October 6, 2024: First Major AI IPO Coming?

Last week, Dow Jones rose 0.1% and hit a record close, S&P 500 rose 0.2%, and Nasdaq composite was up 0.1%. That said, 10-year Treasury yield spiked 23 basis points to 3.98%, for its biggest weekly gain in nearly a year, two-year yield, which is more closely tied to Fed policy, shot up the most in two years by 37 basis points, to 3.93%. U.S. startups raised US$37.5 billion in the three months ended in September, up 8% y/y. OpenAI completed a US$6.6 billion raise, that values the company at US$157 billion post-money. The company also secured a US$4 billion revolving credit line. OpenAI also told employees Wednesday it plans to allow them to sell some of their stock through a tender offer. Cerebras, which designs chips for training and running AImodels, disclosed in its IPO that it lost US$127 million last year on US$78 million in revenue. Shein is hosting informal roadshows in London and New York in preparation for the company’s IPO on the London Stock Exchange. Accenture will train 30,000 employees on Nvidia’s full stack of AI technologies and start a new business group dedicated to AI. Google is considering nuclear power to feed its energy-hungry AI data centers. Kalshi, a prediction market startup, went live with its betting market that allows U.S. users to bet on who will win the November presidential election. In Canada, Toronto-based, Koho Financial raised a $190 million round of debt and equity funding as it continues its efforts to secure a Schedule 1 banking licence. Sophic Client, upsized its bought deal to $45 million from $25 million, the stock is trading above deal price, which bodes well. Sophic Client, Clear Blue Technologies closed a Convertible Debenture financing, raising $2.2 million. Sophic Client, Plurilock signed a US$19.3 million contract with a S&P 500 semiconductor company, and also announced nearly US$2 million of Critical Services contracts. Sophic Client, American Aires expects to receive mass media exposure through upcoming appearance on Military Makeover with Montel.

Sophic Client Kraken Robotics (PNG-TSXV, KRKNF-OTC) announces upsize of previously announced bought deal public offering to $45 million.

Kraken Robotics amended its agreement with Cormark Securities Inc. to increase the size of its previously announced $25 million “bought deal” public offering to $45 million. Pursuant to the upsized deal terms, Cormark Securities Inc., as lead underwriter, together with a syndicate of investment dealers (the “Underwriters”) has agreed to purchase 28,125,000 common shares (the “Common Shares”) from the treasury of the Company, at a price of $1.60 per Common Share (the “Offering Price”) and offer them to the public by way of short form prospectus for total gross proceeds of $45 million (the “Offering”). https://tinyurl.com/46smhcth & https://tinyurl.com/3f9u8pfp

Sophic Client Clear Blue Technologies (CBLU-TSXV, CBUTF-OTC, 0YA-FRA) closes Convertible Debenture financing, raises $2.2 million.

Clear Blue Technologies successfully closed the second (and final) tranche of its private placement offering (the “Offering”) previously announced on August 6, 2024 and September 4, 2024, in the aggregate principal amount of up to $2,500,000 of unsecured convertible debentures (each, a “Debenture”) at a price of $1,000 per Debenture. The second tranche of the Offering consisted of gross subscriptions of $800,578 in principal debentures, and $2,206,990 collectively across both tranches of the Offering. The Debentures, issued in the second tranche carry the same terms as the first tranche. https://tinyurl.com/bdzafu27

Sophic Client Plurilock (PLUR-TSXV, PLCKF-OTCQB) signs US$19.3 million contract with S&P 500 semiconductor company.

The contract represents the largest single sale in Company history. Under the terms of the contract, Plurilock will modernize and re-platform the Customer’s security operations stack, leveraging the industry’s leading AI-native cybersecurity platform to replace an aging array of partially integrated, high-overhead security solutions. The Company will also provide two dedicated cybersecurity experts from the Security Operations (“SecOps”) practice of its Critical Services business unit for a 12-month period, to support the integration and smooth implementation of the new platform. https://tinyurl.com/bdu5kury

Sophic Client Plurilock (PLUR-TSXV, PLCKF-OTCQB) announces US$1.9 million in Critical Services Contracts with S&P 500 semiconductor company.

