The HubSpot-Cacheflow deal is just what the venture market needed

Top News

• HubSpot acquires Cacheflow: Cacheflow, a startup that wanted to improve the software buying experience, has exited to HubSpot. Given that Cacheflow had raised just $16 million in known venture capital, the exit likely wasn’t ground-shaking in size, but Jason has argued on the show that small and midsized deals are critical to venture economics. The deal is therefore a win for the company, and likely just as delightful to its backers who get to turn some TVPI into DPI.

• TikTok knew about the app’s potential harms: Poor redactions strike again! Thanks to the state of Kentucky, a bunch of internal TikTok communications were laid bare in a suit, giving the public a window into how the social network discusses potential issues with its service behind closed doors. NPR reports that the documents indicate that TikTok was aware “its many features designed to keep young people on the app led to a constant and irresistible urge to keep opening the app.” TikTok faces both state-level lawsuits in the United States, and a divest-or-ban law from the Federal government.

• Hedge funds heart crypto: Tradfi folks used to mock crypto as some combination of vaporware mixed with snake oil. The crypto folks might get the last laugh, however. New data, Bloomberg reports, indicates that nearly half of hedge funds have some crypto exposure today. The same number last year? 29%. That’s quick growth, and implies that at least some folks who place bets think that the crypto market is efficient enough to warrant a wager or two.

News from CoreWeave

To close out the week, let’s talk about CoreWeave. CoreWeave, a TWiST500 company, just secured “a new $650 million credit line,” according to CNBC reporting. The new credit line comes after the company secured a $7.5 billion debt facility earlier this year and a $1.1 billion Series C. Put simply, the startup is crushing it.

Why? Per Michael Intrator, CoreWeave’s CEO, “the market’s continued demand for critical AI infrastructure [is] simply insatiable.” That’s one way to get past the TAM question when pitching to investors!

While CoreWeave is on the TWiST500 already, there are other so-called neoclouds that we might need to add. Tenstorrent is on the list as well, though it has a greater focus on its own chips and boards. Lambda Labs is also in the mix, though it has a capital base that is — according to public information — far smaller than what CoreWeave has assembled. When it comes to building AI training infra, cash really does matter — meaning that a capital-derived edge may be more moat than puddle when it comes to neoclouds.

Regardless, adding the company to the list is looking like the right call. More next week! — Alex

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This Week in Startups

E2024: Alex breaks down the TWiST500 by covering topics like AI development tools (Qodo, Poolside), AI infrastructure (CoreWeave), and AI data management (Tollbit, Scale). He also covers robotics (Figure, Dusty Robotics), fintech (Circle, Altruist), cybersecurity (Huntress, Wiz), and crypto (Farcaster). We end with a special announcement that Angel University is set to start on November 6th.

Startup Finance Basics: Scott Orn, Kruze COO, and Jason go through the distinct characteristics of the current AI boom, emphasizing differences in revenue, costs, and growth rates between AI startups and traditional SaaS. They highlight how AI tools are improving productivity and labor efficiency, while also noting the unique accounting and operational challenges AI startups face.

E2023: M.G. Siegler joins Jason and Alex to discuss his transition from journalism to venture capital, comparing the two fields and sharing insights on media transparency. He dives into the current state of venture capital, focusing on challenges like high valuations, market downturns, and opportunities for early-stage returns. They cover tech industry dynamics, including AI competition among tech giants, regulatory impacts on mergers and acquisitions, and the implications of the DOJ’s antitrust case against Google.

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Founder University

Applications are open for Founder University Cohort 9, a 12-week remote pre-accelerator program tailored towards navigating early-startup practices, building an MVP, and growing traction. Submit your application at Founder University — Cohort 9 begins on October 25th!

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