More than three-fourths of that funding will reportedly come from a source close to home — Alphabet, where Waymo is a subsidiary. (The company was incubated as part of Alphabet’s “moonshot factory” X.)
The FT reports that Waymo is bringing on new investors Dragoneer, Sequoia Capital, and DST Global, with existing backers Andreessen Horowitz and Abu Dhabi sovereign fund Mubadala also participating in the round.
When contacted by TechCrunch, a company spokesperson said in a statement, “While we don’t comment on private financial matters, our trajectory is clear: with over 20 million trips completed, we are focused on the safety-led operational excellence and technological leadership required to meet the vast demand for autonomous mobility.”
The company is expanding quickly, including with a recent launch in Miami. That growth has come with some challenges, including a number of robotaxis that stalled at traffic lights during a widespread San Francisco blackout.
Waymo has more than $350 million in annual recurring revenue, according to the FT. The company last raised a $5.6 billion Series C in 2024, valuing the company at $45 billion.
From the street, the only indication I’ve found Physical Intelligence’s headquarters in San Francisco is a pi symbol that’s a slightly different color than the rest of the door. When I walk in, I’m immediately confronted with activity. There’s no reception desk, no gleaming logo in fluorescent lights.
Inside, the space is a giant concrete box made slightly less austere by a haphazard sprawl of long blonde-wood tables. Some are clearly meant for lunch, dotted with Girl Scout cookie boxes, jars of Vegemite (someone here is Australian), and small wire baskets stuffed with one too many condiments. The rest of the tables tell a different story entirely. Many more of them are laden with monitors, spare robotics parts, tangles of black wire, and fully assembled robotic arms in various states of attempting to master the mundane.
During my visit, one arm is folding a pair of black pants, or trying to. It’s not going well. Another is attempting to turn a shirt inside out with the kind of determination that suggests it will eventually succeed, just not today. A third — this one seems to have found its calling — is quickly peeling a zucchini, after which it is supposed to deposit the shavings into a separate container. The shavings are going well, at least.
“Think of it like ChatGPT, but for robots,” Sergey Levine tells me, gesturing toward the motorized ballet unfolding across the room. Levine, an associate professor at UC Berkeley and one of Physical Intelligence’s co-founders, has the amiable, bespectacled demeanor of someone who has spent considerable time explaining complex concepts to people who don’t immediately grasp them.
Image Credits:Connie Loizos for TechCrunch
What I’m watching, he explains, is the testing phase of a continuous loop: data gets collected on robot stations here and at other locations — warehouses, homes, wherever the team can set up shop — and that data trains general-purpose robotic foundation models. When researchers train a new model, it comes back to stations like these for evaluation. The pants-folder is someone’s experiment. So is the shirt-turner. The zucchini-peeler might be testing whether the model can generalize across different vegetables, learning the fundamental motions of peeling well enough to handle an apple or a potato it’s never encountered.
The company also operates a test kitchen in this building and elsewhere using off-the-shelf hardware to expose the robots to different environments and challenges. There’s a sophisticated espresso machine nearby, and I assume it’s for the staff until Levine clarifies that no, it’s there for the robots to learn. Any foamed lattes are data, not a perk for the dozens of engineers on the scene who are mostly peering into their computers or hovering over their mechanized experiments.
The hardware itself is deliberately unglamorous. These arms sell for about $3,500, and that’s with what Levine describes as “an enormous markup” from the vendor. If they manufactured them in-house, the material cost would drop below $1,000. A few years ago, he says, a roboticist would have been shocked these things could do anything at all. But that’s the point — good intelligence compensates for bad hardware.
Techcrunch event
Boston, MA | June 23, 2026
As Levine excuses himself, I’m approached by Lachy Groom, moving through the space with the purposefulness of someone who has half a dozen things happening at once. At 31, Groom still has the fresh-faced quality of Silicon Valley’s boy wonder, a designation he earned early, having sold his first company nine months after starting it at age 13 in his native Australia (this explains the Vegemite).
When I first approached him earlier, as he welcomed a small gaggle of sweatshirt-wearing visitors into the building, his response to my request for time with him was immediate: “Absolutely not, I’ve got meetings.” Now he has 10 minutes, maybe.
Groom found what he was looking for when he started following the academic work coming out of the labs of Levine and Chelsea Finn, a former Berkeley PhD student of Levine’s who now runs her own lab at Stanford focused on robotic learning. Their names kept appearing in everything interesting happening in robotics. When he heard rumors they might be starting something, he tracked down Karol Hausman, a Google DeepMind researcher who also taught at Stanford and who Groom had learned was involved. “It was just one of those meetings where you walk out and it’s like, This is it.”
Groom never intended to become a full-time investor, he tells me, even though some might wonder why not given his track record. After leaving Stripe, where he was an early employee, he spent roughly five years as an angel investor, making early bets on companies like Figma, Notion, Ramp, and Lattice while searching for the right company to start or join himself. His first robotics investment, Standard Bots, came in 2021 and reintroduced him to a field he’d loved as a kid building Lego Mindstorms. As he jokes, he was “on vacation much more as an investor.” But investing was just a way to stay active and meet people, not the endgame. “I was looking for five years for the company to go start post-Stripe,” he says. “Good ideas at a good time with a good team — [that’s] extremely rare. It’s all execution, but you can execute like hell on a bad idea, and it’s still a bad idea.”
Image Credits:Connie Loizos for TechCrunch
The two-year-old company has now raised over $1 billion, and when I ask about its runway, he’s quick to clarify it doesn’t actually burn that much. Most of its spending goes toward compute. A moment later, he acknowledges that under the right terms, with the right partners, he’d raise more. “There’s no limit to how much money we can really put to work,” he says. “There’s always more compute you can throw at the problem.”
What makes this arrangement particularly unusual is what Groom doesn’t give his backers: a timeline for turning Physical Intelligence into a money-making endeavor. “I don’t give investors answers on commercialization,” he says of backers that include Khosla Ventures, Sequoia Capital, and Thrive Capital among others that have valued the company at $5.6 billion. “That’s sort of a weird thing, that people tolerate that.” But tolerate it they do, and they may not always, which is why it behooves the company to be well-capitalized now.
So what’s the strategy, if not commercialization? Quan Vuong, another co-founder who came from Google DeepMind, explains that it revolves around cross-embodiment learning and diverse data sources. If someone builds a new hardware platform tomorrow, they won’t need to start data collection from scratch — they can transfer all the knowledge the model already has. “The marginal cost of onboarding autonomy to a new robot platform, whatever that platform might be, it’s just a lot lower,” he says.
The company is already working with a small number of companies in different verticals — logistics, grocery, a chocolate maker across the street — to test whether their systems are good enough for real-world automation. Vuong claims that in some cases, they already are. With their “any platform, any task” approach, the surface area for success is large enough to start checking off tasks that are ready for automation today.
Physical Intelligence isn’t alone in chasing this vision. The race to build general-purpose robotic intelligence — the foundation on which more specialized applications can be built, much like the LLM models that captivated the world three years ago — is heating up. Pittsburgh-based Skild AI, founded in 2023, just this month raised $1.4 billion at a $14 billion valuation and is taking a notably different approach. While Physical Intelligence remains focused on pure research, Skild AI has already deployed its “omni-bodied” Skild Brain commercially, saying it generated $30 million in revenue in just a few months last year across security, warehouses, and manufacturing.