Under the four contracts, together valued at US$1.9 million, the Company will provide services to modernize several of the Customer’s foundational cybersecurity and information security platforms and resources, including its Identity and Access Management (IAM) stack, its Configuration Management Database (CMDB) infrastructure and integrations, its encryption infrastructure, its phishing training and reporting infrastructure, and its internal cybersecurity communications. https://tinyurl.com/abs2rcu2

Sophic Client Kraken Robotics (PNG-TSXV, KRKNF-OTC) announces that their Miniature Interferometric Synthetic Aperture Sonar (MINSAS) was evaluated by five NATO navies at the Portuguese Navy annual Robotic Experimentation and Prototyping with Maritime Unmanned Systems (REPMUS) exercise, which took place in Sesimbra and Troia, Portugal.

Five Kraken MINSAS modules were integrated onsite to American, Dutch, Swedish, Belgian, and Portuguese uncrewed underwater vehicles (UUVs). These systems combined were able to locate more than 50 mine-like targets over the course of the exercise (including redundant coverages). Kraken’s MINSAS was used for a wide range of tasks during the exercise including area search and reacquire/identify. Real-time beamforming and georeferencing facilitated the rapid recovery of acquired data from payloads, enabling immediate post-mission analysis of data when the UUVs returned to shore using SeeByte’s SeeTrack C2 System. https://tinyurl.com/4kfaarbk

Sophic Client American Aires (WIFI-CSE, AAIRF-OTCQB) expects to receive mass media exposure through upcoming appearance on Military Makeover with Montel.

American Aires, has been invited to appear on Military Makeover with Montel®, America’s leading branded reality TV show that offers hope and a helping hand on the home front to members of America’s military and their loved ones. The segment will include the Aires team incorporating Aires Tech electromagnetic field (EMF) radiation protection products into the home of the episode’s featured family. The Military Makeover episode featuring Aires is expected to have broad mass media reach, airing on Lifetime and American Forces Network, streaming on www.militarymakeover.tv, uploaded to the show’s YouTube channel and promoted on their Facebook, Twitter and Instagram channels, and available on the Military Makeover website on a dedicated landing page with the Aires video segment and links directly to the Aires website, all of which is expected to contribute to our ongoing efforts to establish Aires as a trusted and household brand name. https://tinyurl.com/3czuh655

Koho secures $190 million in equity and debt to bolster banking licence efforts.

Toronto-based Koho Financial has raised a $190 million round of debt and equity funding as it continues its efforts to secure a Schedule 1 banking licence. The $40 million equity financing was led by PROPELR Growth with participation from return investors Drive Capital, TTV Capital, and BDC Capital. New York-based Rockefeller Capital, founded by oil baron John D. Rockefeller, also participated in the round as a new investor. Koho also secured an additional $150 million in debt through a credit extension that was provided in partnership with new and existing partners, the company said in a statement. https://tinyurl.com/232bznfa

Startup funding rises 8% in third quarter.

U.S. startups raised US$37.5 billion in the three months ended in September, up 8% from the year-ago, driven by larger deals and investments in artificial intelligence, according to data from PitchBook and the National Venture Capital Association. That’s a slowdown from the 59% rise in the second quarter. Defense firm Anduril, AI research lab Safe Superintelligence and AI chip maker Groq were among the largest fundraising rounds for the period. The number of venture capital deals in the U.S. during the latest quarter fell 17% to 2,794, compared to the same quarter last year. PitchBook says it expects to add hundreds of more deals to its final deal count, which will lift the third quarter activity higher than the year ago period. The data do not include the VC-backed funding round that OpenAI closed on Wednesday, which will add US$6.6 billion to PitchBook’s fourth quarter deal numbers. https://tinyurl.com/ykxhbnux

Lightspeed Venture Partners is raising money for three new funds that could total around US$7 billion, according to a person who has discussed the fundraising with the firm’s partners.

