Good morning. The Information reported over the weekend that Nvidia’s newest AI chips are overheating in their data centers, sparking “anxiety” in customers who are concerned about yet another delay.

These chips, as we’ve discussed often, are both the key to generative AI and, because of that, to Nvidia’s success.

— Ian Krietzberg, Editor-in-Chief, The Deep View

In today’s newsletter:

AI for Good: Sustainable urban development

Last week, IBM — in collaboration with Sustainable Energy for All — unveiled two publicly available AI-powered solutions intended to aid in the sustainable development of cities and communities around the world. 

The details: The solutions, a result of IBM’s pro-bono Sustainability Accelerator, are specifically aimed at providing assistance to developing regions around the world. 

“The Open Building Insights (OBI) Tool … will help energy planners overcome critical data gap challenges to inform energy access and energy transition interventions, and better deliver results for those most in need,” Damilola Ogunbiyi, CEO and Special Representative of the UN Secretary-General for Sustainable Energy for All, and Co-Chair of UN-Energy, said in a statement. 

Today’s fastest-growing software company might surprise you 🤳

🚨Heads up! It's not the publicly traded tech giant you might expect… Meet $MODE, the disruptor turning phones into potential income generators. Investors are buzzing about the company's pre-IPO offering.¹

📲Mode saw 32,481% revenue growth from 2019 to 2022, ranking them the #1 overall software company on Deloitte’s most recent fastest-growing companies list² by aiming to pioneer "Privatized Universal Basic Income" powered by technology—not government. Their flagship product, EarnPhone, has already helped consumers earn & save $325M+.

🫴 Mode’s Pre-IPO offering¹ is live at $0.25/share — 20,000+ shareholders already participated in its previous sold-out offering. There’s still time to get in on Mode’s pre-IPO raise and even lock in 100% bonus shares³… but only until their current raise closes for good. Invest in Mode before their share price changes on 11/22 (and lock in up to 2X bonus stock).*

Elon Musk looks to raise another $6 billion at a $50 billion valuation

Elon Musk’s xAI is reportedly looking to raise another $6 billion at a $50 billion valuation. 

The details: CNBC reported Friday that xAI, Musk’s AI startup, plans to close the round this week. The funding reportedly represents a combination of $5 billion from sovereign funds in the Middle East and an additional $1 billion from other investors. 

The context: That same Memphis data center — which has summoned spy planes from the competition, according to The Information — is worsening Memphis’ air pollution problems, according to the Southern Environmental Law Center. The center, as of July, was powered by 18 gas turbines, installed without permits. 

At the same time, the Memphis data center is severely taxing the local power grid, which lacks the capacity to serve both xAI and the surrounding region, according to the SELC. xAI’s only product — Grok — is available exclusively to premium users on X, Musk’s social media platform.

In a semi-related note, Musk on Friday expanded his lawsuit against OpenAI, adding Microsoft as a defendant and accusing the two of creating an AI monopoly. 

Warp: Payroll and Compliance for Founders and Startups

In a landscape crowded with payroll solutions, Warp takes a radically different approach: do less, but do it perfectly.

While other providers compete in a features arms race, Warp strips away complexity to focus on what matters most—paying people accurately and managing compliance effortlessly.

Traditional payroll software often comes loaded with dozens of unused features, while frequently stumbling on the essentials. Warp's streamlined platform delivers exactly what modern businesses demand: lightning-fast payroll processing, two-minute employee onboarding, and automated multi-state tax compliance.

From same-day contractor payments to seamless FinCEN BOI filings, every core function is engineered for speed and precision. No bloated features. No unnecessary complexity.

Just a powerful, intuitive experience that lets startups handle their payroll operations in minutes and return to what they do best—building. In an industry that equates more features with more value, Warp proves that thoughtful simplicity is the ultimate sophistication.

Startups should spend more time in Notion and less time on the phone with the Pennsylvania Department of Revenue. Learn more about Warp and get a free Airpods 4.

If you want to get in front of an audience of 200,000+ developers, business leaders and tech enthusiasts, get in touch with us here.

Biden legalizes TSMC’s $6.5 billion grant

President Joe Biden on Friday finalized billions in federal grant funding for TSMC Arizona, a subsidiary of Taiwan Semiconductor Manufacturing Company (TSMC), under the Chips Act that Biden signed two years ago. 

The details: TSMC will receive up to $6.6 billion in grants — and a further $5 billion in loans — which will support a $65 billion investment to build three factories in Arizona, according to a statement. Biden said that the factories will create “tens of thousands of jobs” by the end of the decade. 

The first of these three factories is set to open early next year, according to Biden, meaning that “for the first time in decades an American manufacturing plant will be producing the leading-edge chips used in our most advanced technologies.”

“This is the largest foreign direct investment in a greenfield project in the history of the United States,” Biden said in a statement. “Today’s announcement is among the most critical milestones yet in the implementation of the bipartisan Chips & Science Act, and demonstrates how we are ensuring that the progress made to date will continue to unfold in the coming years, benefitting communities all across the country.”

