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Future of Capital Allocation

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The week's developments in investing & technology, explained | 29.02.24

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Fresh off the heels of Sequoia's boardroom debacle, another Silicon Valley soap opera is taking the tech world by storm. We are talking, of course, about Elon Musk and OpenAI's legal battle which this week took an unexpected twist.

Following Musk’s lawsuit accusing OpenAI of abandoning its non-profit mission, the AI research lab hit back by releasing emails that allegedly revealed Musk's past support for creating a for-profit entity and raising billions in funding. Will this new evidence force Elon to reconsider his positions? (Musk has been a vocal critic of OpenAI since his departure from the board, and has even launched his own AI project, named xAI).

Elsewhere, Singapore's state-owned investment giant, Temasek, is in discussions to invest in OpenAI, equity fund flows hit a three-year high at £2.6bn in February, and the UK government is set to reverse its most recent angel investor policy.

Read on to find out more — including China’s $280k AI computing ‘vouchers’, the startups building their own specialised data centres and the reason why some investors exclusively back founders with MBAs.



—Charlie and the Research & Intelligence Team


The investment ecosystem

📧 OpenAI has released emails contradicting Elon Musk's claims in his lawsuit against the company. While Musk's legal action accuses OpenAI of straying from its non-profit roots, the disclosed emails reveal that Musk endorsed the idea of forming a for-profit entity.


💸 Temasek in talks to invest in ChatGPT maker OpenAI. Singapore's state-owned investment giant, Temasek, is in discussions to invest in OpenAI. The news comes amidst reports that OpenAI is seeking funding to develop its own chip business, looking to reduce reliance on external providers like Nvidia.


📈 GP stakes markets are poised for a rebound. After a decline in 2023 due to market uncertainty, the GP stakes market is showing signs of recovery in 2024. The year is expected to see more add-on acquisitions and minority stake sales, along with a decrease in large strategic deals


🇬🇧 UK angel investor policy U-turn: The UK government is set to reverse its recent policy change that raised the income threshold for angel investors (from £100 to £170k), following widespread criticism that it disproportionately impacted women and underrepresented groups.


💰 Equity inflows: UK investors most bullish in three years. UK investors are showing renewed confidence in the stock market, pouring £2.6 billion into equity funds in February - the highest monthly inflow in nearly three years.


Chart of the week

Startup CEO salaries showed a mixed bag in 2023. While the average CEO took a 5.3% pay cut to $142,000, the median salary rose to $145,000. According to Kruze consulting, this is the first time these two measures haven't moved in tandem, suggesting a shift in the overall distribution of startup CEO pay.


How AI is transforming investing 


💾 AI startups are building their own specialised data centres, raising $22.3 billion in Q4 2023 alone. Several upstarts are taking the fight to established players like Microsoft, Google, and AWS, hoping to dethrone them in the data centre space.


🤖 China offers AI computing ‘vouchers’ to its underpowered start-ups. China is launching initiatives to support its AI startups facing challenges related to chip scarcity and competition from tech giants. “Computing vouchers" worth up to $280k and state-run data centres are just some of the measures China is deploying to address these challenges.

💵 The UK to invest millions into AI. Britain is doubling its investment in AI, allocating £100 million to the Alan Turing Institute, the national hub for data science and AI research. “With the UK home to a third of Europe’s AI companies, investing in this pivotal technology is a vital opportunity to grow the economy and deliver a brighter future for Britain” the treasury said.


👨🏻‍⚕️ Telehealth leader Kry is now profitable in all three major markets: Sweden, France, and the UK. This success is attributed partly to GenAI technology, which has improved doctor-patient meeting efficiency and cut administrative time by 30% per consultation.


🤔 Why some investors exclusively back founders with MBAs. The significance of an MBA in the startup ecosystem has always been a subject of debate. While some VCs value the networks and skills these courses provide, critics contend that the high cost barriers may exclude talented founders from diverse backgrounds.




Noteworthy deals

  • Monzo, the London-based digital bank has raised $430m in new funding from investors including CapitalG and HongShan. This fresh capital injection has propelling its valuation to $5bn and coincides with Monzo's renewed efforts to enter the US market

  • Powerdot, a Lisbon-based company that operates electric vehicle charging stations, has raised €100m in funding led by Antin Infrastructure Partners and Arié Group.

  • Remofirst, a US-based HR tech startup has secured $25m in series A funding led by European VC firm Octopus Ventures.

  • BRKZ, a construction-tech startup based in Riyadh has raised a $8m series A round co-led by Beco Capital and 9900 Capital.


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Disclaimer: This content is for informational and educational purposes only. It does not constitute financial, investment, legal or tax advice.

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