Startups Weekly: Musk raises $6 billion for AI, and the fintech dominoes are falling

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In a twist that shocks absolutely no one and excites arsonists who love to watch money burn, Elon Musk’s new venture, xAI, has secured $6 billion in casual funding. Valor, a16z and Sequoia are stacking money on the xAI-shaped roulette table, with Musk spinning the wheel.

Ivan ponders whether Musk is last market coup will finally bring us artificial intelligence so advanced that our puny human brain will be even more obsolete than it already is thanks to its other crazy projects.

I think he’s completely out of his mind. These investors appear to be overflowing with liquidity and have just emerged from skepticism. I can just imagine the tone: “Imagine an AI so powerful it makes HAL 9000 look like a Roomba.” And, of course, they threw money at it. Because, well… Honestly, I can’t see the logic in it.

What makes this especially crazy is that the $6 billion windfall is just the latest chapter in Musk’s epic saga of “how to get the world to fund my sci-fi fantasies.” The more stories that come out about Musk, the more you’d think people would start to hesitate before investing. But as it turns out, this is why I’m a newsletter writer and podcast host (we talked about that on equity today so) and not a VC. I would think twice about betting on the guy who gave it to us self-driving cars that can’t spot fire trucks and spacecraft that sometimes land but also sometimes they explode into a fiery display.

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The most interesting startup stories of the week

Welcome to the wild, wild west of fintech! Remember that bright star called Synapse? Yes, it was a supernova. Startup banking-as-a-service was one segment that seemed to be one careening towards the stratosphere, and Synapse itself was supported by a16z, but that didn’t help anyone. THE the company collapsed faster than my New Year’s resolutions. With 10 million consumers now left in the lurch and many fintechs scrambling to pick up the pieces, it’s a real catastrophe out there. It’s like “Game of Thrones” but with more spreadsheets and fewer dragons. If you thought your week was rough, spare a thought for those who are stuck trying to access their funds or save their jobs thanks to this chaos. Fasten your seatbelts: it’s going to be a bumpy ride for fintech!

• The drama is in motion: James Khatiblou, the 37-year-old owner and CEO of Onyx Motorcycles, died just as his company was going down the drain. With unpaid bills, an absent COO, angry customers demanding refunds for overdue Chinese electric bikes, and two former shareholders fighting for control over Onyx’s remaining assets… This is an incredible ride.
• Job cuts in the automotive sector Earth: Lucid Motors is trimming the fat once again, laying off 400 employees (6% of its workforce) just in time for the launch of their first SUV. Apparently, they need to “optimize resources”. CEO Peter Rawlinson believes so fewer employees will help make the best SUV in the world … In the meantime, Fisker has laid off hundreds of people in a desperate attempt to survive. Employees got the hint when they were suddenly told to work from home, presumably so that no one could hear the collective sighs of despair at the all-hands meeting.
• Collect money to save money: The relay just tripped a $32.2 million Series B funding round to help small businesses do more than just nervously refresh their bank balances. Their secret sauce? Focusing on mom-and-pop shops rather than tech startups — take it, Silicon Valley!

Synapse has fueled tons of other startups. Until it wasn’t. Image credits: Synapses

This week’s most interesting fundraisers

Firefly, the cloud asset management startup that aims to simplify digital chaos with “infrastructure as code,” has done so obtained financing of 23 million dollars. This comes after an unimaginable tragedy: Co-founder CTO Joseph “Sefi” Genis was killed by Hamas during a music festival. Despite this, the Firefly team chose resilience over retreat and went on to quadruple their revenue in 2023. So, in essence, Firefly is now untangling the complexities of the cloud and navigating through real-world turbulence like absolute champions.

• Is fantastic: Google just launched a casual $350 million in Flipkartmaking him the latest VIP to back the Indian e-commerce powerhouse, which now has a valuation of $36 billion.
• Get a dinero! Get a dinero!: Sending money home just got a lot more talked about! Félix Pago, the fintech darling who makes remittances as easy as sending a WhatsApp, that’s it has obtained funding of 15.5 million dollars. Forget about downloading apps or navigating complex interfaces; this startup uses the WhatsApp chatbot.
• A dictionary with a unicorn horn: More funding is being poured into AI-focused startups. DeepL, which creates automated text translation and writing tools that compete with the likes of Google Translate and Grammarly, raised another $300 million. It is now valued at $2 billion.

Image credits: Anindito Mukherjee/Bloomberg/Getty Images

More must-see stories from TechCrunch…

Dreaming of a tech IPO bonanza in 2024? Well, wake up and smell high interest rates! Even though Reddit, Astera Labs, Ibotta, and Rubrik managed to break down the IPO door earlier this year, it seems like most startups are still stuck at home in their pajamas. Plaid’s CEO said they will remain private for now, and Figma and Stripe are busy with public offerings as if they were holding a bake sale instead of preparing for an IPO. Databricks raised $500 million but isn’t even feeling the public market vibes; maybe next year they will feel more extroverted. And Canva? They may take so long to be made public that by then we’ll be designing newsletters straight from our brain implants. Stay tuned as TechCrunch continues to do so monitor which startups will challenge the stock market runway or stay hidden behind the curtains of their venture capital!

Other top stories:

• What is happening in the land of messengers: Meredith Whittaker, president of Signal, has had enough of the tech industry’s “frat boys” and their “dorm room highs.” At VivaTech in Paris, he didn’t hold back his concerns on everything from US companies’ takeover of artificial intelligence to the EU’s misguided attempts at regulation.
• Artificial intelligence in your ears: Welcome to the battle of generative AI gadgets, now with Iyo’s GenAI earphones! Humane and Rabbit R1 flopped harder than a fish out of water, but Iyo thinks we can succeed where they have stumbled. Unlike its predecessors’ bizarre pins and overpriced handhelds that critics said should have been apps-only, Iyo is betting on an already beloved form factor: Bluetooth earbuds.
• Dude, where’s my wallet?: Is it a bird? Is it a plane? No, it’s the Stax Ledger, finally descending from the cryptocurrency skies 18 months after his big announcement. This new one high-end hardware wallet it features an E Ink display designed by iPod guru Tony Fadell—yes, they’re bringing back the vibrations of e-readers for your encryption needs.
• Wait, Foursquare had 105 employees to fire?: Quattroquadrato just laid off 105 employees in an attempt to “streamline” operations and place themselves on a more solid financial footing. CEO Gary Little, who might as well have hit Enter and then vanished into thin air, hasn’t shed much light on what comes next.
• Let me summarize it for you: It looks like Apple is back to its old tricks, ready to “sherlock” another innovative feature into the app. This time, it’s The Browser Company’s Arc that’s in the crosshairs with its nifty AI summary tools like “browse for me” and “pinch to summarize.” Apple’s supposed “smart summaries” in iOS 18 look suspiciously similarpotentially transforming Safari into a one-stop shop for AI-powered summaries of everything from web pages to missed notifications.

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