2 years after ChatGPT, how VCs are approaching investing in AI 

The AI investment landscape has had a tumultuous couple of years. 

In the public markets, there’s been a mix of frenzy and caution, with investors increasingly aware — and frustrated by — the lack of return on enormous investments in AI infrastructure (the $600 billion+ hole in the industry). Despite this, the stocks that represent the clearest AI plays (Nvidia, Microsoft, TSMC) have remained on a relatively steady surge over the past two years. 

The private market, meanwhile, has been one of unchecked enthusiasm for AI. 

In 2023, the AI sector raised $42.5 billion across 2,500 rounds, according to CB Insights, bolstered by a handful of massive raises from some of the biggest startups in the space. Through October of this year, meanwhile, the AI sector has raised nearly $70 billion, according to Crunchbase data. 

Even as VC excitement continues unabated, the space is not the same as it was two years ago, when ChatGPT’s launch sparked the venture fire that has been burning ever since. For one, the biggest startups in the space have gotten in bed with Big Tech, in a string of partnerships and semi-aquisitions that point to the enormous capital requirements needed to train and operate models. 

At the same time, the major winners in the foundation model side of things have largely been decided — i.e., OpenAI, Anthropic, Microsoft, Google, etc. This all, according to Bain Capital Ventures partner and AI investor Rak Garg, means that you “really have to be smart about the companies you invest in.”

The challenge, Garg told me, is that, among the biggest organizations, the “gap is basically nonexistent.” But the gap between these giants and everyone else is likely unassailable; where it made sense two years ago to invest in companies that could become competitors to Google or OpenAI, such ventures today require a lot more caution. 

“When we look at models companies, we look for two things,” Garg said. “Is there a product innovation or is there a business model innovation?”

In light of this, Garg said that Bain Capital Ventures has shifted its focus away from the foundation model developers and toward highly domain-specific companies. Two recent examples on this front are Poolside and Contextual AI — which we wrote about in September. Poolside recently raised $500 million at a $3 billion valuation; Contextual raised $80 million. 

The key consideration and approach here has to do with the size of the market. 

The companies on display here — including the heavyweights, like xAI, Anthropic and OpenAI — are raising money at enormous valuations, many of them in the same general markets. Garg said that you “really have to make sure the market” can sustain these kinds of valuations before you go to invest.  

“The way we think about the bubble is, is there a market big enough to sustain whatever valuation that we invest at? I mean, the physics of these companies are such that they are going to burn way more dollars than a normal company would just to get their product into production,” he said. “And so, when you raise way more money, you end up having to raise at higher prices. So in many industries, your best hope, even if you captured a hundred percent of the revenue in that industry, is probably single-digit billions.”

It’s not all rosy for Big Tech

Garg added, though, that Big Tech’s biggest asset — “they are cash printing machines” — is also their biggest liability, which represents a bright spot in an otherwise challenging ecosystem for startups. 

While he said that it is “such an easy thing to siphon a tiny percentage of” Big Tech revenue to, for instance, “fund Gemini forever,” these companies — due to the breadth of their platforms — lack the singular focus of the startups, which has allowed the startups to execute on a higher technical level. It is this, Garg said, that has led to the partnerships and acqui-hires that have recently become such a popular way to do business in this sector. 

“If you ask me about what's gonna happen in two years, I think the big tech clouds end up becoming value-added resellers for a lot of the startups that are working,” he said, adding that the trajectory around these companies, specifically their rapid growth in valuation and annual revenue, “has never before been seen in the history of software.” 

🤔 Your thought process:

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💭 A poll before you go

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_{Mode Mobile Advertiser’s Disclosures}

_{¹ Mode Mobile recently received their ticker reservation with Nasdaq ($MODE), indicating an intent to IPO in the next 24 months. An intent to IPO is no guarantee that an actual IPO will occur.}

_{² The rankings are based on submitted applications and public company database research, with winners selected based on their fiscal-year revenue growth percentage over a three-year period.}

_{³ A minimum investment of $1,950 is required to receive bonus shares. 100% bonus shares are offered on investments of $9,950+.}

_{⁴ Please read the offering circular and related risks at invest.modemobile.com. This is a paid advertisement for Mode Mobile’s Regulation A+ Offering.}

_{Past performance is no guarantee of future results. Start-up investments are speculative and involve a high degree of risk. Those investors who cannot afford to lose their entire investment should not invest in start-ups. Companies seeking startup investment tend to be in earlier stages of development and their business model, products and services may not yet be fully developed, operational or tested in the public marketplace. There is no guarantee that the stated valuation and other terms are accurate or in agreement with the market or industry valuations. Further, investors may receive illiquid and/or restricted stock that may be subject to holding period requirements and/or liquidity concerns.}

_{DealMaker Securities LLC, a registered broker-dealer, and member of FINRA | SIPC, located at 105 Maxess Road, Suite 124, Melville, NY 11747, is the Intermediary for this offering and is not an affiliate of or connected with the Issuer. Please check our background on FINRA's BrokerCheck.}