This is a transcript of the latest episode of Equity, TechCrunch’s venture capital-focused podcast. New episodes of Equity air every Monday, Wednesday and Friday.
Listen above or read on to catch up on our Wednesday show, where we talk about the week’s top startup and venture capital news.
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0:10
Hello, and welcome back to Equity, the TechCrunch podcast where we unpack the numbers and nuances behind the headlines. Today is February 14, 2024. Happy Valentine’s Day, I hope you eat some chocolate and relax on the couch because you deserve it.
This is Wednesday’s show, where we look at the crucial startup and venture capital stories from the week so far. In the pod today, we have an absolute bucket list of things. I can’t wait to talk about it.
We’ll start with Bret Taylor’s new startup Sierra and why FlowFi wants to bring people and technology together. Next, we have venture capital rounds from Fold and Antithesis. And we’ll close our startup coverage by asking why everyone wants me to eat more mushrooms. In the venture corner, we have news from Homebrew, Foundry and the latest from Europe. Let’s go!
1:00
To kick off our startup coverage, today I want to talk about someone who might be best known for his work in Big Tech. This is Bret Taylor. He’s the ex-Google Maps guy, founded FriendFeed, then became Facebook’s CTO. He then founded Quip and then became the co-CEO of Salesforce. And he is a former board member at Twitter and currently sits on the board of OpenAI. And he’s building a new company called Sierra.
So what is Sierra up to? Well, it creates conversational AI agents, essentially pieces of artificial intelligence that do things for end users, like asking questions or updating their account. The AI agent space is a busy one, but Sierra has already raised $110 million and brought a product to market. So it looks like with plenty of capital, early customers, and possibly even some early revenue, it’s making a well-supported play to dominate a growing software niche.
But it does the job in a more practical way than I expected. Of creating software tools for its clients instead of just offering them a big bag of stuff to make on their own.
The funny thing here is that if you want to raise money today, start an AI startup. But if you Really You want to raise money today, so create an AI startup that will also be on the OpenAI board. Fortune reports that Sierra uses both closed — also known as OpenAI — artificial intelligence and open source models that it links together to avoid illusions and help AI agents actually perform tasks for its customers. Chained LLMs could become a trend.
2:36
Moving on [to] FlowFi. I think this is an absolutely fascinating startup. It just raised $9 million from Blumberg Capital. But the way he goes after his purchase, the financial management of startups, really makes me stand up.
So today there is a big push to use artificial intelligence to do as much as possible of what humans can do, as often as possible and as quickly as possible. The logic here is pretty simple. Computer agents are much cheaper than human workers. Replacing the latter with the former makes business sense. However, FlowFi is building a software suite for startup funding, which it combines with a marketplace of real people helping its customers with their books. So it creates software plus humans instead of software with more artificial intelligence.
And honestly, in this case, I get it. You don’t want your CFO to be a bot. You want someone who is grizzled, experienced, and can give you the familiar CFO look when you make a silly mistake or spend too much money on your business travel dinners. So the company offers accounting help, a CFO-like service and tax preparation help, just with software and people at the wheel. Very cool. But let’s see how it scales.
3:47
And there was so, so, so much more this week. I had to condense a few things, but I want to go to more companies. So let’s start with Bold. It just raised $50 million and is working on payments in Latin America. So this is a big fintech round in an area that was once absolutely dismal for fintech, and given the pullback we’ve seen in Latin America and fintech in general, it’s nice to see Bold raising money for this project, where it is located is. Bold is a welcome ray of light for many other Latin American fintechs hoping to raise more capital. And if you remember, on last Friday’s show, we talked a lot about how Latin American startups are more efficient on many key metrics than those in other regions. So maybe the VCs here are seeing this and putting their checkbook to work where it can have the most impact.