Image Credits:Connie Loizos for TechCrunch
Skild has even taken public shots at competitors, arguing on its blog that most “robotics foundation models” are just vision-language models “in disguise” that lack “true physical common sense” because they rely too heavily on internet-scale pretraining rather than physics-based simulation and real robotics data.
It’s a pretty sharp philosophical divide. Skild AI is betting that commercial deployment creates a data flywheel that improves the model with each real-world use case. Physical Intelligence is betting that resisting the pull of near-term commercialization will enable it to produce superior general intelligence. Who’s “more right” will take years to resolve.
In the meantime, Physical Intelligence operates with what Groom describes as unusual clarity. “It’s such a pure company. A researcher has a need, we go and collect data to support that need — or new hardware or whatever it is — and then we do it. It’s not externally driven.” The company had a 5- to 10-year roadmap of what the team thought would be possible. By month 18, they’d blown through it, he says.
The company has about 80 employees and plans to grow, though Groom says hopefully “as slowly as possible.” What’s the most challenging, he says, is hardware. “Hardware is just really hard. Everything we do is so much harder than a software company.” Hardware breaks. It arrives slowly, delaying tests. Safety considerations complicate everything.
As Groom springs up to rush to his next commitment, I’m left watching the robots continue their practice. The pants are still not quite folded. The shirt remains stubbornly right-side-out. The zucchini shavings are piling up nicely.
There are obvious questions, including my own, about whether anyone actually wants a robot in their kitchen peeling vegetables, about safety, about dogs going crazy at mechanical intruders in their homes, about whether all of the time and money being invested here solves big enough problems or creates new ones. Meanwhile, outsiders question the company’s progress, whether its vision is achievable, and if betting on general intelligence rather than specific applications makes sense.
If Groom has any doubts, he doesn’t show it. He’s working with people who’ve been working on this problem for decades and who believe the timing is finally right, which is all he needs to know.
Besides, Silicon Valley has been backing people like Groom and giving them a lot of rope since the beginning of the industry, knowing there’s a good chance that even without a clear path to commercialization, even without a timeline, even without certainty about what the market will look like when they get there, they’ll figure it out. It doesn’t always work out. But when it does, it tends to justify a lot of the times it didn’t.
Ethos Technologies, a San Francisco-based provider of software for selling life insurance, debuted on the Nasdaq on Thursday. As one of the year’s first major tech IPOs, the insurtech platform is being closely watched as a bellwether for the 2026 listing cycle.
The company and its selling shareholders raised approximately $200 million in the offering, selling 10.5 million shares at $19 each under the ticker symbol “LIFE” — one of the more on-the-nose choices in recent memory. The name fits. Ethos runs a three-sided platform where consumers buy policies online in 10 minutes without medical exams. It says over 10,000 independent agents use its software to sell those policies and that carriers like Legal & General America and John Hancock rely on it for underwriting and administrative services. Ethos itself isn’t an insurer — it’s a licensed agency earning commissions on sales.
Though the company’s stock closed its first day as a public company at $16.85, 11% below its IPO price of $19, Ethos co-founders Peter Colis and Lingke Wang still have plenty to celebrate, having grown the 10-year-old business to public-market scale.
“When we launched [the business], there were like eight or nine other life insurtech startups that looked very similar to Ethos, with similar Series A funding,” Colis told TechCrunch. “Over time, the vast majority of those startups have pivoted, been acquired at subscale, remain at subscale or gone out of business.”
For instance, Policygenius, which raised over $250 million from investors, including KKR and Norwest Venture Partners, was acquired by PE-backed Zinnia in 2023. Meanwhile, Health IQ, a startup that secured more than $200 million from prominent VCs like Andreessen Horowitz, filed for bankruptcy that same year.
Ethos, which has raised over $400 million in venture capital, could have easily succumbed to a similar fate. Instead, the company remained laser-focused on reaching profitability as the era of cheap capital and easy fundraising came to an end in 2022. “Not knowing what the ongoing funding climate would be, we got really serious about ensuring profitability,” Colis said.
That financial discipline transformed it into a profitable company by mid-2023, according to its IPO documents. Since then, Ethos has also maintained a year-over-year revenue growth rate of more than 50%. In the nine months ending September 30, 2025, the company generated almost $278 million in revenue and just under $46.6 million in net income.
Techcrunch event
Boston, MA | June 23, 2026
Still, the company ended its first day as a public company with a market capitalization of about $1.1 billion, a valuation that’s significantly below the $2.7 billion it garnered in its last private round led by SoftBank Vision Fund 2 in July 2021.
When asked why Ethos went public, Colis said that a big part of the reason was to bring “additional trust and credibility” to potential partners and clients. He explained that because many major insurance carriers are over a century old, being publicly traded signals the company’s staying power.
The largest outside shareholders of Ethos include prominent firms, including Sequoia, Accel, Google’s venture arm GV, and SoftBank, as well as General Catalyst and Heroic Ventures. Sequoia and Accel did not sell shares in the IPO, the company disclosed.
Kais Khimji has spent most of his professional career as a venture investor, including six years as a partner at the prominent VC firm Sequoia Capital.
But just like several other former Sequoia partners — including David Vélez, who founded the Brazilian digital bank Nubank — Khimji (pictured left) has always wanted to be a startup founder. On Thursday, he announced that he has revived an idea he began working on as a student at Harvard about 10 years ago, turning it into the AI calendar-scheduling company Blockit. In a major vote of confidence, Khimji’s former employer, Sequoia, led the company’s $5 million seed round.
“Blockit has a chance to become a $1Bn+ revenue business, and Kais will make sure it gets there,” Pat Grady, Sequoia’s general partner and co-steward who led the investment, wrote in a blog post.
While many startups have tried to automate scheduling in the past, Khimji believes that thanks to advances in LLMs, Blockit’s AI agents can handle scheduling more seamlessly and efficiently than many of its predecessors, including now-defunct startups Clara Labs and x.ai. (Yes, that domain name ended up with Elon Musk’s AI company.)
Unlike the current category leader Calendly, which was last valued at $3 billion and relies on users sharing links to find availability, Blockit is betting that its AI agents can master the nuance required to handle the entire scheduling process without human involvement.
With Blockit, Khimji and co-founder John Hahn — who previously worked on calendar products, including Timeful, Google Calendar, and Clockwise — are building what is essentially an AI social network for people’s time.
“It always felt very odd. I have a time database — my calendar. You have a time database — your calendar, and our databases just can’t talk to each other,” Khimji told TechCrunch.
Techcrunch event
San Francisco | October 13-15, 2026
Khimji says that Blockit can finally solve this disconnection. When two users need to meet, their respective AI agents communicate directly to negotiate a time, bypassing the typical back-and-forth emails entirely.
Users can invoke the Blockit agent by copying it on an email or messaging it in Slack about a meeting. The bot then takes over the logistics, negotiating a mutually convenient time and location that fits the preferences of all participants.
