Why the open-source AI boom is actually very "precarious"

First, happy Mother's Day to many of our readers.:) Hope you have a luxurious Sunday, courtesy of your grateful children. ❤️

Fellow Warriors' fans, we feel your pain. We won't compare it to the Titanic or the Hindenburg obviously, but that was really a disaster.

To take your mind off the abrupt end of the basketball season in the Bay Area, we have a new episode of StrictlyVC Download featuring Elad Gil, once called Silicon Valley's biggest solo venture capitalist, even while he shies from disclosing exactly how much capital he manages on his own behalf and for institutional investors. What we know for certain is that Gil, who is also a serial entrepreneur, is highly regarded by a wide number of founders, so we talked with him in this wide-ranging interview about the market (“the really hard times are coming”); the promise and also long-term risks of AI (think “species competition,” he says), and why giving back money to investors right now is probably the right move for a lot of startups.

Giant thanks to this week's sponsor, Tegus, which helps VCs figure out which deals to fast track, aided in part by what it says is a library of 55,000+ expert calls. For a limited time, StrictlyVC readers can trial Tegus for free at tegus.com/svc.

Meet Linda Yaccarino, Elon Musk’s New Twitter CEO and the ad world’s "velvet hammer." Let's see how long she sticks it out (is what everyone is saying/thinking). 

Instead of cobbling together a disjointed ecosystem of tools and vendors, forward-thinking venture firms have realized that a technology-enabled fund administrator can power everything from their fund accounting and investor services to their investor portal and CRM, bridging the gap between finance and investor relations teams. Meet Juniper Square: the first modern administrator built for sophisticated venture capital firms.

Austin Russell is on quite a run.

The 28-year-old founder and CEO of Luminar, which develops vision-based lidar and machine perception technologies primarily for self-driving cars, told the Wall Street Journal earlier today that he is buying an 82% stake in Forbes Global Media Holdings in a deal that values the company at nearly $800 million.

According to the WSJ, Russell’s stake includes the remaining portion of the company owned by its namesake family, which sold 95% of the company to the Hong Kong-based investor group Integrated Whale Media back in 2014. Forbes was essentially on sale from the moment it called off its merger with a special-purpose acquisition company in June of last year, after the market soured and investors lost their appetite for SPACs.

Luminar itself had better timing; it went public via a SPAC merger in 2021 when retail investors were still clamoring for shares in mobility tech companies. By the time Forbes was calling off its own SPAC plans, nearly every mobility SPAC was trading below its offering price.

Luminar has not been immune to the broader downturn. Valued at $3.4 billion when it hit Wall Street, its market cap is now roughly $2 billion.

It just three days ago reported slightly wider than expected losses.

Some retail investors might not be so happy about its performance, even while Russell told the Silicon Valley Business Journal last year that he had no regrets about the SPAC. (From his perspective, the alternative would have been to potentially run out of money, as private market investors began to snap shut their checkbooks.)

Longer-term shareholders in Luminar may meanwhile find it concerning that Russell, described by Forbes itself in 2021 as the world’s youngest self-made billionaire, will soon be directing some of his attention elsewhere.

While it has become fashionable to run more than one company at the same time (Elon Musk, Jack Dorsey), as well as to be a billionaire owner of a media company (Jeff Bezos, Laurene Powell Jobs, Patrick Soon-Shiong, Marc Benioff), shareholders -- and Luminar employees -- may also find the acquisition confusing. 

Certainly, they wouldn't be alone in questioning the wisdom of buying Forbes when so many outlets are fighting to stay relevant amid an atomizing landscape -- and when advertising budgets have been hit hard by an accelerating pullback by advertisers.

Then again, Russell has been focused on Luminar since 2012, when he dropped out of Stanford to start the company, aided by a $100,000 grant from renowned investor Peter Thiel.

More here.

Amino Health, a 10-year-old San Francisco startup that helps consumers determine what benefits they have under their health plans, raised an $80 million equity and debt round. Transformation Capital and Oxford Finance co-led the deal. The company has raised a total of $125 million. Fierce Healthcare has more here.

Cable, a three-year-old London startup whose platform provides automated assurance and risk assessment for banks and fintechs, raised an $11 million Series A round co-led by Stage 2 Capital and Jump Capital, with CRV also contributing. The company has raised a total of $16.3 million. TechCrunch has more here.

