18 October, 2024
Y Combinator backs its first defense startup, Ares Industries
The first defense startup to receive backing from Y Combinator, Ares Industries, launched earlier this week.
In a post on the YC website, the startup outlined a vision to build low-cost cruise missiles that will be compatible with existing launch platforms, saying it will “deliver the capabilities that the [Department of Defense] wants in a form factor that’s 10x smaller and 10x cheaper.”
Ares Industries’ founders say they’ve tested prototypes in the Mojave Desert and plan to deliver working missile systems to their first customers in mid-2025.
YC partner Jared Friedman told the Financial Times that the incubator started encouraging defense tech startups to apply earlier this year.
YC’s CEO Garry Tan was an early employee at data analytics company Palantir, which has become hugely successful through its sometimes controversial work for U.S. military, as well as other governments and agencies. CEO Alex Karp defended the company’s “consistently pro-Western view” in a recent New York Times interview.
Y Combinator wants 100 times more MRI scans
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everaging resources such as virtual data rooms and shared labs makes it easier for biotech startups to grow. This is good news: We need more companies attacking cancer from novel angles, including AI-enabled early detection. And who knows, maybe one of these will become a trillion-dollar company? — Anna
Scaling early cancer detection
Y Combinator’s newest request for startups (RFS) is well worth reading, and not just because it’s been a while since the incubator shared the ideas and categories its partners “would like to see more people working on.” As my colleague Sarah Perez noted, YC hadn’t updated its full list since 2018.
Y Combinator puts out a new call for startups in areas like AI, spatial computing, climate tech and more
Taken as a whole, YC’s RFS is a great way to sense the zeitgeist; the list includes AI of course, as well as climate tech, defense tech and more. But zooming in on individual requests is also a worthwhile exercise.
One of the requests that captured my interest calls for “a way to end cancer.” Written by YC group partner Surbhi Sarna, a former medical device company CEO, it focuses on MRIs. “Since most cancers are now treatable if caught early enough,” she wrote, “this technology would dramatically reduce cancer deaths if rolled out widely and affordably.”
My first thought was that MRI startups already exist. Just a few days earlier, New York–based Ezra raised a fresh round of $21 million — and we are talking about a team that TechCrunch first covered in 2018. It has competitors, too, such as Neko, backed by Spotify’s Daniel Ek, and Prenuvo, which has a $2,500 full-body scan that was promoted by Kim Kardashian.
For Sarna, that price point is part of the problem, as it inherently limits scale, but it’s not the only one. “There is backlash from the medical community as MRIs also create incidental findings (or false positives) that cost our healthcare system valuable time and money to investigate.” The jury is still out on whether they are beneficial or individuals, let alone society. But YC still hopes startups can help.
How to get into Y Combinator, according to YC’s Dalton Caldwell
“For this to work, the world would need to scale up the number of MRI scans it does by at least 100x. Doing that will require innovations in the MRI hardware, the AI algorithms to interpret scans and reduce false positives, and the business models and consumer marketing to make it a viable business.”
Of course, companies like Ezra are also hoping to do some of this in-house. In its latest pitch deck, the startup boasted it “leverages Al at every step of the screening process.” But if others can contribute from other angles, I can see why YC would be interested — I am.
Co-working for biotech
Shared lab spaces have been a game changer for biotech startups, Nature reported. Of course, co-working isn’t new, but co-working labs provide their customers with much more than office space, saving them both time and money.
This reminded me of Startup Battlefield alum Parallel Health — its chief scientist officer Nathan Brown had mentioned shared labs in passing when we chatted at Disrupt. I noticed he had liked a repost of Nature’s article, so I asked him for his thoughts. He confirmed that the skincare startup he co-founded had been using BioLabs‘ shared facilities in Los Angeles, and he highlighted some of the benefits of this concept:
BioLabs has enabled us to cost-effectively build a consumer biotech product. They make the laboratory infrastructure available to us without having to spend our entire seed round on capital expenses like DNA sequencing machines, laminar flow hoods, and lab-grade freezers. We also save immense amounts of time at BioLabs, because they manage all aspects of environmental health and safety as well as infrastructure management. Maybe most importantly, they create a thriving culture of innovation where startups can collaborate easily and learn from each other.
While this may read as a local endorsement, startups don’t have to be based in California to leverage this trend. BioLabs itself is a franchise that has expanded to a dozen locations, and similar things could likely be said of many competing facilities around the world. However, a founder interviewed by Nature, Accure Health CEO Jessica Sang, shared a word of caution: Some labs are better equipped and wider-ranging than others. “If you’re thinking about starting a company, try to visit a few just to see which one is the best.”
