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☆ Watch: Russian Jet Downs U.S. Spy Drone After Collision Over Black Sea
▼ + stars: | 2023-03-16 | by ( ) www.wsj.com time to read: 1 min

Startups Look to Change After Silicon Valley Bank CollapseThe collapse of Silicon Valley Bank has rattled the startup sector that was so reliant on it. Now venture investors are combing through the aftermath, working to change their banking practices. WSJ venture-capital reporter Berber Jin joins host Zoe Thomas to discuss. Plus, do you have questions about generative AI? Leave us a voicemail at (415) 439-6482 or send us a voice recording at tnb@wsj.com.

☆ Generative AI Brings Cost of Creation Close to Zero, Andreessen Horowitz’s Martin Casado Says
▼ + stars: | 2023-03-15 | by ( Angus Loten | ) www.wsj.com time to read: 1 min

WSJ Reporter Berber Jin, left, spoke with Andreessen Horowitz’s Martin Casado at the WSJ CIO Network Summit in Palo Alto, Calif. The value of ChatGPT-like technology comes from bringing the cost of producing images, text and other creative projects close to zero, according to Andreessen Horowitz General Partner Martin Casado . With only a few prompts, generative AI technology—such as the giant language models underlying the viral ChatGPT chatbot—can enable companies to create sales and marketing materials from scratch quickly for a fraction of the price of using current software tools, and paying designers, photographers and copywriters, among other expenses, Mr. Casado said.

☆ Flash Floods Hit Southeast Turkey a Month After Deadly Earthquakes
▼ + stars: | 2023-03-15 | by ( ) www.wsj.com time to read: 1 min

Silicon Valley Bank built up a formidable network in Silicon Valley over its 40 years in business. Startup founders and investors breathed a collective sigh of relief after the federal government agreed to backstop deposits at Silicon Valley Bank, but they said the lender’s collapse would drive changes in the industry’s financial practices. The decision, announced Sunday afternoon California time, ended a frenzied multiday race to shore up cash and meet payroll needs. The government move surprised many in the industry, which was bracing for a delay of weeks and even months before depositors would get full access to their cash.

Startup founders and investors breathed a collective sigh of relief after the federal government agreed to backstop deposits at Silicon Valley Bank, but they said the lender’s collapse would drive changes in the industry’s financial practices. The decision, announced Sunday afternoon California time, ended a multiday race to shore up cash and meet payroll needs. The government move surprised many in the industry, which was bracing for a delay of weeks and even months before depositors would get full access to their cash.

Tech startups and other businesses raced to line up sources of cash for payroll and other immediate needs after their deposits in Silicon Valley Bank , long a linchpin of tech financing, were locked up when federal authorities took control Friday morning. The bank’s sudden collapse fueled uncertainty among many founders over the immediate future of their businesses, and further hobbled a startup sector that has struggled with a sharp slowdown in venture funding and broader economic woes. Its demise will likely further accelerate the shift away from the high-risk and aggressive growth strategies that startups embraced during the decades-plus bull market that ended last year, according to longtime startup investors.

Silicon Valley Bank, which collapsed Friday, had grown over four decades to become a linchpin of tech investing. Startup investors scrambled over the weekend to help their portfolio companies meet immediate expenses and to shore up their own access to cash after Friday’s federal seizure of Silicon Valley Bank made some money inaccessible. Venture-capital giant Andreessen Horowitz said it was helping founders of startups it has invested in find new banks and identify financing alternatives. Other venture leaders also said they were funding payroll for now at their portfolio companies that didn’t move cash out of SVB before it was taken over by the Federal Deposit Insurance Corp. Friday morning.

A part-time worker for Instacart filled customer orders in New Jersey last year. Instacart Inc. generated sharply higher sales and profit in the fourth quarter, according to people familiar with the matter and an internal memo, as the company prepares for its highly anticipated initial public offering of stock. The grocery-delivery company told employees on Tuesday that its revenue increased more than 50% in the fourth quarter, compared with the same period a year earlier, while gross profit rose more than 80%, according to a memo viewed by The Wall Street Journal.

Sequoia Capital has started screening some investments its China arm is considering in technology companies there for U.S. national-security concerns, according to people familiar with the matter, as Washington steps up efforts to stop American money from funding China’s development of sensitive technologies. The Biden administration is expected to soon unveil investment restrictions that would prevent U.S. capital from flowing to companies and startups in China that are developing cutting-edge technologies in sectors including advanced semiconductors.

