Specifically, batteries for electric vehicles. Amid all the hullabaloo around generative AI, the fall of crypto, and the head-scratching discourse around Web3, somehow, electric vehicle batteries are seeing steady 鈥� and favorable 鈥� funding in the past few years, per 小蓝视频色情网页版 data.

Despite a 43% decrease in funding between 2021 and 2022, electric vehicle battery manufacturing still saw more funding in 2022 than it did in 2020. Last year was the sector鈥檚 second-best funding year since 2014.

What鈥檚 even more interesting is how much of this funding is flowing to the U.S., despite the fact that China dominates the global battery manufacturing sector.

In 2020, only around 20% of all funding to the sector went toward U.S.-based companies. But in 2021, 64% of all funding to the sector was funneled into U.S.-based companies, per 小蓝视频色情网页版 data. In 2022, that number rose to 70%.

VCs chase EV subsidies

So, what鈥檚 driving battery funding?

It鈥檚 the federal government. Seriously. Following the Inflation Reduction Act, which promises subsidies for EV companies, funding has been pouring into the U.S. to ramp up green energy production.

The Inflation Reduction Act is part of a slew of laws to make it easier for electric vehicle manufacturers to produce parts in the U.S. as it attempts to make its manufacturing sector more competitive at a global level.

Last week, the conditionally approved a $9.2 billion loan to for the construction of electric vehicle battery factories. It鈥檚 the largest automaker loan doled out by the DOE since the 2008 financial crisis.

Ford isn鈥檛 the only company to bask in the federal government鈥檚 new obsession for electric vehicles 鈥� , and Rhyolite Ridge are among the U.S.-grown battery companies that received loans. Even , which was founded by co-founder , received a $2 billion loan.

The U.S., despite being home to Tesla and some of the biggest electric vehicle companies in the world, trails behind China in terms of battery manufacturing. Because the U.S. is ramping up its own green energy efforts, the country is working to tighten its supply chains amid geopolitical concerns. That makes sense; the war between Russia and Ukraine saw . The U.S., which dreams of running on batteries and semiconductors, currently relies heavily on other countries to source the raw materials to make those products.

What鈥檚 most interesting here is the relationship between the bureaucratic federal government and the nimble, fast-moving startup world. It just goes to show how influential the public sector is on our private markets.

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The company filed confidentially in the U.S. for its initial public offering, , citing sources familiar with the matter. (In a statement to after the report, what it called 鈥渞umors.鈥�)

A Shein IPO would be years in the making

Nonetheless, the company has been making moves toward an IPO since at least 2020. The startup, based in China at the time, shelved those plans after rising geopolitical tensions between the U.S. and its headquarters country. In 2022, Shein鈥檚 IPO plans were once again put on the back burner due to strict and complex regulatory barriers imposed by the on companies that want to go public offshore.

China has since promised to change its regulatory standards. While keeping its supply chain and warehouse facilities in China, Shein last year moved its headquarters to Singapore, which has laxer regulatory and expansion laws.

In March, rumors swirled that the company was in talks to go public in the U.S. again. In May, the company raised $2 billion at a $66 billion valuation 鈥� making it, at the time, the fourth-highest-valued unicorn on The 小蓝视频色情网页版 Unicorn Board.

Problems ahead

And now, here we are. If Shein goes public this year, it will be in a much different world than 2020. E-commerce, fueled by the pandemic, made the international fashion brand wildly popular. But post-pandemic the demand for online shopping isn鈥檛 what it used to be.

Shein has long been scrutinized by the U.S. for unethical labor practices and the potential damage its clothing production may have on the environment. The company is now navigating stricter environmental regulations that the U.S. and European Union are imposing on imports.

When Shein will go public still remains to be seen. Several highly valued startups, including social networking platform , car-sharing platform , and grocery delivery service , paperwork to go public, but none have their ticker symbols yet.

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Many are also joining federal and state health insurance programs like , and Medicaid. And venture firms and startups are taking notice: New health care startups that once vied for the eyes of employers and insurance companies are now targeting these patients.