Khimji said that Blockit can work as seamlessly as a human executive assistant. Users simply need to provide the system with specific instructions about their preferences, such as which meetings are nonnegotiable and which are “movable” based on daily needs. “Sometimes my calendar is crazy, so I need to skip lunch, and the agent needs to know that it’s okay to skip lunch,” he said.
The system can even be trained to prioritize meetings based on the tone of an email. For instance, a user might instruct the agent that a meeting request signed with a formal “Best regards” should take precedence over a casual interaction ending with “Cheers.”
By learning the preferences of its users, Blockit appears to be capitalizing on what venture firm Foundation Capital’s partners Jaya Gupta and Ashu Garg call “context graphs.” In a widely shared essay, the investors describe a multibillion-dollar opportunity for AI agents to capture the “why” behind every business decision by relying on the hidden logic that previously only existed in a person’s head.
Blockit is already being used by more than 200 companies, including AI startup Together.ai, the newly acquired fintech company Brex, and robotics startup Rogo, as well as venture firms a16z, Accel, and Index. The app is available for free for 30 days. After that, it costs $1,000 annually for individual users and $5,000 annually for a team license with support for multiple users, Khimji said.
Sequoia Capital is reportedly joining a blockbuster funding round for Anthropic, the AI startup behind Claude, according to the Financial Times. It’s a move sure to turn heads in Silicon Valley.
Why? Because venture capital firms have historically avoided backing competing companies in the same sector, preferring to place their bets on a single winner. Yet here’s Sequoia, already invested in both OpenAI and Elon Musk’s xAI, now throwing its weight behind Anthropic, too.
The timing is particularly surprising given what OpenAI CEO Sam Altman said under oath last year. As part of OpenAI’s defense against Musk’s lawsuit, Altman addressed rumors about restrictions in OpenAI’s 2024 funding round. While he denied that OpenAI investors were broadly prohibited from backing rivals, he did acknowledge that investors with ongoing access to OpenAI’s confidential information were told that access would be terminated “if they made non-passive investments in OpenAI’s competitors.” Altman called this “industry standard” protection (which it is) against misuse of competitively-sensitive information.
According to the FT, Sequoia is joining a funding round led by Singapore’s GIC and U.S. investor Coatue, which are each contributing $1.5 billion. Anthropic is aiming to raise $25 billion or more at a $350 billion valuation — more than double its $170 billion valuation from just four months ago. The WSJ and Bloomberg had earlier reported the round at $10 billion. Microsoft and Nvidia have committed up to $15 billion combined, with VCs and other investors said to be contributing another $10 billion or more.
The Sequoia connection with Altman runs deep. When Altman dropped out of Stanford to start Loopt, Sequoia backed him. He later became a “scout” for Sequoia, introducing the firm to Stripe, which became one of the firm’s most valuable portfolio companies. Sequoia’s new co-leader Alfred Lin and Altman also appear comparatively close. Lin has interviewed Altman numerous times at Sequoia events, and when Altman was briefly ousted from OpenAI in November 2023, Lin publicly said he’d eagerly back Altman’s “next world-changing company.”
While Sequoia’s investment in xAI might seem to have already contradicted the traditional VC approach of picking winners, that bet is widely viewed as less about backing an OpenAI competitor and more about deepening the firm’s extensive ties to Elon Musk. Sequoia invested in X when Musk bought Twitter and rebranded it, is an investor in SpaceX and The Boring Company, and is a major backer of Neuralink, Musk’s brain-computer interface company. Former longtime Sequoia leader Michael Moritz was even an early investor in Musk’s X.com, which became part of PayPal.
Sequoia’s apparent reversal on portfolio conflicts is especially glaring given its historical stance. As we reported in 2020, the firm took the extraordinary step of walking away from its investment in payments company Finix after determining the startup competed with Stripe. Sequoia forfeited its $21 million investment, letting Finix keep the money while giving up its board seat, information rights, and shares, marking the first time in the firm’s history it had severed ties with a newly funded company over a conflict of interest. (Sequoia had led Finix’s $35 million Series B round just months earlier.)
Techcrunch event
San Francisco | October 13-15, 2026
The reported Anthropic investment comes after dramatic leadership changes at Sequoia, where the firm’s global steward, Roelof Botha, was pushed out in a surprise vote this fall just days after sitting down with this editor at TechCrunch Disrupt, with Lin and Pat Grady — who’d led that Finix deal — taking over.
Anthropic is reportedly preparing for an IPO that could come as soon as this year. We’ve reached out to Sequoia Capital for comment.
After nearly a decade at the helm of Sequoia Capital, Roelof Botha will step aside as “steward” of the legendary Silicon Valley VC firm.
Botha—PayPal’s defining early CFO, who’s now known for backing companies like YouTube, Instagram, and Block—said Tuesday that he will pass the baton to Pat Grady and Alfred Lin.
“They have a fearlessness and resilience that’s necessary to win in this business,” Botha wrote in a letter that the firm post on X. “They do not shy away from difficult conversations, and they roll up their sleeves to company-build—both with founders and within Sequoia.”
Botha, who Fortune profiled last year, has presided over a tumultuous period in the history of Sequoia, which burst into the public most recently when the Financial Times reported that Sequoia COO Sumaiya Balbale resigned due to posts by Sequoia partner Shaun Maguire that she considered Islamophobic.
The firm—started in 1972 by Don Valentine, and a backer in the early days of companies like Atari and Apple—has experienced a number of big changes over recent years: In 2021, Sequoia restructured its United States and European funds into one evergreen fund, and two years later split off its China operations.
Botha, who was named Sequoia’s steward in 2017, said he will transition into a new role advising the partnership, while continuing to support Sequoia on the boards of startup companies he’s invested in. In making Lin and Grady co-stewards, Sequoia is returning to the successful formula last employed when partners Michael Moritz and Doug Leone served as co-stewards.
Lin—whose early career at Zappos and mathematical inclinations molded him into an early backer of companies like Airbnb and DoorDash—has been at Sequoia since 2010. Meanwhile, Grady’s been at Sequoia since 2007 and made his name as a key investor in companies like Snowflake, Zoom, and Okta.
The pair will face the immediate challenge of addressing the controversy over politics that has roiled the firm, at a time when many Silicon Valley venture firms are becoming increasingly outspoken on hot-button political and culture-war issues.
Sequoia has a longtime policy of “institutional neutrality,” while allowing partners the freedom to express their views individually. But that policy has been tested by Maguire’s comments, reportedly leading to discord within the firm.
At TechCrunch Disrupt last week, Botha declined to comment extensively on the controversy, but said of Maguire: “I think he has made it clear what he stands for, and there’s a particular set of founders for whom it is very appealing that he’s been as firm in his opinion. Does it come with tradeoffs? Yes it does.”
Sequoia is one of the most powerful venture firms in Silicon Valley, with $56 billion in assets under management and investments in startups including OpenAI, SpaceX, Stripe, Ramp, and Chainguard. Last week, the firm unveiled two new funds, a $200 million seed fund and a $750 million venture fund.
When reached for comment Sequoia directed Fortune to its LP letter, and Grady and Lin’s comments on X.
The Trump administration has begun taking direct equity stakes in American companies, not as temporary crisis measures, as in 2008, but as permanent fixtures of industrial policy.