It’s the latest firm seeking to raise billions after a period when institutional investors pulled back from venture capital. Close to 40% of the new money will go to an opportunity fund that will make follow-on investments in its portfolio companies and buy shares in late-stage startups such as Stripe and Rippling from existing investors. In some cases, Lightspeed will seek controlling stakes in aging enterprise software startups and try to prepare the companies for a sale or public listing. The rest of the new money will go to a fund that invests in growth-stage firms and one that focuses on seed and Series A companies. If Lightspeed hits its fundraising target, the new funds collectively would top the firm’s last group of three flagship funds, totaling US$6.7 billion, which closed in 2022. https://tinyurl.com/5a57976m

OpenAI raises US$6.6 billion at US$157 billion valuation.

OpenAI has completed a US$6.6 billion fundraise that values the ChatGPT developer at US$157 billion, including the investment, the company announced in a blog post on Wednesday. The announcement comes after several weeks of reports the company was in talks with investors including Thrive Capital, which led the round, SoftBank’s Vision Fund, Microsoft, Coatue Management and others. The completion of the massive funding round means OpenAI can now pursue a tender offer that will give employees the opportunity to sell shares, chief financial officer Sarah Friar wrote in a message to employees today. The company aims to generate more than US$11 billion next year, or triple the amount it may generate this year, and more than US$25 billion in 2026. https://tinyurl.com/arrx82ap

OpenAI takes out US$4 billion revolving credit line.

OpenAI has secured a US$4 billion revolving credit line with JPMorgan Chase, Citi, Goldman Sachs, Morgan Stanley, Santander, Wells Fargo, SMBC, UBS and HSBC, the company said in a blog post on Thursday. The credit line, which can be tapped over the next three years, can also be increased by US$2 billion and currently has an about 6% annual interest rate, CNBC reported. The bank loan gives it access to more short-term cash and follows the close of its US$6.6 billion fundraising round from investors including Thrive Capital, SoftBank and others, which valued it at US$157 billion including the investment. The new cash will help the company pay for the steep costs of computing, which have lifted losses to US$5 billion this year. It has projected its revenue will grow 200% next year, to US$11.6 billion, and US$25.6 billion in 2026. https://tinyurl.com/3hsur5yt

OpenAI aims to buy employees shares after for-profit conversion, CFO says.

OpenAI told employees Wednesday it plans to allow them to sell some of their stakes in the startup through a tender offer, following its US$6.6 billion fundraising haul and a planned conversion to a for-profit from its current nonprofit structure. The funding round “means that we have the ability to offer a tender event to give qualifying employees a liquidity option,” chief financial officer Sarah Friar wrote in a message to employees. Friar added that the company was still working through details but would share timing and specifics as soon as it could. Friar has told some shareholders that after the company’s for-profit conversion, the company itself—rather than outside investors—aimed to purchase the employee stakes. The size of the upcoming tender offer couldn’t be learned, but employees and ex-employees have already sold more than US$1.2 billion worth of shares, known profit units, in the past few years. OpenAI allowed some current and former employees to cash out in a tender offer valuing the company at US$86 billion earlier this year, based on a deal it struck with investors in late 2023. The most recent round nearly doubled that valuation to US$157 billion, Friar said. https://tinyurl.com/msjjbyvh

OpenAI offers one investor a sweetener that no others are getting.

Thrive Capital is investing more than US$1 billion of OpenAI’s current US$6.5 billion fundraising round, and it has a sweetener no other investors are getting: the potential to invest another US$1 billion next year at the same valuation if the AI firm hits a revenue goal, people familiar with the matter said on Friday. OpenAI is predicting its revenue will skyrocket to US$11.6 billion next year from an estimated US$3.7 billion in 2024, the sources said, speaking on condition of anonymity. Losses are expected to be as much as US$5 billion this year, depending largely on their spending for computing power that could change, one of the sources added. The current funding round, which comes in the form of convertible debt, is expected to close by the end of next week and could value OpenAI at US$150 billion, cementing its status as one of the most valuable private companies in the world. https://tinyurl.com/2s3hyu72

Cerebras IPO filing shows losses, customer concentration.