Enter Author Health, a health care platform for Medicare Advantage recipients. The company launched on Wednesday armed with $115 million in financing from and .

The Boston-based startup creates a team of doctors, nurses, therapists and community health workers for Medicare Advantage recipients with serious mental health disorders. Data from shows 1 in 4 people with Medicare 鈥� those in the U.S. who are age 65 and older, or those with a disability 鈥� , but only 40% to 50% receive treatment.

鈥淭hey end up in inpatient units and emergency departments,鈥� said Dr. Katherine Hobbs, CEO of Author Health. 鈥淎 lot of that utilization and bad outcomes could be avoided by better care in the community in the outpatient setting.鈥�

Bullish on federal health plans

Given medical advancements, there are more older people in the U.S. today than ever. As of 2022, there are more than 58.6 million people enrolled in Medicare.

So much health care spending has been funneled into government programs that startups are beginning to tap into it. , which raised $135 million in 2021 (), acts almost as an insurance brokerage that connects patients with different Medicare plans. , provider of medical and behavioral care to Medicaid are patients, raised $400 million, also in 2021. Nashville, Tennessee-based raised $140 million in 2022 to offer at-home care for state Medicaid beneficiaries. And retirement benefits startup has raised $13.6 million over the past few years to branch into Medicare.

鈥淚nvestors recognize the substantial need and also the opportunity that really will only continue to grow as the Medicare population grows,鈥� Hobbs said.

Even , the fertility platform that launched a direct-to-employer model, raised $90 million in 2022 to tap into Medicaid patient rolls.

鈥淢edicaid is a priority for us. Nearly half of all the babies born in America are born into a Medicaid plan,鈥� Will Porteous, Maven鈥檚 chief growth officer, told me last year. 鈥淭here’s the opportunity to address over half of the babies born in the country, but then, too, oftentimes these are the most underserved communities in the country.鈥�

There鈥檚 a catch 鈥� companies interested in tapping into Medicare and Medicaid beneficiaries have to prove their plans work. Employers are more likely to offer health care-related perks based on how they affect productivity, retention and happiness.

But startups looking to work with insurance providers have a higher bar to meet to prove their work lowers health care spend over time.

鈥淭here’s been a lot of investment over the last five years in behavioral health. Most of that investment has gone to mild to moderate conditions,鈥� Hobbs said. 鈥淭here’s really been very little investment around serious mental illness and substance use disorders.鈥�

Correction: A previous version of this article incorrectly stated Cityblock Health worked with Medicare patients, not Medicaid patients. The post has been updated.听

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, a streaming data startup, announced on Tuesday it raised $100 million in Series C funding. The round was led by , and .

The San Francisco-based startup provides real-time streaming data services bolstered by the use of artificial intelligence and machine learning. Using the platform, companies are able to analyze data as soon as it鈥檚 collected. Redpanda has amassed a large customer base that spans different sectors, including , , and .

The company says it has enjoyed a healthy fiscal year, which included multiplying its revenue growth 5x over and doubling its workforce. That鈥檚 pretty huge 鈥� especially at a time when startups are experiencing revenue stress and laying off employees in mass workforce reductions, and very few companies are thriving.

That may be the reason for Redpanda鈥檚 oversubscribed raise. The 4-year-old company previously raised a round just 16 months ago. We haven鈥檛 seen many follow-up rounds happen this quickly since the funding boom of 2021 鈥� and look what happened there.

How it works

The platform can be plugged into an open-source streaming API known as Kafka and also can be integrated into companies鈥� existing cloud networks.

鈥淭he hero of the Redpanda story has always been the engineer, hands on keyboard, behind a terminal, materializing her ideas into a working system,鈥� said , the CEO of Redpanda, in a statement. 鈥淭hat鈥檚 who we built Redpanda for, and why we made it easy to use, scalable to double-digit 鈥嬧�媑igabytes per second, and compatible with all the existing applications,”

The platform works by acting as both a data storage system and a data streaming system 鈥� using AI and machine learning, companies can integrate their own data into the machine-learning system to bolster responses, or changes. That sort of platform has been increasingly useful for user-facing applications like Midjourney鈥檚 AI-generated images, or video game platforms.

