OpenAI shoots from the hip -- and hits itself in the head

Man! If you can pull your attention away from trying to figure out what the hell just happened at OpenAI, we have a new StrictlyVC Download for you this week. Featuring Medha Agarwal and Amy Yin, we talked with the pair because both just joined the early-stage venture firm Defy, Agarwal as a general partner and Yin as a venture partner. It's a big deal for both, particularly Agarwal, who spent the last seven years with Redpoint Ventures, where she was a partner. 

We discussed a range of things, including valuations right now, how they're approaching AI as an investment theme, and how interested or not they are in all things web3, given that Bitcoin is staging a comeback. (Yin logged several years at Coinbase as an engineer.) Hope you enjoy it.

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In a shocking development that has left Silicon Valley mouths agape, OpenAI co-founder Sam Altman has been terminated as CEO. “Mr. Altman’s departure follows a deliberative review process by the board, which concluded that he was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities,” a company statement read. “The board no longer has confidence in his ability to continue leading OpenAI.” OpenAI co-founder and CTO Mira Murati is assuming the position of interim CEO, while co-founder and president Greg Brockman -- who was stripped of his board seat today but told he could maintain his operating role -- opted to resign from the company.

In a tick-tock of what happened today, Brockman tweeted tonight that he and Altman are "still trying to figure out exactly what happened." According to Brockman, Altman was fired over a Google Meet with OpenAI's board at noon today. (Brockman, who was the board's chairman, wasn't present.) 

Roughly 20 minutes later, Brockman joined a separately scheduled online meeting, where he was told he could stay with OpenAI -- but that had to leave the board, which includes another OpenAI cofounder, Ilya Sutskever; Adam D’Angelo, CEO of the question-and-answer site Quora; Tasha McCauley, a scientist and founder; and Helen Toner, director of strategy and foundational research grants at Georgetown’s Center for Security and Emerging Technology. 

In an apparent act of protest over Altman's abrupt dismissal, Brockman quit instead.

By all reports, Altman was blindsided by the news. He was raising a venture fund that's focused on "hard tech" and seemed to be in good spirits, Semafor reports.

OpenAI's investors (Vinod Khosla and Reid Hoffman) and its major commercial partner (Microsoft) were also caught unawares. The software giant immediately uploaded a blog post asserting that it has everything it needs to move forward with its OpenAI deal. 

No doubt we'll have more details Monday. In the meantime, battle lines are already being drawn. Wrote Brockman tonight, "The outpouring of support has been really nice; thank you, but please don’t spend any time being concerned. We will be fine. Greater things coming soon."

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Lynx, a two-year-old Boston startup that uses AI and ML to detect fraud across various channels, such as cards, digital banking, e-commerce, telephony, branches, and ATMs, raised an $18.5 million Series A round led by Forgepoint Capital, with Banco Santander also joining in. FinTech Futures has more here.

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Ediphi, a Boston startup whose platform is designed to help construction estimators predict building costs, raised a $6.5 million seed round from Suffolk Technologies. More here.

Every.io, a two-year-old San Francisco startup that provides backoffice services for SMBs, raised a $9.5 million seed round led by Base10, with Y Combinator, Formus Capital, and Rex Salisbury also pitching in. Axios has more here.

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Optiwatt, a three-year-old San Francisco startup whose app helps consumers optimize energy us for their EVs and homes, raised a $7 million Series A round led by Navitas Capital, with GV, Active Impact Investments, Urban Innovation Fund, and Thin Line Capital also investing. More here.

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Taproot Wizards, a crypto startup that is trying to build a Bored Ape Yacht Club equivalent for the Bitcoin ecosystem, raised a $7.5 million round led by Standard Crypto, with Geometry, Collider Ventures, StarkWare, UTXO Management, Bitcoin Frontier Fund, Masterkey, and Newman Capital also anteing up. TechCrunch has more here.

Union Labs, a five-year-old San Francisco startup that is developing a cross-chain bridge based on zero-knowledge proofs,raised a $4 million seed round. Galileo, Semantic Ventures, Tioga Capital, Nascent, Lightshift, and Chorus One invested in the deal. The Block has more here.

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Acton Capital, a 24-year-old Munich firm that typically invests €5-10 million in growth-stage startups across Europe and Canada, raised €225 million for its sixth fund.

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Vivek Ramaswami, Partner at Madrona Venture Group, recently told Affinity: “You can feel the shift happening of seeing more deals in Series B+ stages. It's getting people excited, there’s an element that things are coming back.” He's just one contributor to Affinity's new deal sourcing guide. Get the guide to ensure your team is ready with deal sourcing strategies designed for 2024. Download now.