The moves raise interesting questions, including what happens when the White House appears on a cap table.
At TechCrunch Disrupt in San Francisco last week, Sequoia Capital’s global steward Roelof Botha fielded exactly that query, and his response drew knowing laughter from the packed house: “[Some] of the most dangerous words in the world are: ‘I’m from the government, and I’m here to help.’”
Botha, who describes himself as “sort of libertarian, free market thinker by nature,” said that industrial policy has its place when national interests demand it. “The only reason the U.S. is resorting to this is because we have other nation states with whom we compete who are using industrial policy to further their industries that are strategic and maybe adverse to the U.S. in long term interests.” In other words, China’s playing the game, so the U.S. has to play along.
Still, his discomfort with government as co-investor was unmistakable during his appearance. And that wariness extends beyond Washington. In fact, Botha sees troubling echoes of the pandemic-era funding circus in today’s market, though he stopped short of using the word “bubble” on stage. “I think we’re in a period of incredible acceleration,” he offered more diplomatically, while also warning about valuation inflation.
He told the audience that, on the very morning of his appearance, Sequoia had debriefed about a portfolio company whose valuation soared from $150 million to $6 billion in twelve months during 2021, only to come crashing back down to Earth. “The challenge you have inside the company for the founders and the team, [is] you feel as though you’re on this trajectory, and then you end up being successful, but it’s not quite as good as you hoped at one point.”
It’s tempting to keep raising money to maintain momentum, he continued, but the faster a valuation climbs, the harder it can fall, and nothing demoralizes a team quite like watching a paper fortune evaporate.
Techcrunch event
San Francisco | October 13-15, 2026
His advice for founders navigating these frothy waters was two-pronged: if you don’t need to raise for at least twelve months, don’t. “You’re probably better off building because your company will be worth so much more 12 months from now,” he said. On the other hand, he added, if you’re six months from needing capital, raise now while the money’s flowing, because markets like the one we’re in can sour quickly.
Being the sort of person who studied Latin in high school (his words), Botha reached for classical mythology to drive the point home. “I did read the story of Daedalus and Icarus in Latin. And that stuck with me, this idea that if you fly too hard, too fast, your wings may melt.”
When founders hear Botha opine on the market, they pay attention, and understandably so. The firm’s portfolio includes early bets on Nvidia, Apple, Google, and Palo Alto Networks. Botha also kicked off his Disrupt appearance with news about Sequoia’s two newest investment vehicles: new seed and venture funds that give the firm $950 million more to invest and are “essentially the same size as the funds we launched six, seven years ago,” said Botha onstage.
Though Sequoia changed its fund structure in 2021 in order to hold public stock for longer periods, Botha made clear it is still very much an early-stage shop at its core. He said that over the last twelve months, Sequoia has invested in 20 seed-stage companies, nine of them at incorporation. “There’s nothing more thrilling than partnering with founders right at the beginning.” Sequoia is “more mammalian than reptilian,” he continued. “We don’t lay 100 eggs and see what happens. We have a small number of offspring, like mammals, and then you need to give them a lot of attention.”
It’s a strategy rooted in experience, he said. “In the last 20-25 years, 50% of the time we’ve made a seed or venture investment, we fail to fully recover capital, which is humbling.” After his own first complete write-off, Botha said he cried at a partner meeting out of shame and embarrassment. “But unfortunately, that is part of what we have to do to achieve outliers.”
What accounts for Sequoia’s success? After all, a lot of firms invest in seed-stage companies. Botha partly credited a decision-making process that even surprised him when he joined two decades ago: every investment requires partnership consensus, with each partner’s vote carrying equal weight regardless of tenure or title.
Each Monday, he explained, the firm kicks off partner meetings with an anonymous poll to surface the range of opinions about materials the partners are asked to digest over the weekend. Side conversations are verboten. “The last thing you want is alliances to form,” Botha said. “Our goal is great investment decisions.”
The process can test patience — Botha once spent six months lobbying partners on a single growth investment — but he’s convinced it’s essential. “No one, not even me, can force an investment through our partnership.”
Despite Sequoia’s success, or perhaps because of it, Botha’s most provocative position is that venture capital isn’t really an asset class or, at least, it shouldn’t be treated as one. “If you take out the top 20 or so venture firms out of the industry’s results, we [as an industry] actually underperformed investing in an index fund,” he said flatly onstage. He pointed to the 3,000 venture firms now operating in America alone, which is triple the number when Botha joined Sequoia. “Throwing more money into Silicon Valley doesn’t yield more great companies,” he said. “It actually dilutes that. It actually makes it harder for us to get the small number of special companies to flourish.”
The solution, in his view, is: stay small, stay focused, and remember that “there are only so many companies that matter.” It’s a philosophy that has served Sequoia for decades. And in a moment when Uncle Sam wants on your cap table and VCs are throwing money at anything that moves, it might be the most contrarian advice of all.
Sequoia Capital is making a bet on the future of Wall Street, leading an investment in Rogo Technologies Inc., a startup developing artificial intelligence tools to make bankers more efficient, according to people familiar with the matter. The deal would value New York-based Rogo at $750 million, the people said. Rogo builds software that helps investment […]
Peter Thiel, PayPal’s first CEO, turned his fintech fortune into a far-reaching empire of influence spanning venture capital, politics and power. Marco Bello/Getty Images
In 2007, Fortune magazine reimagined a classic mafia scene with a Silicon Valley twist: 13 male founders and early employees of PayPal, all long gone from the company, posed at a San Francisco café with slicked-back hair, poker chips and dozens of whiskey glasses. The crowd included some of the most recognizable names in today’s tech scene, like Elon Musk, Peter Thiel and Reid Hoffman. The magazine dubbed them the “PayPal mafia,” not for their time at the fintech company, but for their outsized impact on Silicon Valley through the companies they launched afterward.
PayPal went public in early 2002 and was acquired by eBay for $1.5 billion the same year. Most of its early employees left the company after the acquisition. They went on to found YouTube, SpaceX and LinkedIn, among other legendary names in Silicon Valley. However, like their cinematic namesake, the group hasn’t avoided controversy. These former colleagues have built billion-dollar businesses while also finding themselves in the crosshairs of public criticism.
For instance, Thiel has faced controversy over his political affiliations and, most notably, for funding Hulk Hogan’s 2012 lawsuit against Gawker Media with $10 million — a case that ultimately drove the online media company into bankruptcy. Musk has also faced criticism for his takeover of Twitter and his prior role in the Trump administration, where he led widespread federal employee firings.
Here’s what they are up to these days:
Peter Thiel: venture capitalist
Peter Thiel. Marco Bello/Getty Images
Peter Thiel, Max Levchin and Luke Nosek founded PayPal in 1998, originally as a software security company. After merging with Elon Musk’s X.com (unrelated to the social media platform he owns today), PayPal shifted its focus to digital payments.
Thiel served as CEO from 1998 until 2002, leaving after the company was sold to eBay. He then co-founded Palantir Technologies, a major U.S. government contractor providing data analytics services. The company now has a market capitalization of $439 billion.
Thiel is also known as a prolific angel investor. He co-founded Clarium Capital, Founders Fund, Valar Ventures and Mithril Capital. In 2004, Thiel became Facebook’s first outside investor after acquiring a 10.2 percent stake in the company for $500,000.