Modern Hydrogen, a startup based in Bothell, Wa., that is developing methane pyrolysis reactors in order to make hydrogen fuel, raised a $32.8 million Series B-2 round led by NextEra Energy, with additional investors including Miura and National Grid Partners as well as previous investors Gates Frontier, Irongrey, Starlight Ventures, Valo Ventures, and Metaplanet. GeekWire has more here.

Wellthy, an eight-year-old New York startup that aims to be a “tech-enabled care concierge” for caregivers tasked with taking care of parents or elderly relatives, raised a $25 million round. Previous investors Hearst and Eldridge co-led the deal, while Citi Impact Fund, Cercano Management, Stardust Equity, and ReThink Impact also joined in. The company has raised a total of $78 million. TechCrunch has more here.

Integrated Projects, a five-year-old New York startup that digitizes building plans, raised a $3 million seed round led by 186 Ventures, with additional participation from Founder Collective, Connexa Capital, and Four Acres Ventures. More here.

Lucem Health, a two-year-old startup based in Davidson, N.C., that uses AI to analyze electronic health record data in order to identify patients who are at risk for conditions such as heart disease, stroke, and diabetes, raised a $7.7 million Series A round co-led by Mayo Clinic, Granger Management, and Mercy (St Louis), with previous investor Rally Ventures also pitching in. Medical Device Network has more here.

Stio, a 12-year-old company based in Jackson Hole, Wy., that has built a mountain lifestyle brand, raised a $3 million round. LAGO Innovation Fund was the deal lead. Sporting Goods Intelligence has more here.

Builder.ai, a seven-year-old London startup whose platform helps people and companies build apps, raised an undisclosed strategic round from Microsoft. TechCrunch has more here.

Curity, an eight-year-old Stockholm startup whose platform assists organizations in securing their digital services, raised an undisclosed amount from GRO, a Danish private equity fund. More here.

Fourthwall, a four-year-old L.A. startup that enables creators like Marques Brownlee to design their own homepages, digital shops, and membership programs, raised an undisclosed amount from Jelly Smack. The company has now raised a total in excess of $25 million. TubeFilter has more here.

Now more than ever, VCs need an effective process to screen deals before committing to specific terms. GoingVC has created a comprehensive due diligence guide with real scorecards, questions, and actionable steps to help emerging VCs better understand the process. Grab your copy of their due diligence guide here!

The U.S. Commerce Department today launched the application process for cities to receive a total of $500 million in grants to become technology hubs. The $500 million is part of a $10 billion authorization from last year’s CHIPS and Science Act to stimulate investments in new technologies such as AI, quantum computing and biotech. It’s an attempt to expand tech investment that is largely concentrated around a few U.S. cities to the rest of the country. AP News has more here.

Navitas Capital, a 15-year-old LA-based venture firm focused on the real estate and construction industries, is raising up to $200 million for its fourth fund, per an SEC filing flagged by Axios. More here.

Zeal Capital Partners, a nearly three-year-old Washington, D.C.-based venture firm that we'd written about when it launched, is raising up to $120 million for its second fund, per an SEC filing; that would be double what it collected for its debut effort. More here.

A court in Montenegro said today it will allow South Korean cryptocurrency mogul Do Kwon to leave prison and stay under house arrest on bail while he awaits trial on a charge of using a forged Costa Rican passport during a bid to leave the Balkan country. Under the ruling, Kwon will be released on a bail of €400,000, equivalent to $435,000, and required to stay in an apartment in the Montenegrin capital of Podgorica. The WSJ has the story.

The open-source AI boom is "precarious," argues MIT Technology Review. "Most open-source releases still stand on the shoulders of giant models put out by big firms with deep pockets. If OpenAI and Meta decide they’re closing up shop, a boomtown could become a backwater," it notes.

A former executive at ByteDance, the Chinese company that owns TikTok, has accused the technology giant of a “culture of lawlessness,” including stealing content from rival platforms Snapchat and Instagram in its early years, and called the company a “useful propaganda tool for the Chinese Communist Party.” The New York Times has the story.

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GE Big Boy Appliances. 

Washington’s Blaine Mansion is officially up for grabs.

The unicorn landscape has changed *dramatically* since the start of the decade. Affinity's latest infographic looks at worldwide trends and reveals the areas of opportunity that still exist across geography and industry.