鈥淎s a new game studio, we needed to build a flexible data platform that empowers our developers to get real-time insights from game events, without having to worry about the backend infrastructure,鈥� Colin Riddell, an executive at , said in a statement. The company is one of Redpanda鈥檚 clients.

While Redpanda has managed to keep up the momentum many startups lost in 2021, we鈥檙e not likely to see other startups in the same place.

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The company announced on Thursday it acquired , a credit card startup, for $95 million in cash. The deal is expected to close by the third quarter of 2023.

X1 is a no-fee credit card company that deals its credit based on the person鈥檚 income. And it fits in well with Robinhood鈥檚 brand of providing easy-to-understand financial products for someone new to building their personal wealth.

Last year the company introduced a no-fee debit card that integrated with its stock investment app. Users could round up their purchases to the nearest dollar and invest that extra change into the public markets.

鈥淭his acquisition will bring us closer towards our goal of serving the entirety of our customers鈥� critical financial needs,鈥� , CEO and co-founder of Robinhood, said in a statement.

X1 co-founders and will stay on at the company and oversee the credit card arm of Robinhood鈥檚 expanding business.

The acquisition of X1 is a step forward for Robinhood, which was marred by controversy in the last two years. Robinhood was of the meme stocks controversy in 2021 when users banded together to inflate the stock price of gaming retailer for, you know, fun. The move $1.4 billion.

Earlier this year, the company announced it would also cancel its plan to buy the UK-based crypto startup . The plan was in the works for more than a year, but following the crypto crash of 2022, and owed around $12 million in impairment charges.

This also may be a harbinger of good times for the fintech industry, which saw a massive rise in popularity in 2021 thanks to cryptocurrency platforms, buy-now-pay-later startups and new banking systems.

Only two companies, including Robinhood, successfully went public. Most of them, notably , are still flailing around in the private markets as venture funding continues to move sparingly. Global funding in the fintech space dipped 40% year over year, per 小蓝视频色情网页版 data.

Cleareye.AI, which automates the trade compliance and operations systems for companies, entered into a commercial partnership with JPMorgan back in September in which the banking institution would use Cleareye鈥檚 software to manage compliance risks.

Cleareye鈥檚 software uses algorithms to quickly analyze documents and data transactions and remove many of the manual checks that need to be done by banking institutions to authorize certain transactions.

By automatically validating the data, banking institutions can expedite the flow of trade while keeping an eye out for signs of money laundering or signs that a company is circumventing sanctions. Trade financing right now is often slowed significantly by analog processes that involve multiple people to look at and assess documents.

James Fraser, Global Head of Trade & Working Capital for JP Morgan, called the trade financing world 鈥渁 manually intensive industry loaded with paper and lacking standardization, burdened by an increasing cost base鈥� that 鈥渘eeds real innovation in order to transform.鈥�

Accessing credit often takes companies weeks to access because of this process, which bottlenecks the business pipeline.

Some companies have aimed to solve this problem in a different way. Buy Now Pay Later companies, which have often been consumer focused (think ) or focused on small businesses, are looking to provide similar services for large, multinational corporations. , for instance, , which would allow them to access a line of credit quickly.

Banks are quickly adopting similar strategies to JP Morgan in an attempt to keep up with the fast-paced nature of digital banking. Because banks require more security and have to follow stricter compliance guidelines than other industries, financial institutions are looking for niche products that automate processes quickly without risking security.

Pham had decades of experience in advertising with , a branding agency he co-founded with that worked closely with the likes of , and . After selling the company to marketing giant , Pham and Ralph were working on a new generative AI product.

The first line of the pitch deck read, 鈥淥bello: An AI-powered graphic design platform.鈥�

鈥淚 visually saw them recoil in their seats and roll their eyes, because they had been beaten over the head by so many companies saying ‘AI-powered’ [or] ‘powered by AI,鈥欌�� Ralph said.

That鈥檚 not surprising. After took the world by storm in November, generative AI startups began popping up left and right. Venture firms were enamored with it 鈥� around 10% of global startup funding last year went to AI companies, .