Thiel is among the many former PayPal employees who have entered political and high-profile public arenas. An active donor to the Republican Party, Thiel supported Donald Trump’s 2016 presidential campaign but withheld donations during the 2024 election. He is also credited with helping JD Vance reach the Vice Presidential ticket.
Elon Musk: entrepreneur, the world’s richest person
Elon Musk. Kevin Dietsch/Getty Images
Elon Musk briefly served as PayPal’s CEO before being ousted by the board in 2000. He went on to build one of the most influential portfolios in technology, spanning electric vehicles, space exploration, social media and A.I.
Musk founded SpaceX in 2002 and has led Tesla since 2008. He also founded Neuralink and The Boring Company, expanding his reach into brain-computer interfaces and infrastructure. In 2022, Musk gained global attention for acquiring Twitter for $44 billion, later rebranding it as X.
His ties to A.I. run deep: Musk co-founded OpenAI with Sam Altman in 2015 but left in 2018 over strategic disagreements. In 2023, he returned to the field by launching xAI, a research venture focused on building A.I. that is more understandable for humans.
Today, Musk is the richest person in the world, with an estimated net worth of $400 billion. He is also perhaps the only PayPal alumnus to ascend into direct political influence. During the Trump administration, he led the Department of Government Efficiency (DOGE)—a name shared with his cryptocurrency venture—before stepping down in May after clashing publicly with the President.
Max Levchin: computer scientist
Max Levchin. John Lamparski/Getty Images
Position at PayPal: co-founder, chief technology officer from 1998 to 2002
As PayPal’s chief technology officer, Max Levchin helped lead the company’s anti-fraud efforts by co-creating the Gausebeck-Levchin test—the foundation for the widely used CAPTCHA security tool. After leaving PayPal, he launched the media-sharing platform Slide in 2004, which was acquired by Google in 2010. Levchin briefly served as Google’s vice president of engineering until Slide was shut down the following year.
In 2012, he co-founded Affirm, a leading “buy now, pay later” (BNPL) company, where he continues to serve as CEO. Today, Affirm has a market capitalization of $27.5 billion, with 21.9 million consumers and more than 350,000 merchant partners on its platform.
Levchin has also held board positions at Yahoo and Yelp. In 2015, he became the first Silicon Valley executive appointed to the U.S. Consumer Financial Protection Bureau’s advisory board, emphasizing the importance of collaboration between companies and regulators.
Reid Hoffman: entrepreneur, investor
Reid Hoffman. Kimberly White/Getty Images for WIRED
Before joining PayPal, Hoffman worked as a senior user experience architect at Apple, contributing to the company’s online social network eWorld. He later became director of product management at Fujitsu. After his online dating startup, SocialNet, folded, Hoffman joined PayPal in 2000 as chief operating officer.
In 2003, he co-founded the career networking site LinkedIn. Following Microsoft’s $26.2 billion acquisition of LinkedIn in 2017, Hoffman joined Microsoft’s board, a move that greatly increased his wealth.
Over the years, Hoffman has served on the boards of Airbnb and OpenAI, where he was also an early investor. Through the venture capital firm Greylock Partners, he has backed dozens of A.I. startups. In 2022, he co-founded Inflection AI with Mustafa Suleyman, who now serves as CEO. Earlier this year, he teamed up with cancer researcher Siddhartha Mukherjee to launch Manas AI, a startup focused on drug discovery.
David Sacks: investor, White House A.I. and Crypto Czar
David Sacks currently serves as the White House A.I. and Crypto Czar. JC Olivera/Variety via Getty Images
Position at PayPal: chief operating officer from 1999 to 2002
Since leaving PayPal, David Sacks has built a career spanning film, tech, investing and politics. In 2005, he produced and financed a political satire that earned two Golden Globe nominations. The following year, he founded Geni.com, a genealogy-focused social network that later spun off Yammer, one of the earliest enterprise social networking platforms. He went on to co-found Craft Ventures, the startup Glue, and the podcast platform Callin.
Jeremy Stoppelman joined Musk’s X.com in 1999 and became vice president of engineering after its transition to PayPal. In 2004, he co-founded Yelp, where he has served as CEO ever since. Under his leadership, the company turned down a 2010 acquisition offer from Google and went public two years later. Stoppelman’s net worth is estimated at more than $100 million.
Ken Howery: investor, U.S. ambassador
Position at PayPal: chief financial officer from 1998 to 2002
Ken Howery served as PayPal’s chief financial officer from 1998 to 2002. After PayPal’s sale to eBay, he became eBay’s director of corporate development until 2003. He later joined Peter Thiel at Clarium Capital as vice president of private equity and went on to co-found Founders Fund as a partner. Beyond investing, he is a member of the Explorers Club, a nonprofit dedicated to scientific exploration, and an advisor to Kiva, the micro-lending nonprofit founded by former PayPal colleague Premal Shah.
Howery is also among the former PayPal executives who have moved into politics. He has donated at least $1 million to Donald Trump’s campaign through Elon Musk’s political action committee. During Trump’s first term, Howery was appointed U.S. ambassador to Sweden and today serves as the U.S. ambassador to Denmark.
Roeloth Botha: venture capitalist
Roelof Botha joined PayPal as director of corporate development shortly before graduating from Stanford University. He later became vice president of finance and went on to serve as chief financial officer until the company’s acquisition by eBay.
Position at PayPal: software architect from 1998 to 2003
Companies later founded: Yelp, Learnirvana
Russel Simmons helped design PayPal’s payment system as a software architect. After leaving the company, he and fellow PayPal alum Jeremy Stoppelman set out to build a platform for restaurant reviews. With a $1 million investment from Max Levchin, they launched Yelp in July 2004. Simmons served as chief technology officer until his departure in 2010. At the time, Yelp said he would remain a “significant” shareholder, though the size of his stake—and whether he still holds it—remains unclear.
In 2014, Simmons co-founded Learnirvana, an online learning platform.
Andrew McCormack: entrepreneur
Position at PayPal: assistant to Thiel from July 2001 to November 2002
Companies later founded: Valar Ventures
Andrew McCormack began his career as an assistant to Peter Thiel at PayPal and followed him into subsequent ventures. From November 2002 to April 2003, he oversaw operations at Thiel’s hedge fund, Clarium Capital.
In 2010, McCormack co-founded Valar Ventures with Thiel and James Fitzgerald, focusing on fintech investments. He remains a general partner at the firm.
Luke Nosek: investor
Position at PayPal: co-founder and vice president of marketing and strategy from 1998 to 2002
Companies later founded: Founders Fund, Gigafund
In 2005, Luke Nosek joined Peter Thiel and Ken Howery to launch Founders Fund, a San Francisco–based venture capital firm that has backed companies such as Airbnb, Lyft and SpaceX. While his exact net worth is unclear, Nosek has made substantial investments through his venture firms. At Founders Fund, he led one of the firm’s earliest major deals with a $20 million investment in SpaceX, later serving on its board.
In 2017, Nosek left to co-found Gigafund, which went on to invest $1 billion in SpaceX, according to the company. He also sits on the board of ResearchGate.
