Weekly Download #11

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This week, OpenAI proved that burning $13B annually while your product drives users into psychotic breaks is actually a growth strategy, and somehow the entire US economy now depends on Big Tech's data center shopping spree staying irrational longer than we can stay solvent.

Check it out, stay plugged in, and don’t miss these hot upcoming events:

Here's what's moving markets and making headlines:

After months of Altman's hype, GPT-5 arrived with a lot of fanfare. However, it seems to be GPT-4 with marginally better debugging skills, but failing at basic math and spelling.

For startups betting on exponential AI progress, this plateau means the dream of having autonomous AI agents handling end-to-end operations still seems far away. So focus on making boring B2B tools that actually deliver value. 

🤡 OpenAI is Shopping Shares at a $500B Valuation: Led by Thrive Capital, this is nearly double its $260B price tag from their recent $40B round they just closed. Despite revenue hitting $12B annualized (up from $6B), they're still massively unprofitable. Plus, employees can sell $2-10M worth of shares each (most will take the money and run).

💥 Meanwhile, Altman Says the Quiet Part Out Loud: In a CNBC interview, the CEO admitted OpenAI will "keep running at a loss" indefinitely, adding it's "nice not to be public" because actual investors would demand silly things like profits. He promises "tremendous upside" when they eventually IPO, which in founder-speak means "please don't ask about unit economics."

🏗️ SoftBank's $500B Stargate Infrastructure Dream Hits Reality: That $500B Stargate project SoftBank and OpenAI announced at the White House earlier this year seems to be dead in the water. SoftBank and OpenAI could not agree on sites, structure, or terms, and market volatility and tariffs made financing impossible. To make matters worse, OpenAI already signed a $30B/year deal with Oracle instead.

To complete OpenAI's terrible week, the NYT dropped a bombshell investigation revealing ChatGPT is sending users into "delusional spirals" at scale.

The Horror Stories:

The Response: OpenAI "acknowledges the issue" and is "making changes to detect distress," while social media support groups are forming for ChatGPT-induced delusion survivors.

The Bottom Line: OpenAI built a $500B valuation on a product that can't do math, burns cash infinitely, and occasionally convinces users they're Neo from The Matrix. But hey, at least the secondary sale will let employees cash out before the class-action lawsuits hit.

Axios dropped a sobering analysis that should terrify anyone with a 401k: The entire US economy is now dependent on Big Tech's AI fever dream.

The Insanity by the Numbers:

Here's the Scary Part: As economist Derek Thompson noted after the weak jobs report: "GDP is only growing because of AI capex." So without tech giants building data centers like it's SimCity on steroids, we'd already be in recession.

The Economist just asked the trillion-dollar question: Who's paying for AI's infrastructure?

The Ticking Time Bomb: Noah Smith warns that with "large and increasing debt funding one single sector (data centers)," a bust could trigger a full financial crisis. Paul Kedrosky calls it "a massive private sector stimulus program."

The Bottom Line: We're watching the largest infrastructure boom since the Gilded Age. When this bubble pops, the fallout will make 2008 look like a minor correction.

🎬 Decart Speedruns to $3.1B Valuation with Real-Time AI Video: The 2-year-old startup raised $100M from Sequoia and Benchmark after claiming they've slashed AI video generation costs from $1000+/hour to 25 cents (casual 4000x improvement). Their Oasis platform hit 1M users in 72 hours, and they're already licensing tech to cloud providers for "multimillion-dollar contracts" while burning through $153M total raised.

🎯 Clay Triple-Dips Into Funding with $100M at $3.1B: The sales automation startup just closed its third funding event in six months. The $100M Series C was led by CapitalG, following December's $1.25B Series B and a recent $1.5B tender offer that let employees cash out early. With revenue tripling to $100M this year and customers like OpenAI and Anthropic, Clay's 31x revenue multiple almost looks reasonable in this market.

🧲 Vulcan Elements Raises $65M to Fight China's Magnet Monopoly: The rare earth magnet startup raised Series A funding led by Altimeter at a $250M valuation, with CEO John Maslin noting that two years ago investors "would look at you like you're insane" for pitching magnets. Now with military contracts and a North Carolina pilot facility running, they're planning to scale from hundreds to thousands of tons annually by 2030.