We鈥檙e on track to outpace that: So far in 2023, 15% of all startup funding has gone to AI-focused startups.

But the dust is beginning to settle, and some venture firms are getting skeptical of startups that claim to power their platforms using generative AI and large language models.

鈥淭he word is hurting us more than helping us pave the way, because the promise hasn’t been delivered,鈥� Pham said.

Genesis of Obello

Pham鈥檚 previous startup Character built cohesive design packages for startups and legacy companies, which included tone, color, typography and logos. Character sent this package to its clients鈥� brand and marketing teams to turn those pieces into emails, landing pages, stories, Facebook posts and vertical ads.

鈥淥ne of the challenges that we witnessed for companies of all sizes is that the designers and the marketers are struggling to keep up with the increased demands placed,鈥� Pham said. 鈥淢odern brands have to be omnipresent and, as a result, they have to create a lot of marketing content.鈥�

Their new venture Obello takes those brand ingredients, organizes them on its platform, and uses its in-house generative AI to create content based on what platform it will live on, what dimensions it needs to be, and even what tone the company wants to set 鈥� it can be 鈥減layful鈥� or 鈥渦nderstated.鈥�

Traditional workflows, Pham said, 鈥減ull designers away from doing other more conceptual, creative work within their organization.鈥�

How AI lost investors

While Obello may sound like a promising concept, it鈥檚 simply one of many new generative AI startups to investors.

A ton of generative AI startups build intuitive UI designs that sit on top of APIs from the likes of ChatGPT. These companies don鈥檛 have their own proprietary language models or data sets.

鈥淵ou’re building basically something that is not super defensible and is easy to be replicated by another market entrant,鈥� said , co-founder of . He met with the Obello team. 鈥淚t’s not a great business case to be investing into.鈥�

For those companies, it鈥檚 hard to develop long-term business strategies that will net investors multiples on their investments. It also makes them 鈥� and those that use them 鈥� vulnerable to potential legal ramifications, compliance roadblocks and copyright issues in the future. (AI art tools like are already being for stealing from artists.)

鈥淚 can’t use a part of someone else’s IP because the harm, from a reputational point of view and a monetary point of view, for big brands is going to be huge if they’re discovered using or plagiarizing other people’s IP,鈥� said , co-founder of VC firm .

As a result, investors have been more skeptical about the long-term viability of generative AI.

Self-funding a new company

When Ralph and Pham began Obello in April 2022, the economic situation was bleak. Private-market funding was drying up, interest rates soared and private companies were grappling with sky-high valuations.

鈥淲hat’s required from companies today is they have to be fiscally responsible,鈥� Pham said.听 鈥淲hat’s important for us is to build a product first.鈥�

Startups in most industries aren鈥檛 getting the same love as AI. , a startup founded in May, despite not having any sort of product.

鈥淟et’s say we went to a VC and they’re like, ‘Oh my goodness, this is generative AI. You’re training a model. Let me value your company at $25 million,鈥欌�� Ralph said. 鈥淭hen we have to actually deliver, to perform as a $25 million company. And that’s a huge burden to carry.鈥�

While most startups are facing a valuation reckoning, and venture firms say they鈥檙e course-correcting, it seems like the AI hype is following in the footsteps of crypto and Web3.

鈥淲e’re happy that we’re in the right space at the right time,鈥� Ralph said. 鈥淏ut also we don’t want to set ourselves up for failure in the future.鈥�

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The round was led by , with additional participation from the. The company鈥檚 fresh fundraising brings its total funding to $237 million, per 小蓝视频色情网页版 data.

Primer Technologies has long been a big player in the AI and machine-learning space. The company was founded in 2015 and quickly nabbed government clients such as the , the and the . Military officials use Primer鈥檚 technology to plan missions and predict logistics.

The new round of funding will go toward Primer鈥檚 new generative AI models. The company already has a large language model functionality built into its system 鈥� the same sort of technology that powers open-source generative AI tools like and 鈥檚 platform.