Virtual data rooms
Virtual data rooms are another important resource for biotech startups. Calling them “the unsung hero of biotech financing,” and noting that they can also be helpful in business development talks, a16z published a guide on what biotech teams should and shouldn’t put in their data rooms.
Apple and peers
Sam Altman may not be raising trillions for AI chips after all, but it still got me thinking: How much money is a trillion with a T? When asked, Perplexity.ai surfaced an old CNBC article telling me that $1 trillion in $100 bills would fill 4.5 Olympic-sized swimming pools — visually compelling, but not that helpful, sorry.
Much more relevant is looking at a list of things that recently neared or passed the $1 billion threshold. Not national GDPs; we can just stick to tech and still have plenty of anchor points. The total amount invested in bitcoin. Dry powder available for climate tech. The liquidity gap for U.S. startups. And Nvidia’s market cap in May of last year.
AI tailwinds haven’t faltered for the chip giant since then. Indeed, Nvidia’s market value briefly surpassed Amazon’s earlier this week when it reached $1.82 trillion.
This says a lot about AI’s power and the leg up it gives companies that are best positioned to benefit from its rise. But it shouldn’t eclipse the wider story about the group of tech companies that have become known as “the Magnificent Seven” and their incredible cumulated market cap of some $13 trillion.
As CNBC noted, “The last time Nvidia was more valuable than Amazon was in 2002, when they were each worth under $6 billion.” Billion, with a small b. Fast-forward to today, and both aren’t that far from Apple’s $2.81 trillion market cap. Two-thirds of an Apple is much more telling than dollar-filled Olympic pools, isn’t it?
Startups Weekly: Let's see what those Y Combinator kids have been up to this time
Welcome to Startups Weekly — your weekly recap of everything you can’t miss from the world of startups. Sign up here to receive the Startups Weekly newsletter in your inboxes.
It’s the most wonderful tiiiiiiime of the yeaaaaaaar … That’s right, we’re back with all the you-can’t-miss companies from the current batch of Y Combinator startups. AI was, not shockingly, the biggest theme, with 86 out of 247 companies calling themselves an AI startup, but we’re reaching bubble territory given that 187 mention AI in their pitches. We have a couple of roundups for you, including the 18 most interesting, and the TechCrunch staff favorites.
Meanwhile, I wrote up an in-depth interview with the founder of Ember, the hot-mug company, about (among other things) how he split his company in half to be able to woo MedTech and life sciences investors.
Most interesting startup stories from the week
Startups losing money is nothing new, but this week, Devin summarizes why Trump’s Truth Social is different in a few key ways. In a nutshell, the whole thing is playing out like a bad reality TV show, where the plot revolves around hemorrhaging money and the suspense is whether it’ll run out of cash before viewers change the channel. With a debut on Nasdaq as $DJT, thanks to a merger with the desperation darling of the finance world, a SPAC, Trump Media & Technology Group’s (TMTG) financial lifting of the veil reveals a $58 million loss on a meager $4 million in revenue. This isn’t your typical Silicon Valley “burn cash now, profit later” saga; it’s more of a “burn cash now, and that’s it” kind of story. Unlike startups that thrive on VC life support while disrupting industries, TMTG’s lifelines are fraying, with no explosive user growth, no VC sugar daddies, and the unenviable position of being publicly accountable while trying to juggle a business model that seems to repel advertisers like it’s made of antimatter. As the stock flops around lacklusterly, the reality sets in that TMTG’s story might be less about pioneering digital media and more about how to lose friends and alienate advertisers, all while the credits roll on what could be the most expensive episode of “The Apprentice” ever produced.
IPOs are gathering steam … maybe?: Cybersecurity darling Rubrik, which has been guzzling venture capital like it’s going out of style, has decided it’s time to brave the public markets and files for an IPO. With a history of bleeding money, Rubrik’s tale is one of modest revenue growth, eye-watering losses, and a pivot to subscription models that’s as groundbreaking as deciding to sell software as a service in the tech world.Accel rethinks India: Accel, the venture capital firm that’s been collecting Indian unicorns like they’re going out of style, is having a bit of an existential crisis with its Atoms accelerator program, realizing that in the eyes of founders, all VC money eventually starts to look the same — just a pile of cash with strings attached.Crypto is back?: If the 2023 crypto venture landscape was an ice-cold pot of water, the first quarter of 2024 is the part where the bubbles start to form right before water boils, Tom Schmidt, a partner at Dragonfly Capital, said to TechCrunch in Jacquelyn’s overview of the VC investment space for crypto.
Chaos in automotive startup land
Stormy weather continues to be the theme for the movers and shakers of the startup world: Transportation.