💰 Index Ventures Casually Banks $11B While Others Beg for Exits: The Swiss-born firm is reaping an astronomical $11B from portfolio exits, with Figma alone turning their $86.5M investment into nearly $6B (69x return). Add Meta's Scale AI acquisition ($1.4B payout) and Google's pending Wiz deal ($4.3B if it closes), and Index just outperformed every Silicon Valley giant while they're still waiting for their unicorns to find buyers.

📈 July Funding Stays Flat at $30B, But Figma's IPO Has VCs Seeing Exit Signs: Global venture funding hit $29.7B in July, flat YoY despite AI gobbling up 37% of all capital. The real story? Figma's IPO tripled on day one, potentially unlocking exits for 1,600+ unicorns sitting on $1T in trapped value. With only seed (10%), early (30%), and late-stage (60%) deals closing, the market's saying "go big or go home" while corporate and PE firms muscle in on the $200M+ rounds that used to be VC territory.

🔋 Activate Capital Bets $500M on European Climate Tech: Activate's raising Fund III to chase European climate deals, already closing half their target as LPs suddenly remember Europe exists after their energy crisis. The firm is pivoting from pure US focus to backing energy and industrial decarbonization in Europe due to the need for actual energy infrastructure.

₿ Tim Draper's $200M Bitcoin Victory Lap: The OG crypto bull just raised $200M for Draper Associates' eighth fund, celebrating 40 years of VC by doubling down on digital assets. With crypto's total market cap hitting $4T for the first time and Congress finally passing stablecoin regulation, Draper's $2B AUM firm is profiting from his 2014 bet when he bought 30,000 Bitcoin.

💰 OpenAI Throws Millions at Engineers to Stop the Bleeding: OpenAI is handing out bonuses ranging from "low hundreds of thousands to millions" to 1,000 technical staff (a third of the company), with quarterly vesting over two years. Chief Research Officer Mark Chen's memo promising to "respond aggressively" to Meta's poaching translates to "we'll match whatever insane number they throw at you."

🧘 Anthropic's 80% Retention Rate Without $100M Checks: While Meta and OpenAI wave huge comp and retention bonuses, Anthropic has the industry's highest retention rate (80% vs OpenAI's 67% and Meta's 64%) by offering something radical: actual meaning. CEO Dario Amodei says most engineers "wouldn't even talk to Mark Zuckerberg" despite Meta's offers, with staff staying for the "mission" and "equity upside" instead of cash.

☠️ Cognition's Post-Acquisition Reality Check: Three weeks after acquiring Windsurf's leftovers (following Google's $2.4B talent raid), Cognition offered 200 employees a stark choice: embrace 80-hour weeks with CEO Scott Wu's "we often put our loved ones to bed hours before we get there ourselves" culture, or take nine months' severance and run. They already fired 30 people on Friday, and the rest have until August 10 to make the decision.

🍔 CS Grads Trading $165K Dreams for Chipotle Reality: New CS graduates are finding their expensive degrees qualify them to wrap burritos, with unemployment rates for CS grads hitting 6.1% (double that of art history majors at 3%). While tech companies use AI to automate away the entry-level jobs that would train the next generation, students who were promised six-figure starting salaries are sending thousands of apps into the void.

Here's a roundup of notable recent funding rounds across various sectors in the Bay:

Total Deals: 26, totaling $690M

Please note that we're still working on building our data pipelines to identify pre-seed rounds as they come.

That's a wrap on another week where a company losing billions convinced investors it's worth half a trillion dollars, and fresh CS grads with $200K in student loans are fighting art history majors for barista jobs.

Remember: when your AI chatbot is telling users they can fly and your entire economy depends on four companies not sobering up from their infrastructure binge, you're either witnessing late-stage capitalism's finale or its greatest comedy act.

Till next time,

P.S. Raised this week, and we missed you? Want to be featured? Have tips or funding questions? Reply or DM us as we’re here to help.

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