☆ Venture Fundraising Hits Nine-Year Low
▼ + stars: | 2023-02-20 | by ( Berber Jin | ) www.wsj.com time to read: 1 min

Sequoia Capital changed the fees it charges limited partners to better reflect the slowdown. Fundraising by venture-capital firms hit a nine-year low in the fourth quarter, as the macroeconomic pressures that already weighed on technology startups began to affect the investors who underpin the industry. Venture firms raised $20.6 billion in new funds in the fourth quarter. That was a 65% drop from the year-earlier quarter and the lowest fourth-quarter amount since 2013, according to data firm Preqin Ltd., which tracks venture-fund data. The amount was also less than half the level raised in the preceding three months, the first time fundraising volumes decreased from the third to fourth quarter since 2009, the data show.

The target for Tiger Global’s latest venture fund is down from $6 billion last fall and early expectations of around $12.7 billion. Tiger Global Management is scaling back its plans for a large venture-capital fund, a reversal for the tech investor that epitomized the Silicon Valley startup mania. The New York-based manager told investors it is reducing the target size for its latest venture fund to $5 billion, down from a $6 billion target it set when it began fundraising last fall, according to people familiar with the matter. The $6 billion itself was well below Tiger’s early expectations that it would raise a roughly comparable fund to its last, which totaled $12.7 billion, some investors said.

☆ Elon Musk Explores Raising Up to $3 Billion to Help Pay Off Twitter Debt
▼ + stars: | 2023-01-26 | by ( Berber Jin | Alexander Saeedy | ) www.wsj.com time to read: 1 min

Elon Musk’s team has held talks with investors about raising up to $3 billion to repay some of the $13 billion in debt tacked onto Twitter Inc. as part of his buyout of the company, people familiar with the matter said. In December, Mr. Musk’s representatives discussed selling up to $3 billion in new Twitter shares, people familiar with the matter said.

☆ Elon Musk Explores Raising Up to $3 Billion to Pay Off Twitter Debt
▼ + stars: | 2023-01-25 | by ( Berber Jin | Alexander Saeedy | ) www.wsj.com time to read: 1 min

Mr. Musk’s representatives have discussed selling up to $3 billion in new Twitter shares, people familiar with the matter said. Elon Musk‘s team has been exploring using as much as $3 billion in potential new fundraising to help repay some of the $13 billion in debt tacked onto Twitter Inc. for his buyout of the company, people familiar with the matter said. In December, Mr. Musk’s representatives discussed selling up to $3 billion in new Twitter shares, people familiar with the matter said.

☆ Robert Iger, Henry Kravis to Buy Minority Stake in Thrive Capital
▼ + stars: | 2023-01-24 | by ( Berber Jin | ) www.wsj.com time to read: 1 min

Venture firm Thrive Capital is selling a stake to a group of investors including Walt Disney Co. CEO Robert Iger and KKR & Co. co-founder Henry Kravis , a rare move designed to expand its investing reach and give the founders of the startups it backs access to some of the world’s most powerful business figures. As a part of the transaction, Brazilian food magnate Jorge Paulo Lemann , French telecoms executive Xavier Niel , Indian oil tycoon Mukesh Ambani , Mr. Iger and Mr. Kravis will invest about $175 million to purchase a 3.3% stake in Thrive, the New York-based firm said Tuesday. The deal values the venture firm at $5.3 billion.

☆ Microsoft to Deepen OpenAI Partnership, Invest Billions in ChatGPT Creator
▼ + stars: | 2023-01-23 | by ( Berber Jin | Miles Kruppa | ) www.wsj.com time to read: 1 min

Microsoft Corp. said Monday it is making a multiyear, multibillion-dollar investment in OpenAI, substantially bolstering its relationship with the startup behind the viral ChatGPT chatbot as the software giant looks to expand the use of artificial intelligence in its products. Microsoft said the latest partnership builds upon the company’s 2019 and 2021 investments in OpenAI.

☆ ChatGPT Creator Is Talking to Investors About Selling Shares at $29 Billion Valuation
▼ + stars: | 2023-01-07 | by ( Berber Jin | Miles Kruppa | ) www.wsj.com time to read: 1 min

OpenAI , the research lab behind the viral ChatGPT chatbot, is in talks to sell existing shares in a tender offer that would value the company at around $29 billion, according to people familiar with the matter, making it one of the most valuable U.S. startups on paper despite generating little revenue. Venture-capital firms Thrive Capital and Founders Fund are in talks to buy shares, the people said. The tender could total at least $300 million in OpenAI share sales, they said. The deal is structured as a tender offer, with the investors buying shares from existing shareholders such as employees, the people said.

