January 31st Newsletter

Before we unpack this week’s actions, click here for our deck highlighting the financials from selected public companies.

This week was marked by economic and political pressures, including slowing GDP growth, AI market losses, and administrative changes. On Monday, $1 trillion was lost in market value after DeepSeek’s cost-effective training method called into question AI spending on other LLM Models. The market recovered partially during the week as tech earnings indicated no pullback in CapEx despite DeekSeek’s breakthrough. The Fed met on Wednesday and maintained the benchmark rate of 4.25% to 4.5%, amid inflation concerns. The Department of Commerce reported US GDP grew 2.3% in Q4 2024, falling short of economists predictions of 2.5%. Additionally, the Trump Administration is offering “deferred resignation letters” to federal employees, with as many as 10% of current employees expected to quit over the plan to end remote work. It is rumored that Microsoft is in talks to keep TikTok in the US through an acquisition. Elsewhere, banks are planning to sell as much as $3 billion in debt Elon Musk used for the buyout of X. Fresh from this morning, President Trump vows 25% tariffs on Canada and Mexico starting this Saturday that could disrupt nearly $1.6 trillion in annual trade.

We have recently published a new series called Company Spotlight, please access it here and let us know if you have any companies that you would like to see next.

Top 5 AI highlights

[1] 🔎Chinese AI startup DeepSeek has dethroned ChatGPT as the most downloaded free app on the U.S. App Store. Additionally, Perplexity has added DeepSeek R1 to support web research, Despite concerns about DeepSeek using prohibited access to OpenAI, Microsoft (OpenAI’s exclusive partner) is offering R1 on its Azure Platform. Read more from CNBC and Bloomberg.

[2] 💻 Meta plans to significantly boost its CapEx to $60–$65 billion in 2025, up from $38–$40 billion in 2024. Much of that will fund the expansion of data centers needed for its AI initiatives. The company also aims to secure 1.3 million GPUs this year and hire additional AI engineers. Meanwhile, Microsoft and other tech giants are making similarly large bets on infrastructure, signaling an escalating “arms race” in AI. These moves underscore Meta’s ambition to lead the industry in next-generation AI technologies. More information on Reuters.

[3] 🏛️On Tuesday, OpenAI unveiled ChatGPT Gov, a secure AI platform for U.S. government agencies to handle sensitive data. Aimed to launch “within a month,” ChatGPT Gov is capable of a multitude of tasks, ranging from legal and compliance work to law enforcement and healthcare. Despite heavy popularity with government employees, the platform faces scrutiny over AI's potential harms, including bias and privacy concerns. This move marks OpenAI’s move to expand AI’s reach across industries, in addition to their ChatGPT Enterprise and the new successful ChatGPT Pro subscriptions. They are also rumored to raise $40 billion at a $340 billion valuation with SoftBank leading the round. Read more CNBC on TechCrunch.

[4] 📊 FactSet and Perplexity have partnered to integrate AI-driven insights with FactSet’s premium financial data. This collaboration enables users to access both public and proprietary datasets, analyze large data sets, uncover trends, and streamline workflows. Perplexity has also integrated Crunchbase data, showing diversification in partnerships and strides for more reliable data. Both are only available to Enterprise Pro users. Details on X. 

[5] 🤖Alibaba, not missing out on the latest AI buzz unveiled its Qwen 2.5-Max AI model, claiming to outperform GPT-4, DeepSeek-V3, and Llama-3.1-405B. The model is part of Alibaba's advanced Qwen multimodal system, which integrates text, images, and speech capabilities. The release highlights fierce competition driven by DeepSeek's recent breakthroughs, which shook global markets and forced rivals like ByteDance to update their AI. Learn more on Reuters.

Founder’s Corner

What we read and listened to this week

• Apple’s gross margins hit a record 46.9% in the latest quarter as service revenue continues to grow despite iPhone sales declining. (CNBC)

• ASML's fourth-quarter bookings soared, driven by AI demand, surpassing forecasts and boosting chip stock confidence. (YF)

• Frontier Airlines offers $2.1 billion for Spirit, aiming to merge budget carriers despite Spirit's rejection and past merger challenges. (NYT)

• IBM surged more than 13% on Thursday after posting its Q4 report, highlighting significant gains in its software division driven by AI. (CNBC)

• Meta gained 4% on Wednesday after topping estimates and delivering a strong Q1 outlook as it prepares to spend billions on AI infrastructure. (TV)

• Microsoft fell 6.1% despite topping Q2 estimates, as Azure cloud growth of 31% trailed the previous two quarters. (IBD)

• Tesla stock fell 2% after trading closed on Wednesday, but rose back after the report, despite posting a $25.7 billion revenue missing estimates of $27.1 billion. (CBS)

• US DOJ sued to block HPE’s $14 billion Juniper buyout. (AP)

• Visa partners with Elon Musk's X to offer direct payment solutions, with the goal of transforming X into an "everything app." (Reuters)

AI M&A and Fundraising news (Jan 24 — Jan 31)

• Athenic AI: Data analysis and business intelligence startup, raised a $4.3M Seed.

• Atomicwork: SaaS startup creating AI agents, raised a $25M Series A.

• Applied Labs: AI-business solutions, raised a $4.2M Seed.

• Bonsai Robotics: AI-driven agriculture solutions, raised a $15M Series A.

• Capgrid: AI-powered sourcing and procurement platform for manufacturing, raised a $3.3M Series A.

• Deepwise: Chinese developer of AI disease diagnosis software, raised $69M.

• Delfina Care: AI-powered maternal health platform, raised a $17M Series A.

• Earth AI: AI to help find mineral deposits, raised a $20M Series B.

• Eleven Labs: AI audio startup, raised a $180M Series C.

• Final Round AI: Jobs platform, raised a $6.9M Seed.

• Indigo: AI-powered real estate negotiation platform, raised a $8M Seed.

• iPronics: Spanish optical networking gear maker, raised a €20M Series A.

• Jota: Brazilian AI automated finance management software for entrepreneurs, raised $8.9M.

• Maki: HR conversational AI startup, raised $28.6M.

• Manas AI: LinkedIn cofounder Reid Hoffman’s AI drug research and discovery startup, raised $24.6M.

• NeoSpace: Brazilian Gen AI banking startup, raised $18M.

• Nobi: Smart Lights for elderly care, raised a $36M Series B.

• OpenAI: LLM developer, in talks to raise $40B.

• Oumi: Open-source AI startup, raised a $10M Seed.

• Paxton AI: Legal assistant AI, raised a $22M Series A.

• Pipeshift: Enterprise platform to build AI applications utilizing open-sourced AI components, raised a $2.5M Seed.

• Qbiq: Architectural design automation platform, raised a $16M round.

• Quibim: AI medical imaging biomarker developer, raised a $50M Series A.

• Qsic: In-store intelligent audio platform, raised a $25M Series B.

• SafelyYou: AI sensors for fall detection, raised a $43M Series C.

• SignalPlus: Automated trading system for market making and risk hedging, raised a $11M Series B.

• Skild AI: Robotics software startup, in talks to raise $500M at $4B valuation.

• SuperOps: IT automation SaaS, raised a $25M Series C.

• UVeye: AI-powered vehicle inspection startup, raised $191M.

• VEIR: Superconducting solutions for AI data centers, raised a $75M Series B.

• VideaHealth: Dental AI startup, raised a $40M Series B. 

• WiseLayer: AI fintech startup, raised $7.2M.