PreIPO INTELLI™ Weekly Insights | Series 56
Friday, November 3rd 2023 | Volume 1 Series 56 | Elon's xAI Launch, Olive Calling it Quits, and Top Startup Highlights this Week
☕ Happy Friday, everyone! We have new updates brought to you by our Team at INTELLI™. This week, our discussion centers on the highly anticipated launch of xAI, scheduled for tomorrow. xAI was first unveiled in July and carries substantial expectations, with its founder, Elon Musk, boldly asserting that it will outperform any existing AI. Additionally, we'll delve into the decline of Olive, a startup that once held a valuation of $4 billion. To wrap up, we'll spotlight noteworthy funding and acquisitions involving startups that have come to our attention this week.
xAI to be Unveiled Tomorrow 🤖🧠
Elon Musk announced today that his AI company, xAI, is set to unveil its technology on Saturday.
The AI startup, which Musk introduced in July, is focused on "comprehending the true essence of the universe," as outlined on its website. Musk appears to be positioning it to compete with companies like OpenAI, Google, and Anthropic, the entities responsible for leading chatbots like ChatGPT, Bard, and Claude. Musk reportedly secured thousands of high-powered GPU processors from Nvidia in the spring, the type of chips essential for building large language models similar to tools such as OpenAI's ChatGPT or Google's Bard.
The xAI team includes individuals with backgrounds in DeepMind, OpenAI, Google Research, Microsoft Research, Twitter, and Tesla, who have worked on projects including DeepMind's AlphaCode and OpenAI's GPT-3.5 and GPT-4 chatbots, as per LinkedIn profiles examined by CNBC.
Musk disclosed his intentions for a new AI tool called "TruthGPT" in April during an interview on Fox News Channel, expressing concerns that existing AI companies prioritize systems that are "politically correct."
Greg Yang, co-founder of xAI, stated that the startup will delve into the "mathematics of deep learning," a crucial aspect of AI, and endeavor to "develop the 'theory of everything' for large neural networks" to advance AI to the next level.
In August, there were indications that xAI was hiring, as suggested by posts on social media from various company members. During the same month, Toby Pohlen, a founding member of xAI, posted an image of a blue-and-white logo on the platform, mentioning, "Getting everything ready for the first alpha testers."
Musk officially incorporated xAI in Nevada in March, according to official filings. He had previously altered the name of Twitter to "X Corp." in certain financial documents. However, xAI's website emphasizes its distinction from X Corp., noting that it will collaborate closely with X (Twitter), Tesla, and other companies to advance its mission.
Health AI startup Olive to shut down
Olive, a healthcare AI startup that was previously valued at $4 billion, has announced its decision to cease operations. The company, known for its revenue cycle automation tools, will be selling its clearinghouse and patient access divisions to Waystar and Humata Health. These segments are central to Olive's business, while the company will gradually discontinue its other activities. Olive had garnered substantial funding, including a $400 million investment during the digital health funding boom in 2021.
In the context of the digital health industry, Olive's closure represents another prominent player exiting the stage, following a decrease in interest and funding since the peak of the pandemic-driven surge. In 2021, U.S.-based digital health startups raised an impressive $29 billion, breaking previous records and prompting some companies to go public.
However, funding for this sector has dwindled over the past two years. In the third quarter of 2023, startups secured only $2.5 billion in funding, marking the second-lowest quarterly amount since the fourth quarter of 2019, as reported by Rock Health. Additionally, the IPO market has become stagnant, with few digital health firms venturing into the public market.
Companies that flourished during the digital health rush of the pandemic era, like Olive, have faced financial difficulties this year, with some even declaring bankruptcy. These include Pear Therapeutics, specializing in digital therapeutics for substance use disorder and insomnia, and the digital health company Babylon.
Olive encountered financial challenges over the past year, laying off approximately 450 employees in July 2022 due to what CEO Sean Lane described as the company's "fast-paced growth and lack of focus" straining its resources. In February, Olive further reduced its workforce by 200 employees. The startup also divested certain product lines, such as its population health and 340B management tools, as well as its utilization management products for payers.
Investors have noted that the current funding environment and challenges faced by health startups make them ripe for mergers and acquisitions. Acquirers may take advantage of the unfavorable market conditions to acquire new assets, particularly from point solutions providers facing intensified competition from companies offering a wider array of products.
📈 INTELLI™ Featured Trending Companies
Fintech: Animoca Brands, a company in the Web3 gaming sector, is in the process of securing $25 million through convertible notes from Saudi Arabia's NEOM megaproject. Additionally, NEOM is set to purchase $25 million worth of secondaries.
Healthcare: SkyCell, a Swiss firm specializing in the development of containers for transporting medicines and vaccines, has successfully raised $57 million at a valuation of $600 million. This funding round was spearheaded by Catalyst and encompasses a total of seven deals.
Housing: Samara, a San Francisco-based company that constructs compact housing units, has secured $41 million in funding. This investment was led by Thrive Capital and also involved participation from 8VC, General Catalyst, New Legacy, Ron Conway's SV Angel, and Airbnb.
Media: KKR has completed its acquisition of book publisher Simon & Schuster from Paramount Global (Nasdaq: PARA) in an all-cash transaction amounting to $1.62 billion. More information about this acquisition can be found here
Retail: Clariant, a Swiss chemical company, has reached an agreement to acquire Lucas Meyer Cosmetics from International Fragrance and Flavors for $810 million. Being a prominent player in the realm of specialty chemicals, Clariant plays a pivotal role in generating value by offering inventive and environmentally responsible solutions to clients across diverse sectors.
As always, stay tuned for more updates and insights from the team at INTELLI™.