Premal Shah: entrepreneur
Position at Paypal: product manager
Companies later founded: Kiva
Three years after leaving PayPal, Premal Shah co-founded Kiva, a nonprofit that provides loans to entrepreneurs in underserved communities worldwide. He also serves on the boards of other nonprofits, including the Center for Humane Technology, the Change.org Foundation, Watsi and VolunteerMatch.
Keith Rabois: investor
Position at PayPal: executive vice president of business development
After leaving his executive role at PayPal, Keith Rabois became an active investor, backing companies including Slide, YouTube and Palantir. He also invested in LinkedIn, where he served as vice president of business and corporate development, and Square, where he was chief operating officer.
Rabois joined venture capital firm Khosla Ventures from 2013 to 2019 and was a partner at Founders Fund from 2019 to 2024.
X Square Robot, a Shenzhen-based humanoid startup, secured approximately $100 million in funding led by Alibaba Group Holding (NYSE:BABA) through Alibaba Cloud in a deal that strengthens the company’s expansion in the robotics market.
The latest investment brings the startup’s total funding to around $280 million across several financing rounds since launching in December 2023, X Square Robot Chief Operating Officer Yang Qian told CNBC earlier this week.
HongShan, formerly Sequoia Capital China, joined the funding round alongside Meituan, Legend Star, Legend Capital, and INCE Capital. Qian confirmed the company is already generating revenue from sales to educational institutions, hospitality venues, and senior care facilities.
Don’t Miss:
Venture capitalists are pouring unprecedented amounts into humanoid robotics as the integration of generative artificial intelligence promises to revolutionize human-machine interactions. X Square Robot exemplifies this trend, having completed eight funding rounds in less than two years of operation.
“Right now we need robots to operate and complete complex tasks autonomously,” Yang told CNBC. She emphasized that after decades of developing robots capable of only limited functions like grasping objects, the industry has recognized that AI is essential for expanding machine capabilities.
The company on Monday announced WALL-OSS, an end-to-end embodied foundation model, with code linked via GitHub and Hugging Face. The project focuses on vision-language-action alignment for manipulation tasks in real-world settings. Embodied AI here means models that perceive, reason, and act through physical systems such as robots.
Trending: ‘Scrolling To UBI’ — Deloitte’s #1 fastest-growing software company allows users to earn money on their phones. You can invest today for just $0.30/share.
X Square Robot also unveiled its Quanta X2 robot, featuring 360-degree cleaning capabilities with attachable mop heads and advanced hands capable of perceiving subtle pressure changes. According to CNBC, this represents a significant step toward more human-like functionality in commercial robotics applications.
Currently, the company’s humanoid robots carry an $80,000 price tag according to research firm Humanoid Guide. Competitor Unitree offers a humanoid model for $16,000, though the advanced capabilities of that unit remain unclear. X Square Robot acknowledged it does not yet have a product ready for mass market delivery, with specific pricing determined by individual use cases, CNBC reported.
Yang expects consumer adoption to accelerate once robot prices drop to approximately $10,000, achieved primarily through hardware cost reductions. She projects this milestone is achievable within three to five years, coinciding with the X Square Robot’s prediction that “robotic butlers” will become reality within the same timeframe.
The startup plans to begin preparing for an initial public offering next year, though Yang noted the company has not determined the listing location. X Square Robot is already expanding internationally, with ongoing discussions with potential customers in Japan and Singapore.
Yang acknowledged that AI for robotics currently lags behind generative AI advancements in chatting and code generation. She estimates robotic AI technology will require at least 12 months to achieve ChatGPT 3.5-type capabilities, noting that “embodied AI” lacks clear benchmarks for measuring relative progress.
While X Square Robot utilizes Nvidia (NASDAQ:NVDA) chips for computing functions, other operations rely on less powerful automotive chips that can be sourced domestically within China, Yang told CNBC. This hybrid approach provides the company with supply chain flexibility as it scales operations to meet growing demand across educational, hospitality, and healthcare sectors.
UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets.
Mira Murati, Ilya Sutskever, Greg Brockman and Andrej Karpathy (clockwise, starting at top left). Photos by Slaven Vlasic/Getty Images, JACK GUEZ/AFP via Getty Images, Anna Moneymaker/Getty Images and Michael Macor/The San Francisco Chronicle via Getty Images
Since ChatGPT took the world by storm in late 2022, OpenAI’s revenue and market value have skyrocketed. But internally, the company hasn’t necessarily had the smoothest ride. The A.I. giant, valued at $150 billion, lost a slew of top executives this year. On Wednesday (Sept. 25) alone, a trio of leaders, including chief technology officer Mira Murati, chief research officer Bob McGrew, and VP of research Barret Zoph, all announced their departures. They join a larger group of former OpenAI employees who have left for rival A.I. developers and startups. As of now, CEO Sam Altman is one of only two active remaining members of the company’s original 11-person founding team.
OpenAI hasn’t just lost employees—it has also rehired some familiar faces. In May, OpenAI welcomed back Kyle Kosic, who worked at the company between 2021 and 2023 on its technical staff. Kosic left last year to join Elon Musk’s xAI. Several other outgoing OpenAI employees have taken similar routes and gone on to work for competing A.I. companies, showing just how competitive the industry is at the moment.
Here’s a look at some of the top leaders OpenAI has lost in 2024 thus far:
Andrej Karpathy, research scientist
Andrej Karpathy has left OpenAI not once but twice. One of OpenAI’s 11 founders, Karpathy helped build the company’s team on computer vision, generative modeling and reinforcement learning. He first departed in 2017 to lead Tesla’s Autopilot effort. Returning to OpenAI in 2023, Karpathy left once again in February this year to focus on “personal projects.” He subsequently established Eureka Labs, an A.I. education startup.
Ilya Sutskever, chief scientist and co-head of the super alignment team
A renowned machine learning researcher, Ilya Sutskever helped co-found OpenAI nearly a decade ago and served as the company’s chief scientist. He was also notably a member of the four-person board that temporarily ousted Altman last year before reinstating him. Sutskever, who was subsequently removed from the board, later said he regretted his involvement in the brief ouster. In May, he announced his departure from OpenAI and said he was leaving for a venture that is “very personally meaningful.”
Just days after Sutskever left, OpenAI executive Jan Leike announced his resignation as well. Sutskever and Leike co-ran the company’s safety team, which has since been disbanded. Leike said he decided to leave in part due to disagreements with OpenAI leadership “about the company’s core priorities,” citing a lack of focus on safety processes around developing AGI. Leike has since taken up a new role as head of alignment science at Anthropic, an OpenAI rival founded by former OpenAI employees Dario Amodei and Daniela Amodei.
John Schulman, head of alignment science
John Schulman, another OpenAI co-founder, made significant contributions to the creation of ChatGPT. After Leike’s departure, Schulman became head of OpenAI’s alignment science efforts and was appointed to its new safety committee in May. That’s why Schulman’s decision in August to step away from the company came as a surprise—especially when he revealed that he would be joining Anthropic. “This choice stems from my desire to deepen my focus on A.I. alignment and to start a new chapter of my career where I can return to hands-on technical work,” said Schulman on X, where he also clarified that his decision to step away from OpenAI wasn’t connected to a lack of support for alignment research.
