OpenAI secures $6.6 billion

Top News

• OpenAI closes its mega-round: As expected, AI giant OpenAI has closed a massive new funding round. The details are staggering. With $6.6 billion in new capital, the Sam Altman-led company is worth some $157 billion. Thrive Capital, SoftBank, other venture firms and several corporates kicked in cash to the round. OpenAI will also convert to a for-profit company in the next two years. The new capital and resulting valuation mean that OpenAI must target an exit valuation so high that it might become one of the largest IPOs of all time — provided that the company can keep its growth hot.

• Poolside raises $500M: The market is so hot for AI startups today that the OpenAI news is not the only massive round to land today. Poolside, which TechCrunch describes as an “AI-powered software dev platform,” raised from Bain Capital Ventures and others, including Nvidia. Which also invested in OpenAI, it’s worth noting. Poolside is one of several startups hoping to bend modern AI techniques to the realm of software development, and the companies are going far beyond mere chat-based code generation to try and win.

• CRV returns unused capital: What would you do if you raised $500 million for growth-stage startups back in 2022 but couldn’t find compelling places to invest the funds? You release the capital, it turns out. That’s what CRV did with $275 million of their half-billion dollar vehicle. Today, there are a lot of hot early-stage deals in AI-predicated startups that VCs have big hopes for. But growth-ish rounds for existing unicorns seems to be a land of slim pickings, so slim that at least one VC is saying “we’re good” — for now.

AI for Devs

We have a new tag on the TWiST500: AI for Devs. Jason and I decided it was required both as a theme and a category on the list because the sheer number of startups working on the problem. And unlike, say, the startup cluster that formed around OKR software back during the boom times, this one might have a bit more staying power.

Why? Devs love the stuff — as evidenced by surveys of coding folks — and devs are super expensive. Cross that with the fact that it seems the amount of code the world needs to ship each year keeps going up, and you have a ripe market for automation. That means a market so large that many startups could succeed at the same time.

Hence why I am content to have added Qodo to the TWiST500 the other day, and now Poolside. Frankly there are other names that might be worth adding in like Magic, Cursor and others, so expect more names to land over time. But $500 million in a Series B implies two things for Poolside: Enough capital to roll up smaller players, enough capital to keep working on its own models, and enough cash to survive whatever downturn eventually hits the AI hype wave. — Alex

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This Week in Startups

E2018: Another throwback to LIQUIDITY Summit 2024. Ben Choi discussed the Fund of Funds strategy, while Michael Downing focused on the challenges and opportunities for emerging manager funds. Then, Monique Woodard walked us through raising her first fund, navigating investor types, and the importance of building relationships for subsequent funds. She also explored strategies for identifying ideal LPs and leveraging a fund’s unique strengths for future growth.

E2017: Jason and Alex begin by discussing the AI regulation bill SB 1047 and its potential impact on the industry, followed by a broader look at AI regulation in California and industry leaders' reactions to the bill's veto. They also explore the concurrent technological supercycles, including AI, self-driving cars, and fusion, before moving into topics like startup success, OpenAI's valuation, and the future of AR/VR technologies.

E2016: David Ding of Udio joins Alex to discuss Udio's inception, AI-driven music generation, and advancements in its AI models. David highlights Udio's target audience, future DAW integrations, and financial strategies, including GPU efficiency. They dig into insights on Udio's user interface, community engagement, and growth roadmap.

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Founder University

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