☆ ChatGPT Creator in Investor Talks at $29 Billion Valuation
▼ + stars: | 2023-01-06 | by ( Berber Jin | Miles Kruppa | ) www.wsj.com time to read: 1 min

☆ Venture Firms’ Strategy of Holding Stocks for Longer Backfires During Market Rout
▼ + stars: | 2023-01-05 | by ( Berber Jin | ) www.wsj.com time to read: 1 min

Venture-capital firms that deployed a new strategy of holding stocks for longer have come to regret it amid last year’s market rout. During the recent bull market, venture-capital investors that typically exit a stock after taking it public held on to their shares in the hope of maximizing returns. Instead, the sharp selloff in technology stocks in 2022 has dealt a punishing blow to that strategy. Some of the splashiest startup stocks from 2021 plunged, making it unlikely those investors will recover the value of their earlier positions anytime soon, if at all.

☆ ChatGPT Creator OpenAI Pushes New Strategy to Gain Artificial Intelligence Edge
▼ + stars: | 2022-12-18 | by ( Berber Jin | Miles Kruppa | ) www.wsj.com time to read: 1 min

Sam Altman, as CEO of OpenAI, has led its fundraising in the race to build software that fully mirrors human intelligence and capabilities. ChatGPT, the artificial-intelligence program captivating Silicon Valley with its sophisticated prose, had its origin three years ago, when technology investor Sam Altman became chief executive of the chatbot’s developer, OpenAI. Mr. Altman decided at that time to move the OpenAI research lab away from its nonprofit roots and turn to a new strategy, as it raced to build software that could fully mirror the intelligence and capabilities of humans—what AI researchers call “artificial general intelligence.” Mr. Altman, who had built a name as president of famed startup accelerator Y Combinator, would oversee the creation of a new for-profit arm, believing OpenAI needed to become an aggressive fundraiser to meet its founding mission.

☆ The Backstory of ChatGPT Creator OpenAI
▼ + stars: | 2022-12-18 | by ( Berber Jin | Miles Kruppa | ) www.wsj.com time to read: 1 min

☆ Sequoia Capital Apologizes to Limited Partners for FTX Investment
▼ + stars: | 2022-11-22 | by ( Berber Jin | ) www.wsj.com time to read: 1 min

The collapse of FTX has placed Sequoia Capital in an unfamiliar position: damage control mode. The early backer of Apple Inc., Alphabet Inc.’s Google, and Airbnb Inc.—and one of Silicon Valley’s most successful venture-capital firms—apologized to its fund investors in a conference call Tuesday for its $150 million loss on the crypto exchange FTX and vowed to improve its due diligence process for future investments, said people familiar with the matter.

☆ Sequoia Capital Apologizes to Its Fund Investors for FTX Loss
▼ + stars: | 2022-11-22 | by ( Berber Jin | ) www.wsj.com time to read: 1 min

Sequoia Capital apologized to its fund investors for the $150 million it lost on crypto exchange FTX, said people familiar with the matter, a rare moment of contrition for the storied venture-capital firm. On the call, Sequoia’s partners told the fund investors that the firm would improve its due-diligence process on future investments and that it believed it was misled by FTX based on its recent bankruptcy filing, the people said.

When FTX raised $420 million from an array of big-name investors in October last year, the cryptocurrency exchange said the money would help grow the business, improve user experience and allow it to engage more with regulators. Left unmentioned was that nearly three-quarters of the money, $300 million, went instead to FTX founder Sam Bankman-Fried, who sold some of his personal stake in the company, according to FTX financial records reviewed by The Wall Street Journal and people familiar with the transaction.

Sam Bankman-Fried has resigned as chief executive of FTX, which has filed for bankruptcy protection. FTX filed for bankruptcy last week, but the cryptocurrency exchange’s founder still thinks that he can raise enough money to make users whole, according to people familiar with the matter. Mr. Bankman-Fried, alongside a few remaining employees, spent the past weekend calling around in search of commitments from investors to plug a shortfall of up to $8 billion in the hopes of repaying FTX’s customers, the people said.

Sequoia Capital, whose offices in Menlo Park, Calif., are shown here, is writing a $150 million investment one of its funds had in FTX down to zero. A marquee roster of investors from Silicon Valley and Wall Street swarmed FTX. They invested nearly $2 billion with few strings attached and no oversight on the cryptocurrency exchange’s board, promoting it as a safe bet. Now the backers are nursing a high-profile black eye as the three-year-old company—valued at $32 billion at its peak—teeters. Venture-capital firm Sequoia Capital said on Wednesday it is writing a $150 million investment one of its funds had in FTX down to zero because of solvency risk.

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