Peter Deng, vice president of consumer product
Peter Deng, a top OpenAI product executive, also decided to step away from the company earlier this year. Having first joined OpenAI last year, he ended his tenure as vice president of product in July, according to his LinkedIn. Deng, who also previously held product leader positions at companies like Uber (UBER) and Meta (META), has not publicly revealed his next steps.
Greg Brockman, president
Greg Brockman, often seen as Altman’s right-hand man, hasn’t technically left the company but is instead taking a sabbatical through the end of 2024. In August, he announced his time off and described it as the “first time to relax since co-founding OpenAI nine years ago.” Brockman started off as OpenAI’s chief technology officer before becoming the company’s president in 2022. He indicated that he plans to return to OpenAI, noting that “the mission is far from complete; we still have a safe AGI to build.”
Mira Murati, chief technology officer
Mira Murati, one of OpenAI’s most public-facing figures, resigned earlier this week after more than six years with the company. “I’m stepping away because I want to create the time and space to do my own exploration,” said Murati, who notably served as interim CEO during Altman’s brief ousting last year, on X. Adding that she will “still be rooting” for OpenAI, Murati said her primary focus currently is “doing everything in my power to ensure a smooth transition, maintaining the momentum we’ve built.” Altman praised her leadership in a statement on X, describing Murati as instrumental to OpenAI’s “development from an unknown research lab to an important company.”
Bob McGrew, chief research officer
Shortly after Murati’s resignation, Bob McGrew, OpenAI’s chief research officer, also announced plans to leave the company. He simply said on X, “It is time for me to take a break.” Having previously worked at PayPal (PYPL) and Palantir, McGrew started off as a member of OpenAI’s technical staff and has been serving as OpenAI’s chief research officer since August.
Barret Zoph, vice president of research
Barret Zoph is the third executive who announced his resignation this week. Like his two colleagues, Zoph said it’s a “personal decision based on how I want to evolve the next phase of my career.” Zoph, a former research scientist at Google (GOOGL), joined OpenAI in 2022 and played a large role in overseeing OpenAI’s post-training team.
Murati, McGrew and Zoph made their decisions independently of each other, according to Altman, but decided to depart simultaneously “so that we can work together for a smooth handover to the next generation of leadership.” The CEO conceded that, while the abruptness of the leadership changes isn’t the most natural, “we are not a normal company.”
Why did Nvidia invest in AI chips over 10 years ago, ahead of the competition? CEO Jensen Huang and board member Mark Stevens, Nvidia’s two largest individual shareholders, talked to Sequoia Capital partner Roelof Botha to explain what Botha called “one of the most remarkable business pivots in history.”
Nvidia’s original product was 3D graphics cards for PC games, but company leaders noticed by the mid-2000s that the PC market was hitting a growth limit.
“We felt we were always gonna be boxed into the PC gaming market and always knocking heads with Intel if we didn’t develop a brand new market that nobody else was in,” Stevens explained.
Jensen Huang, co-founder and chief executive officer of Nvidia. Photographer: Lionel Ng/Bloomberg via Getty Images
That need for a new market intersected with a product Nvidia already had on hand: its graphics processor unit, or GPU, which could be used to power tasks outside of gaming. Researchers at universities across the world began exploring the graphics cards, eventually building advanced computers with them.
Huang recalled meeting a quantum chemist in Taiwan who showed him a closet with a “giant array” of Nvidia’s GPUs on its shelves; house fans were rotating to keep the system cool.
“He said, ‘I built my own personal supercomputer.’ And he said to me that because of our work… he’s able to do his work in his lifetime,” Huang said.
Other researchers, like Meta AI chief Yann LeCun in New York, began reaching out to Nvidia about the computing power of its chips. Nvidia began considering the AI market when AI had yet to enter the mainstream and was a “zero billion dollar market” or a market that had yet to materialize.
“There was no guarantee that AI would ever really emerge because, keep in mind, AI had had many stops and starts over the last 40 years,” Stevens said. “I mean, AI has been around as a computer science concept for decades. But it had never really taken off as a huge market opportunity.”
Huang and other company leaders still believed in AI and decided to invest billions in the tech in the 2010s.
“This was a giant pivot for our company,” Huang said. “The company’s focus was steered away from its core business.”
Huang highlighted the extra cost, talent, and skills Nvidia had to account for with the pivot, as it affected the entire company. It took 10 to 15 years of effort, but that business decision led to Nvidia powering the AI revolution with an early ChatGPT partnership.
“Every CEO’s job is supposed to look around corners,” Huang said. “You want to be the person who believes the company can achieve more than the company believes it can.”
In speaking with venture capital leaders in the Los Angeles scene, many described the past several years of investing as “irrational exuberance,” a period marked by eye-watering company valuations and growth funds propelling multiple firms into the billion-dollar club.
Now, as 22-year-high interest rates hamper capital deployment and fundraising, venture capital must face the realities of a low-liquidity market and answer to a crop of investors who may be experiencing a downturn in the venture world for the first time.
According to Pitchbook’s venture capital data from last year, deal activity slumped from the peak seen in 2021. Just $171billion was invested into companies, roughly half the amount invested two years prior. Tightened purse strings reflect a shortage of capital availability spurred in part by the public-offering and acquisition markets grinding to a near halt.
“When you don’t have exits coming fast and furious, then the entire market seizes up because there’s no capital funds to refresh the venture capital partners,” said Anna Barber, a partner at VC firm M13.
Last year’s initial public offering market did see some high-profile venture-backed debuts, including ARM and Instacart, but the jump-start was a stark reminder of just how inflated the venture world’s valuations could be. Instacart’s almost $10 billion September entry on the New York Stock Exchange was a fraction of the $39 billion it was worth in 2021– a price tag backed by some of the leading names in venture capital, including Andreessen Horowitz and Sequoia Capital.
Gabe Greenbaum (David Sprague/LABJ)
Barber is among the venture capitalists who see the current capital markets as back to business as usual, and an opportunity for limited partners to see which firms can gauge the companies with cycle-resilient business models.
M13, a Santa Monica-based firm with $685 million in capital, has a majority of its team on portfolio companies’ operations. Even as the firm reserves at least half of its capital for follow-on investments to existing companies, M13 is focusing its efforts on helping companies build two to three years of runway.
“I think that’s been really valuable and meaningful in a challenging market where every company is trying to make their dollars go longer, being able to go further, being able to leverage support,” Barber said.
Fundraising standout
The other side of venture capital, courting limited partners, has proven difficult in current capital markets.
In looking at the Business Journal’s top venture capital firms from last year and 2022, billion-dollar entities like Century City-based Vida Ventures and Santa Monica-based Ominent Capital did not raise any additional capital last year.
Pitchbook’s venture data shows that last year saw the lowest level of fundraising since 2017, with just $66.9 billion committed to venture capital funds globally, compared to the record-high $173 billion committed in 2022.
However, there was one local venture capital firm that worked opposite of the market downturn. Manhattan Beach-based B Capital broke its previous fundraising record and became the top local venture capital firm after raising a total of $2.6 billion last year.