Primer Technologies recently launched Primer Delta, a platform that can analyze millions of documents. The company is creating an internal search function that mimics Search, in聽 which analysts can simply ask questions pertaining to the details of the company through the organization鈥檚 intranet.

Enterprise AI enamors the market

Enterprise-focused AI platforms like Primer Technologies are going to prove to be a far better money-making venture than consumer-facing companies that build on top of ChatGPT鈥檚 API. Already, the arms race has begun.

Last month, announced it will invest $30 million in enterprise AI applications.

Also in May, in AI giant to build out its suite of enterprise-grade AI tools in a search function similar to Primer Delta.

, a cloud infrastructure company, announced in May it will put aside $1 billion in venture funding for enterprise-focused AI startups. The company acquired and the AI platform .

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Perhaps November鈥檚 numbers were a harbinger of trying times ahead. Since then, companies have continued layoffs at the same brutal pace. While funding dried up elsewhere, leading to layoffs, venture firms were pouring money into the generative AI movement, where language models were poised to be the next big cash cow.

Indeed, according to 小蓝视频色情网页版 data, funding to AI startups made up about 10% of global startup funding. Venture鈥檚 dramatic shift in funding priorities has rocked every industry from the art world to health care. And whenever a new piece of technology promises to disrupt an industry, the first worry is that it will replace workers.

鈥淸We鈥檙e] pitching the opposite,鈥� said , an executive at the startup consulting firm . 鈥淎I startups are the only ones really raising big rounds. That’s not to say that AI layoffs aren鈥檛 happening, and that some development work isn’t changing. But I haven’t seen the impact.鈥�

AI spurs layoffs in tech

While few 鈥� if any 鈥� tech startups are actively conducting layoffs to offload work onto AI, the tech industry is quickly embracing artificial intelligence. According to a report from outplacement firm , which looks at layoffs across every industry, around 5% of May鈥檚 job cuts .

鈥淲e do believe AI will cause more job loss, though we are surprised how quickly the technology was cited as a reason,鈥� Andy Challenger . 鈥淚t is incredible the speed the technology is evolving and being adapted.鈥�

CEO said the company is that AI can reasonably do. Positions in human resources, or jobs that aren鈥檛 customer-facing, would be on the chopping block. That means 26,000 jobs at IBM could be in part or in whole replaced by AI. The company and its subsidiary have laid off around 4,660 people so far in 2023.

On Monday, the homework helper platform announced it will lay off 4% of the company, or 80 positions, in order to begin deploying its AI strategy. Students have quickly adopted tools and ChatGPT to get their homework done, impacting Chegg鈥檚 revenue. In the span of three months, the company introduced its own education platform powered by generative AI called CheggMate .

The dangers of AI

But the rapid adoption of AI is likely to require more jobs to babysit the technology.

As of March, U.S.-based jobs on that mentioned GPT increased nearly 80% year over year. And, according to 小蓝视频色情网页版 data, startups focused on AI are quickly joining The 小蓝视频色情网页版 Unicorn Board as funding to the category speeds up.

Yossi Sheffi, an engineering professor at , said that if anything, AI may, in a way, be a job creator. Workers will need to manage the technology through different, industrywide regulatory frameworks.

鈥淓ven if the invention is good and can be adopted, there are a lot of things that inhibit fast adoption,鈥� he said. 鈥淗ow will they be regulated to make sure they aren鈥檛 harmful?鈥�

Already, we鈥檙e starting to see some changes in the way companies are making staff changes to experiment with AI. At the , executives fired a slew of support line staffers after they attempted to unionize. The company quietly launched a chatbot, Tessa, to take over those duties. It was quickly pulled after it gave those with eating disorders 鈥� an argument those in the health care industry have used to stave off adopting AI.

鈥淭his is scary and there’s no precedent, and no one really knows what’s going on,鈥� said , a partner at focused on automation.

