Kalshi's AI ad... FROM DOWNTOWN!

Top News

• AI goes to the NBA finals: What does it cost to run an ad during the NBA finals? A lot. What does it cost to produce one? Sometimes just a few thousand dollars. That’s what prediction market Kalshi is reported to have spent on an AI-generated advertisement that it recently ran during the sporting competition. The ad is about what you would expect, wearing its AI influences on its sleeve. And while the Kalshi spot is good publicity for now — we’re talking about it here, after all — similar stunts in the future likely won’t carry as much weight. The real question: when will AI-generated ads being screened during high-profile broadcasts simply become de rigueur, so common it’s not worth a comment.

• The Scale AI deal is venture gold: As the market digests the massive Scale-Meta deal, that will see the social company abscond with the startup’s CEO, venture capital is counting its winnings. Bloomberg reports that a single VC, Accel, is set to earn about $2.5 billion from its stake in Scale, for which it paid around $350 million. That’s a tidy return. One early investor got into the company at a roughly $3 million valuation, presumably ranking among the better investments of the last decade. Liquidity, long in short supply, is slowly coming back to the market — and LP coffers.

• Yupp: What if we took LMArena, put it on the blockchain, and piled capital into it? That’s the recent a16z wager on Yupp, which offers human LLM rankings with a cypto backend. Depending on your view of crypto and its ability to align incentives, the Yupp deal is either a brilliant flash of insight or another example of people adding blockchain where it isn’t needed. No matter, with LMArena becoming a traditional startup, we’re seeing a startup cohort form around LLM testing that is very interesting. Along similar lines, The LLM Data Company recently showed off its own progress at YC’s latest demo day.

TWiST500

It’s tradition here at TWiST to parse the Y Combinator Demo Day list for potential TWiST500 member companies. We’ve snagged a few over the years, along with a number of startups that were historical YC participants. I just got off recording an interview with Alpaca, for example, which took part in Y Combinator’s Winter 2019 batch.

So, what are we seeing from the latest cohort? Unsurprisingly, a lot of agentic AI applications. JazzBerry’s idea of using genAI to scan code for bugs that may have originated from genAI-derived code is good fun; Nimbic’s idea of using AI to document code is smart; Delty’s idea of a higher-level AI agent to orchestrate lower-level AI coding agents is also worth noting.

But there was more — a few startups are taking on TWiST500 member companies Profound and AthenaHQ and their work to help companies get surfaced in an AI search context. Keep an eye on what Anvil and Relixir come up with.

Heading a bit further afield, I dig what Cascade Space is working on, and pitches from robotics-focused startups like Vassar, Boost, Habit, and SAVA seem downright awesome.

Expect a few of the above names — a longer list is in the day’s docket, in case you wanted a deeper dive — to join our cohort. But only those that we think have the highest chance of exiting a price high enough that the Times covers the transaction.

Oh, and we’re adding Mansa Finance to the list. Because have you seen this chart? More Monday! — Alex

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This Week in Startups

E2137: We’re testing out a brand-new panel discussion format: The TWiST VC Roundtable! On our first installment, Jason and Alex chat with Paige Doherty of Behind Genius and Meghan Reynolds of Altimeter about the rise of secondary markets, the resurgence in M&A activity from major tech players, questions about potentially inflated ARR figures from YC startups, and lots more!

E2136: Jason’s calling in from the coast for a special Monday episode, chatting with Alex about the sky-high valuations for many new Y Combinator companies, despite their relatively low ARRs. What does this mean for the investment landscape more generally? Plus the guys are taking Office Hours with CustomerIQ founder Sean Steigerwald, exploring his startup’s AI sales agents that live inside your email inbox.

E2135: On a brand-new bicoastal TWiST, Jason checks in from LA, while Alex remains at home on the East Coast. They’re talking about Circle’s explosive IPO, and what it means for the markets and crypto looking forward. PLUS the benefits of tokenizied venture capital funds, more crazy Cursor growth, deeper insight into the Anthropic-Windsurf kerfuffle and more details on the Deel-Rippling espionage saga.

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