shipmas Recap

At the halfway mark, here are all the releases so far!

Day 1: Release of full o1 and ChatGPT Pro subscription;

Day 2: Reinforcement Fine-Tuning; 

Day 3: Sora-Turbo released;

Day 4: Demo updates for ChatGPT’s Canvas;

Day 5: Apple Intelligence integration of ChatGPT

Day 6: Advanced voice with video & Santa mode🎅

Day 7: Projects in ChatGPT

Day 8: ChatGPT Search 

Day 9: DevDay Holiday Edition, Openai o1 to the API

Day 10: 1-800-ChatGPT

Day 11: A new way to work with ChatGPT

Day 12: Early evals for OpenAI o3 (skipped a number!)

… and details here on OpenAI.

AI M&A and Fundraising news (Dec 11 — Dec 19)

• Antibiotics: Autonomous industrial robots to the US, raised $60M.

• Azimuth AI: Customized silicon products for edge computing, raised $11.5M.

• Backflip AI: Text-to-3D for 3D printing, raised a $30M Series A round.

• Basis: AI-powered accounting automation startup, raised a $34M Series A round.

• Bluenote: AI to prepare regulatory filings for pharma, raised $10M.

• Boon: Commercial fleet operations, raised $20M.

• Cartesia: Efficient AI model architecture, raised $22M.

• Chargezoom: AI-powered billing and payments platform, raised a $11.5M Series A round.

• Comand AI: AI-powered battlefield strategy planning for military officers, raised a $8.8M seed round.

• Crusoe: AI data center provider, raised $600M.

• Databricks: Data intelligence platform, raised a $10B Series J round.

• Decart: Real-time video model for games, raised a $32M Series A round.

• eyva.ai: AI-powered product portfolio, raised a $3M seed round.

• Fraction AI: Decentralized AI data labeling, raised a $6M pre-seed round.

• GoodWork.ai: AI retail sales analytics, raised a $4M seed round.

• Haber: Industrial AI startup, raised a $44M Series C round.

• Hamming AI: Testing AI voice agents, raised a $3.8M seed round.

• Liquid AI: Efficient AI model development, raised a $250M Series A round.

• Maisa: Spanish AI deep tech startup, raised a $5M pre-seed round.

• Mantis Robotics: Physical AI for robotic automation, raised $5M.

• Nectir: Personalized AI learning partner, raised a $6.3M seed round.

• NeuBird: AI-powered IT operations automation, raised a $22.5M seed extension round.

• Perplexity: AI-power answering machine, raised $500M.

• RapidCanvas: AI streamlining data science projects, raised $16M.

• Salt AI: Low-code AI development platform, raised a $3M seed round.

• SandboxAQ: Large quantitative models (LQMs), raised $300M.

• Scripta Insights: Pharmacy navigation platform, raised a $17M Series B round.

• Starboard: AI-powered logistics solution, raised $5.5M.

• T-robotics: AI to program robots, raised a $5.4M seed round.

• TG0: AI-hardware company, raised a $5.4M Series B round.

• Truewind: AI accounting and bookkeeping platform, raised $13M.

• Twelve Labs: Video understanding AI, raised $30M.

• Vultr: Cloud AI startup, raised $333M.

• Zest AI: Automated underwriting startup, raised $200M.