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The company is looking to raise its Series A to fund the trial, an expensive endeavor that will likely take years to prove to the it鈥檚 superior to other drugs currently on the market. Only around 25% of drugs make it past phase 3.听

鈥淚 think the hardest part of this is being a small company,鈥� said , CEO of RSF Bio, as the company is also known. 鈥淒oing a phase 3 really makes you a bigger company just with the amount of money you have to raise. It is what it is.鈥�

Pharma companies usually partner with startups to drive them through clinical trials, but large pharmaceutical organizations have been laying low since the funding downturn. In 2022, merger and acquisition activity in the space was the lowest it had been since 2013, according to . Partnerships, through which pharmaceutical companies fund the development of drugs and commercialize them themselves, was the lowest it had been since 2018. , funding in 2022 was as low as it was in 2020.

鈥淚n the downturn, we have a situation where a lot of people would be happy to partner around whatever assets or platforms they have,鈥� said , CEO of . 鈥淏eggars can’t be choosers.鈥�

The lack of activity has only strengthened Big Pharma鈥檚 place in the biotech ecosystem, and is creating waves across the delicate innovation pipeline. Without being able to scrounge up venture funding or develop strong partnerships, startups are stagnant.

鈥�Without a shadow of a doubt, these are testing times for nurturing and fast-tracking innovation in the sector,鈥� said from consulting firm .听

Startups鈥� relationship with Big Pharma

It is, in a sense, somewhat surprising that partnership and acquisition activity has been so low. Without large research and development arms themselves, large pharma companies rely on smaller startups to discover and develop new drugs, which they later buy to commercialize, market and patent.

鈥淭he biotech companies are bringing innovative assets, which pharmaceutical companies need,鈥� said Mike Ward, an analyst at Clarivate. 鈥淔or pharmaceutical companies, it’s important that the biotech companies are robust and are going to be around.鈥�

As drug patents expire to make way for generics, pharma companies are constantly on the hunt for new assets to make them money. But funding pharmaceuticals is an expensive and risky business.听

Pharma companies often partner with startups early to develop drugs created out of an already-tested platform, but that comes with regulatory and development risks. They might otherwise acquire those de-risked drugs late in the process at a higher cost.

Last year, Orna Therapeutics announced a partnership with . Merck paid the company $150 million upfront and could pay up to an additional $3.5 billion if Orna successfully develops a handful of vaccines and therapeutics. Xanax, the EpiPen and Concerta have all been developed through a web of partnerships and Big Pharma acquisitions.

Berholtz has talked to large pharma companies before. But by entering phase 3, the company鈥檚 drug is more valuable than it has ever been, because it鈥檚 less risky and more likely to get the stamp of approval from the FDA.听

鈥淲e have had some Big Pharma saying, ‘Well, why don’t you de-risk it a little more? And then we know there’s going to be a New Drug Application, then come and talk to us,’鈥� Berholtz said. 鈥淏ecause Big Pharma has the commercialization, sales and marketing teams.鈥�

Who gets Big Pharma partnerships?

RSF Bio is in what Young calls 鈥渘o man鈥檚 land鈥� in biotech 鈥� that phase in a drug鈥檚 lifecycle where the startup often has to front the cost of developing the drug and pushing it through regulatory approval at little risk to the pharma company that acquires it.听

鈥淸Pharma companies] have bifurcated, either very early or incredibly, incredibly late,鈥� Young said. 鈥淎nd that’s kind of created this gulf in the middle. 鈥�This is where a lot of promising assets, with their associated risks, go to die.鈥�

It鈥檚 not easy to scrounge up a partnership deal with Big Pharma. Many of these companies are struggling in the public markets, so they鈥檙e focused on very specific, bread-and-butter pipeline drugs that leave a lot of innovative companies out of their scope.听

鈥淲hen the deals get done, it’s more of a window into what the pharma is thinking,鈥� said Barnes. 鈥淚t’s less of a marker for how persuasive the biotech has been in persuading them to do something.鈥�

Midsize to small pharma companies are also suffering on the public markets, and their lower market capitalizations make it harder to fund biotech innovation through partnerships.

鈥淭he public markets are closed and the private markets are tough,鈥� Berholtz said. 鈥淚 would think that the dynamic in that collaborative process has shifted in favor of the pharma companies.鈥�

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