Canoo’s 2023 earnings report reads like a tragicomedy. The star of the show? CEO Tony Aquila’s private jet, which cost the company double its entire revenue for the year. In a year where Canoo managed to rake in a meager $890,000 by delivering just 22 vehicles, it simultaneously shelled out $1.7 million to ensure Aquila could jet-set in style. I guess in the fast-paced world of electric vehicles, nothing says “fiscal responsibility” quite like a private jet tab that overshadows your sales, even as the company picks clean the bones of its failed competitors.
Meanwhile, in the land of Fisker, the company momentarily misplaced millions in customer payments amid a frantic scramble to restructure its business model. This financial game of hide-and-seek, which diverted crucial resources from sales to sleuthing, highlights the company’s rather casual approach to tracking transactions, including, in some instances, handing over vehicles on the honor system. Fisker’s attempt to play catch-up with paperwork not only strained its relationship with PwC during annual report preparations but also left the company clueless about its actual revenue, all while teetering on the edge of bankruptcy. So, if you’ve ever felt bad about losing your car keys, at least take solace knowing you didn’t misplace the equivalent of a whole SUV stuffed full of dollar bills, or get yourself into an investigation about why the doors on the cars you manufacture won’t open.
Self-driving … into the abyss: Ghost Autonomy, a startup that once dreamed of making highways safer with its autonomous driving software, has ghosted the automotive world, shutting down operations despite a nearly $220 million séance with investors.Riveting reading from Rivian: Rivian’s latest report card reads more like a cry for help than a victory lap. The EV underdog kicked off 2024 by building a smaller number of cars and delivering even fewer. With each EV sold last quarter costing them the equivalent of a luxury sedan in losses, Rivian’s journey to profitability looks … interesting.Tesla takes a dip: Tesla’s latest delivery figures are so-so, as the company blames everything from arsonists with a vendetta against German factories to maritime mayhem courtesy of the Houthi rebels for its first year-over-year sales dip in three years. As if transitioning to the new Model 3 wasn’t enough of a speed bump, Tesla’s also juggling production of the Cybertruck and a mysterious lower-cost EV, all while trying to invent a revolutionary manufacturing process on the fly.
Most interesting fundraises this week
Kidsy is the latest brainchild to emerge from the startup nursery. The company is essentially the T.J. Maxx of baby gear, swooping in to save parents from the financial black hole that is raising children by offering discounted, overstocked, and gently used items that were once destined for the landfill. Founded by a former business journalist and a software engineer, Kidsy has quickly become the superhero of the circular economy for baby products, managing to charm investors into an “oversubscribed” pre-seed funding round faster than a toddler can throw a tantrum.
A sticky startup indeed: Stripe, the payments behemoth, has swooned over a four-person startup named Supaglue, formerly known as Supergrain, in a classic tale of acqui-hire romance. Supaglue somehow caught Stripe’s eye — perhaps through the tech equivalent of a love potion mixed with mutual acquaintances and serendipitous meetings.Google blesses nonprofits with $20 million: Google.org is throwing $20 million at nonprofits to play fairy godmother to their AI dreams. Twenty-one lucky nonprofits get to be the guinea pigs in a six-month tech boot camp, complete with AI coaches and Google employee minions, all in the name of making the world a better place — one automated task at a time.Bla bla bla something something cars: From its humble beginnings as an online hitchhiking platform to becoming a unicorn with a penchant for hoarding millions and dabbling in buses, BlaBlaCar has had quite the ride. Now armed with a $108 million credit line and a newfound taste for profitability, it’s on a shopping spree for smaller companies.
Other unmissable TechCrunch stories …
Every week, there’s always a few stories I want to share with you that somehow don’t fit into the categories above. It’d be a shame if you missed ’em, so here’s a random grab bag of goodies for ya:
No account required: OpenAI, in a move that screams “data is the new gold,” is now letting anyone chat with ChatGPT without an account, ensuring that even your grandma’s queries about knitting patterns can help train their AI, all while vaguely hinting at “more restrictive content policies” that are as clear as mud.Just bumblin’ along: Bumble, once the belle of the IPO ball, now finds itself grappling with the modern dating dilemma of being ghosted by users for TikTok love stories. New CEO Lidiane Jones is on a mission to rekindle the flame by rethinking the women’s first-move mantra and flirting with AI, all while trying to make dating fun again without really changing the swipe-right culture.Hey, that’s a good impression of me: OpenAI is basically saying “hold my beer” as it dives headfirst into the ethical quagmire of voice cloning with its new Voice Engine. The company insists it’s all about responsible innovation while simultaneously opening Pandora’s box to see how it can be used and abused. We can’t think of a single downside.… </sarcasm>B nixes AI: Beyoncé’s “Cowboy Carter” has been out for only a few days. But in the middle of the press release for “Cowboy Carter,” the singer made an unexpected statement against the growing presence of AI in music.