Sunnyvale-based Cerebras, which designs chips for training and running artificial intelligence models, disclosed in a prospectus for an initial public offering that it lost US$127 million last year on US$78 million in revenue. Still, the startup’s revenue rose sharply in the first six months of 2024, when it generated US$136 million compared to US$8.6 million during the same period last year. The company narrowed its losses as its revenue grew. In the first six months of the year, Cerebras lost US$66 million, down 14% from the year before. Despite the revenue growth Cerebreas has only made significant inroads with one customer. Cerebras disclosed that nearly 90% of its revenue comes from G42, an Abu Dhabi-based conglomerate, which is also one of its investors. G42 agreed earlier this year to spend around US$1.4 billion in products and services from Cerebras before March 2025, according to the filing. The company’s largest outside shareholder is Foundation Capital, and other investors include Benchmark, Eclipse Ventures and Coatue. But G42 is set to become the largest shareholder by far, thanks to a May agreement to purchase a large chunk of shares in the future. The share purchase is subject to regulatory approval, Cerebras said. https://tinyurl.com/2yds5mtr

Shein hosts informal investor roadshows in London, New York.

China-founded Shein is hosting informal roadshows in London and New York this and next week in preparation for the company’s initial public offering on the London Stock Exchange, according to a person familiar with the company. Shein’s elusive CEO Sky Xu and CFO Leigh Gui have been meeting with institutional investors including sovereign wealth, long-only and hedge funds this week, educating them on the company’s business model as what it calls an “on-demand fashion retailer,” and painting its future growth trajectory in becoming a one-stop online apparel shopping site, the person added. Reuters first reported the roadshows. The company has received positive feedback from investors so far, as investor sentiment on China has been buoyed in recent weeks following Beijing’s release of economic and fiscal stimulus plans. Shein’s listing, which rerouted from New York to London earlier this year in the midst of U.S.-China geopolitical tensions, is still subject to approval by both British and Chinese regulators.https://tinyurl.com/ystysmwy

Toyota pours another US$500 million into electric air taxi startup Joby Aviation.

Toyota is doubling down on Joby Aviation with a US$500 million investment into the California-based company that’s developing electric air taxis. Toyota’s total investment in Joby, which includes a US$394 million capital injection back in 2020, is now US$894 million. The funds will be used to help Joby complete the lengthy Type 2 certification process with the Federal Aviation Administration and support commercial production of its electric vertical takeoff and landing aircraft. Joby is in the fourth of five stages of the type certification and aims to launch a commercial air taxi business in 2025. The company also recently rolled its third aircraft off its pilot production line in Marina, California, and broke ground on an expanded facility in California that will more than double its manufacturing footprint. https://tinyurl.com/4bvk3mu2

Google searches for its footing in smart glasses as Meta gains ground.

Earlier this year, Google staffers began pitching their counterparts at Samsung—a longtime Google hardware partner—on an idea for a new collaboration between the companies: high-tech glasses. At the time, another big tech company, Meta Platforms, was starting to see success from its own Ray-Ban smart glasses, which allowed people to record video and listen to music. The artificial intelligence boom had sparked even more excitement about the category, with Meta and others seeing smart glasses as a natural fit for the technology. Google wanted in. https://tinyurl.com/42sbkxvt

Meta unveils ai video and audio generation tools.

Meta Platforms on Friday unveiled a series of artificial intelligence-powered tools for generating videos, editing videos and creating audio. The tools, called Movie Gen, are not yet publicly available, but the company plans to integrate them in its social media apps next year. A Meta spokesperson said the company is working with filmmakers and creators to understand how the tools could be most useful. As examples, the company said the tools could be used to animate birthday greetings sent via WhatsApp and to edit videos for Meta’s short-form video product Reels. Meta has previously showcased image, video and audio generation models. It demonstrated a group of models called Make-A-Scene in 2022 and a group called Emu last year. Videos made by Movie Gen can be up to 16 seconds long, longer than those by Meta’s previous models. https://tinyurl.com/mrra5unk

Accenture to train 30,000 staff on Nvidia AI tech in blockbuster deal.

Global services powerhouse Accenture said it will train 30,000 employees on Nvidia’s full stack of AI technologies and start a new business group dedicated to the AI computing giant as part of a blockbuster deal between the two behemoths. Accenture, No. 1 on CRN’s 2024 Solution Provider 500 list, announced the expanded partnership on Wednesday and said its newly formed Nvidia Business Group will focus on driving enterprise adoption of what it called “agentic AI systems” by taking advantage of key Nvidia software platforms that fuel consumption of GPU-accelerated data centers. https://tinyurl.com/38evy7yn

Google is considering nuclear power to feed its energy-hungry AI data centers.