4:35
Next up is a company called Antithesis. It just raised $47 million for its automated software testing service. I chose this one because I think it’s really cool. The reason is that everyone agrees that software is the future of the world. But actually writing code that is secure and stable is not an easy task. You can compare it to writing and editing — you need both to have a good final product. So Antithesis creates a bunch of tools to help make code run really well, if I can put it that way. It clearly has a lot of competition, especially in the startup world. But I don’t think you’re pinching that much capital in today’s market if your numbers aren’t top notch. Contrast, one to watch.
5:20
And then to wrap up our coverage of startups, why does everyone want me to eat mushrooms? It’s really getting kind of weird. This time, it’s a startup called Spacegoods — all one word. It’s a London-based wellness brand that wants to use mushrooms and nootropics to create a range of powder blends. TechCrunch says it claims its product will boost my energy, relaxation and mood. About which I can only say with certainty. Other startups are using mushrooms to make fake skin, protein foods and energy drinks. Apparently mushrooms can do anything. And that means the people who wrote “The Expanse” were right. I guess we should all keep an eye out for bottles of mushroom whiskey that should be on their way.
6:04
Moving from startups to venture capital, our first VC story of the morning is that Homebrew is targeting $50 million for a new fund. . . according to the SEC filing. And this filing is really surprising because Homebrew said almost two years ago that it was pursuing a more stage-agnostic, evergreen model that would be funded solely by its partners Satya Patel and Hunter Walk. So what to do with the news? I have some ideas. It could be an opportunity fund perhaps, or perhaps a highly tailored vehicle for larger follow-on investments in past deals.
If Homebrew can self-fund, its previous chapters have done very well. So people might want to co-invest with him a bit, even if his main funds will now come from internal sources. Anyway, can you imagine the LP meetings of a fund backed entirely by its own general partners? It would be like “Hello and good morning. How did we do so well this quarter? OK, the meeting is adjourned.”
7:13
But if Homebrew reloads, the Foundry Group goes away. Foundry is an 18-year-old venture capital firm with nearly $3.5 billion in assets under management. And it quietly decided to close and not raise any more funds. This move surprised TechCrunch because the company announced a $500 million fund last year.
Over the years, Foundry has invested in more than 200 companies and 50 venture capital firms. And so says co-founder and partner Seth Levine. As for names you know, Foundry has backed companies like Fitbit and Zynga. But in a post, Levine wrote that, and I quote, “while VC firms rarely make decisions like this this is exactly what we set out to do when we started the foundry in 2006. Since our inception, we have deliberately decided not to create a legacy or generation company”.
Somehow this feels kind of refreshing. Do something for a while, make a lot of money, then move on. It feels strangely clean, especially given what we’ve seen at other venture capital firms. A major generational change or handover can get messy. But don’t worry, Foundry still has money to invest from its latest fund. It’s just not going to lift anymore.
8:30
And to wrap us up, our own Anna Heim reports that Germany-based Earlybird Health has raised the final close of its second fund, which will be valued at €173 million, or about $185 million. That’s actually more than double the size of Earlybird’s first healthcare-focused fund, which was very creatively called Health One and was worth around €85 million at its final close. So while both funds are similar in both thesis and stage, the larger, newer fund will allow Earlybird to write bigger checks. Who doesn’t love a little more ownership? And since Earlybird plans to invest primarily in Europe, including the UK, its new fund could be good news for health tech startups in the region, many of which are running out of cash after telehealth company Babylon went public.
9:23
And that’s our show for this lovely Wednesday morning. Kisses to you. We hope you are doing well.
We’ll have more for you on Friday, but in the meantime, we’re equitypod on X and Threads, and we’re on TechCrunchPods on TikTok.
In the meantime, I highly recommend checking out both of our sister shows. This is Chain reaction in crypto beat and They were found talking to the founders about how they built what they did. Okay. This is Alex, I’ll talk to you soon. Goodbye.
Equity is hosted by me, Alex Wilhelm, and TechCrunch Senior Reporter Mary Ann Azevedo. We are produced by Theresa Loconsolo with editing by Kell. Bryce Durbin is our illustrator, and a big thanks to the audience development team and Henry Pickavet, who manages the TechCrunch audio products. Thank you very much for listening and we will talk to you next time.