Its third growth fund made up the lion’s share of this capital, with $2.1 billion committed from limited partners such as pensions, endowments and family offices. In June, Bloomberg reported B Capital was in talks to raise a $500 million for a new early-stage venture to follow its previous Ascent Fund, which raised $126 million over two years ago.
For Gabe Greenbaum, a general partner at B Capital, having investors double-down on commitments during a market downturn serves to validate the firm’s expertise and strategy on artificial intelligence, fintech and health care.
“You really need to understand multiples in the market both publicly and what private comps trade at to really ensure that your entry point in many of these companies is right-sized,” Greenbaum said. “I think the market has brought that into focus for every venture fund.”
The firm, founded in 2015 by Facebook co-founder Eduardo Saverin and Bain Capital alum Raj Ganguly, is unique in its partnership with the Boston Consulting Group, which serves as a corporate merger and acquisition advisor able to support companies in their operations as well as go-to-market partnerships.
One such company was Gameplanner.AI, which last November became Airbnb’s first acquisition since the vacation rental company went public in a deal CNBC reported was worth around $200 million. According to Greenbaum, B Capital was the only institutional investor in GamePlanner, which is set to develop additional AI tools for Airbnb.
According to its portfolio page, B Capital currently has a stake in 122 companies, and Greenbaum says the firm is deploying additional capital.
For long, Buy Now Pay Later or BNPL has been a popular model for making purchases with consumers using the easily available option to buy stuff ranging from appliances to gadgets to practically everything.
But now a disruption seems to be happening in the segment and a bunch of start-ups – the most common category of disruptors – are taking the BNPL model head-on by offering a Save Now Buy Later (SNBL) option.
SNBL, as the name suggests, is a combination of saving for a future purchase. The added benefit – and a very important one – is that one gets discounts – ranging from 10 per cent to as much as 20 per cent at times – on the purchase price.
SNBL is a mechanism that has brought saving and spending on the same platform and while historically there have been such schemes available in India for decades, a clutch of start-ups is now using the power of technology and data to make it available to the masses.
Start-ups like Tortoise, Hubble, and Multipl to name a few operate in the SNBL space in India and have been seeing strong traction in terms of the number of users though the overall segment is still in its infancy.
Gurgaon-based Hubble, which was launched in April 2022, currently has tie-ups with merchants like Nykaa, Myntra, Croma and Bluestone and is in the process of collaborating with 20 more brands.
Delhi-based Tortoise is another well-known start-up in the SNBL space and offers a minimum 10 per cent incentive to every user who saves to buy on the platform.
Then, there is Bengaluru-based Multipl, which also operates in the SNBL segment, but has a slightly different business model as it also allows users to invest in curated mutual fund schemes that can generate returns and lower the overall cost of the goal.
Currently, most of the merchant tie-ups are in the categories of travel, gadgets, and appliances though these start-ups in the SNBL space are actively working towards enhancing the bouquet of categories or goals – weddings as a goal has also been gaining prominence.
There is a simple registration process post which the user can choose a merchant (for instance, Apple, MakeMyTrip, Croma, Myntra, Nykaa, etc) through which he or she intends to make the purchase.
Thereafter, the goal amount and duration of deposits have to be selected and one can start from as low as ₹500 as monthly deposits. Say, for instance, one can set aside ₹5,000 every month for 10 months while targeting a purchase of ₹50,000.
Meanwhile, how the incentives are given out can differ from one platform to another. Hubble, for instance, gives a gift card for the cumulative amount – money deposited plus the incentive value – while Tortoise credits the money back to the user’s account and gives a 10 per cent cashback when the invoice is submitted.
Interestingly, if the growth numbers are anything to go by, then the SNBL platforms are indeed creating an impact.
Tortoise has signed up over 1.5 lakh customers on its app since it launched in April 2022 and aims for a gross merchandise value or GMV of $5 billion over the next four years across 4-5 verticals covering travel, electronics, and appliances, home & auto, personal care and luxury.
Hubble, on the other hand, has registered more than 4 lakh app downloads and has been witnessing its revenues jump 50 per cent on a monthly basis.
These start-ups have also seen investments from marquee names from the investing community – Sequoia Capital, Blume Ventures, IIFL Finance, Kunal Shah of Cred, and Sriharsha Majety of Swiggy among others –enter the ring.
Data from Tracxn shows that while Hubble is backed by Sequoia and Snapdeal co-founder Kunal Bahl among others, Bengaluru-based Tortoise has the backing of Vertex Ventures and Better Capital along with Cred’s Kunal Shah. Meanwhile, Multiple has been funded by names like Blume Ventures, IIFL Finance, GrowX Venture Management, and Kotak Securities among others.
Meanwhile, BNPL is inflexible in terms of the repayment schedule and components like interest cost and processing fee make it an expensive approach at times. At times, the interest cost could be as high as 15-20 per cent if the repayment schedule is disturbed.
Not to forget, that there are no real incentives in the form of cashback or savings, and in fact could lead to overspending as well since lenders are more than happy to dole out loans for discretionary spending by consumers.
But, BNPL has its share of advantages as well, especially for those who need to make a purchase instantly but are running low on cash.
Under BNPL, the borrower gets the option of an instant, short-term loan with a deferred repayment tenure, including the option for equated monthly instalments (EMIs) after the end of an interest-free period.
The extraordinary exuberance of valuations, deal velocity and the pace of transactions of 2021 will not come back for a long time, Rajan Anandan, Managing Director at Sequoia Capital, said.
Speaking at NASSCOM Product Conclave 2022, Anandan said the funding environment has gone back to the 2018-19 levels with venture capital focus shifting back to quality of start-ups, which is a healthy dynamic for the ecosystem.
“There are still founders in the market who think 2021 will come back. The year 2021 isn’t coming back for a very long time. We are really back to 2018-19 type of funding environment. Right now, the pursuit of quality is high,” he said.
According to a report by Nasscom and Zinnov, start-up funding grew two-fold in 2021 to touch $24.1 billion. As per data from Tracxn, Indian start-ups raised $752 million in funding in the month of September 2022, down by 83 per cent as compared to the same period last year.
Anandan said valuations have corrected significantly at growth stages and are beginning to correct at seed stage.
“We’re really back to reality and what that means for start-ups is that we’re back to quality. You’ve to have a very high-quality business to raise funds. Last year, you could’ve raised Series A capital without product-market fit, this year you won’t be. Series B, C rounds wouldn’t be possible if you don’t have strong unit economics today whereas a lot of companies were raising rounds with broken unit economics last year,” he said.
He advised founders to accept a down round if their runway is limited while asking those with sufficient cash balance to leverage the market advantage to grow.
“If you’re running out of capital and you’ve less than 6-8 months of capital, you should take capital even if you’ve to do a down round, even if you don’t like the terms. If you’ve 18-24 months of runway and you’ve strong unit economics, you shouldn’t be raising (capital) now, you should be growing. It’s a great time to accelerate, because everybody else is on the defence, you go on the offense,” he added.
Anandan’s advice to start-ups to tide over the funding winter is to find great product-market fit and build strong unit economics. “If you are an early-stage company, focus on getting to unquestionable, extraordinary product market fit. If you don’t know what it means, please find a mentor who can help you determine that. Late-stage companies should make sure you build a very powerful economic engine,” he said.
