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Future of Capital Allocation

Your weekly newsletter on the fast-evolving world of investing
The week's developments in investing & technology, explained | 23.05.24

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 The launch of OpenAI's latest flagship model, GPT-4o, has now driven the company's biggest-ever spike in revenue on mobile. But while concerns remain over the eerily similar voice to Scarlett Johansson (which OpenAI claims is coincidental), the new conversational style interface with real-time, emotional responses seems to be a great hit with users. Could emotional AI be the future of chatbots?


Elsewhere, we cover why AI is still far away from becoming your next investment advisor, the meme stock flop that made investors lose billions, and how Raspberry Pi’s IPO could make London’s stock exchange finally catch a break.


Read these stories and more below — in our CogX must reads.


— Charlie and the Research & Intelligence Team

Exciting News! We're giving away a FREE pair of tickets to LA 2025! To enter, simply share your best photos from #CogXUSA and tag us using our social media handles (Insta: @cogxusa, Twitter: @Cogx_festival, LinkedIn: CogX Festival). Good luck!


The investment ecosystem

💵 OpenAI’s GPT-4o sees revenue surge: Since launching its new powerhouse AI model, GPT-4o, on May 13th, the mobile app has been raking in record profits. Net revenue skyrocketed by 22% on launch day and continued to grow in the following days. By Tuesday, earnings hit over $900k, nearly double the app’s daily average of $491k.


🤖 Don't expect AI to make you the next Warren Buffet (just yet). While startups like V7 Labs and Grasp are using AI to help VCs and private equity firms find promising startups and M&A targets, these tools are far from ready to manage your savings. 

  • They can automate tasks that once took entry-level analysts hours, acting as smart assistants — but the technology is still prone to errors. Experts warn that blindly following AI recommendations could be risky, so, for now, they're still far from becoming your next investment advisor.

📈 The London Stock Exchange might finally catch a break: Raspberry Pi, the beloved maker of low-cost computers for education and research, is prepping for an IPO, looking to potentially raise up to £500 million. This news comes as a welcome change for the exchange, which has seen a significant drop in listings recently.


👾 The GameStop mania came... and went just as fast. Investors who piled in hoping for a repeat of 2021's epic rally lost a staggering $13.1 billion in just three days. The stock price skyrocketed based on online hype, but quickly plummeted 66% from its peak, leaving many holding the bag. 

🇪🇺 European venture capital is off to a hot start in 2024. Valuations across nearly all stages have climbed compared to last year. Early-stage deals are particularly strong, with the median size reaching €2 million in Q1, driven by a few massive rounds like Electra's €304 million Series B.


Chart of the week

AI investment is booming in Silicon Valley. A recent analysis by Crunchbase shows a dramatic shift in funding. In 2023, over half of all venture capital money for AI startups landed in the Bay Area, compared to just 29% the year before. This surge coincides with the explosive growth of ChatGPT, which hit a staggering 100 million users in the first quarter of 2023.


How AI is transforming investing 


🚀 Reddit shares surged 11% last week on Thursday after finalising a deal with AI company OpenAI. This deal allows OpenAI to train its ChatGPT models on Reddit's massive dataset, including the platform's well-known raw conversational forum.


🇨🇳 Alibaba Fuels China's AI Race: The tech giant is investing in several promising startups aiming to create a homegrown rival to OpenAI. These investments include MiniMax, 01.AI, Zhipu AI, and Baichuan AI, along with a hefty stake in Moonshot AI – a startup with a chatbot capable of processing massive amounts of Chinese characters in a single prompt.


🇬🇧 Britain’s got AI talent, but that’s not enough. The country still relies heavily on foreign investors for substantial funding. Take Wayve, a British self-driving car startup, which recently had to rely on foreign investment to acquire the growth capital needed to accelerate its expansion.

  • Experts say this is a common story in Britain: the nation nurtures talent but lacks the capital to transform it into globally successful companies.

💸 Is Stability AI looking for a buyout? Stability AI has reportedly been in discussions with at least one potential buyer in recent weeks as it grapples with dwindling cash reserves, according to an article by The Information. 

  • Cutting-edge AI may be hot, but it's also expensive. Top talent and the computing power to run it don't come cheap, and even for leading AI companies, monetization remains a great unsolved equation.


🤖 Data-labeling firm Scale AI has secured $1 billion in a Series F round, boosting its valuation to $13.8 billion. This comes as no surprise, as data is the lifeblood of AI, and companies managing and processing it are thriving in today's market.


🚗  From startup star to safety nightmare: Cruise, a self-driving car startup heavily backed by General Motors, went from a promising startup to facing existential threats after a pedestrian was struck by one of its robo-taxis and then dragged for 20 feet. 

  • Now, after revamping its leadership and operations, the company is focusing on rebuilding its trust with regulators and the public.

🙋🏻‍♀️ What do women at startups want? While many women enjoy the startup environment, a new survey reveals a concerning trend: toxic culture and lack of career growth are pushing them out. They want fair pay, clear career paths, and to be heard.




Noteworthy deals

  • PolyAI, the London-based start-up behind artificial intelligence call centre assistants secured a valuation of close to $500m from new investors including chipmaking giant Nvidia.

  • Circtec, a London based startup developing technology to recycle tires into renewable fuels raised €150m from investors including Novo Holdings, A.P Moller and the Netherlands government.

  • H, a Paris-based startup developing new AI models has raised $220m in seed funding from investors including a long list of billionaires, some well-known VC funds; and a few strategic backers.

  • May Health, a Paris-based medical device company helping to address infertility caused by polycystic ovary syndrome, has raised $25m in series B funding led by Bpifrance and Trill Impact Ventures.

  • Weka, a California-based platform for building data pipelines for AI projects has raised $140m in a series E funding round led by Valor Equity Partners.


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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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