If Google CEO Sundar Pichai’s hints on Thursday are any indicator, nuclear energy may one day power some of Google’s energy-hungry AI data centers. Google, Pichai said, is looking for energy sources that not only meet its high energy needs but will also fulfill its goal of generating net-zero emissions. The search giant aims to achieve net-zero emissions across all of its operations by 2030. “It was a very ambitious target and we are still going to be working very ambitiously towards it. Obviously, the trajectory of AI investments has added to the scale of the task needed,” Pichai said in an interview with Nikkei Asia published Thursday. “We are now looking at additional investments, be it solar, and evaluating technologies like small modular nuclear reactors, etc.,” Pichai added, though he didn’t specify when and where Google would start sourcing electricity from nuclear power plants. To be sure, this isn’t the first time Google has expressed interest in clean energy alternatives like nuclear energy. In September 2023, Google published a blog post and white paper saying that it would “continue to invest significantly” in clean energy technologies like geothermal power and hydrogen. https://tinyurl.com/2rvf3y5y

Amazon to increase the number of ads in Prime Video.

Amazon plans to increase the number of ads it shows to viewers on Prime Video next year, according to the Financial Times. In an interview with the outlet, Kelly Day, vice president of Prime Video International, said the number of ads on Prime Video will “ramp up a little bit more” next year. Amazon initially introduced ads across Prime Video programming, including movies and TV shows, in January. Viewers who still want an ad-free viewing experience (excluding live sports such as the NFL’s “Thursday Night Football,” which still carry commercial breaks for all Prime Video viewers) had to pay an additional US$3 per month in the U.S. The strategy seems to have worked. In the U.S., Amazon exceeded its goal of US$1.8 billion in upcoming ad-spending commitments during the TV upfronts, as The Information has previously reported. And in her comments to the FT, Kelly Day, the Amazon executive, suggested that less than 20% of Prime Video customers are paying up for an ad-free experience. https://tinyurl.com/ms9nzex4

Prediction market Kalshi goes live with U.S. election bets.

Kalshi, a prediction market startup, went live with its betting market that allows U.S. users to bet on who will win the November presidential election on Friday after a favorable court decision. A federal appeals court on Wednesday rejected the Commodity Futures Trading Commission’s emergency request to freeze the launch of such contracts, saying the agency hasn’t demonstrated irreparable harm by the launch. The CFTC is still appealing a lower court’s decision in September that allows Kalshi to list election contracts, and that decision will take months to arrive. Prediction markets become popular this year ahead of the election. Polymarket, the biggest crypto-based prediction platform, already offers betting on the U.S. election, but it’s not open to U.S. users. https://tinyurl.com/247xttcw

Google Starts selling ads in AI powered search results.

Google on Thursday launched advertisements next to new conversational answers that appear in its search engine, a long-awaited move as it changes the look of its biggest moneymaker in response to rising search competition from OpenAI’s ChatGPT. For now, Google is selling the ad space within the AI answers, known as AI Overviews, in the U.S. and only for mobile device users. For example, if someone searches for how to remove a grass stain from jeans, Google would respond with a summary of various options alongside shopping ads for stain removers, according to a blog post from Shashi Thakur, a Google ads vice president. The new advertising format, which Google previewed this spring at its I/O conference for app developers, illustrates the tightrope the company must walk as it attempts to incorporate generative AI responses into search without cannibalizing its search ads business, which accounts for more than half of its revenue. Perplexity, an AI search engine startup aiming to eat into Google’s search monopoly, is also planning to launch advertising. And OpenAI has launched SearchGPT, which includes visual search results similar to Google’s, though the service is limited to a small number of people. https://tinyurl.com/4mdk9sdr

Epic games sues Google, Samsung for allegedly blocking app store competition.

Epic Games on Monday sued Google and Samsung over claims that a new Samsung phone setting blocks app stores that compete with the Google Play app store, which is preloaded on devices powered by Google’s Android software, including Samsung’s. Epic last year won an antitrust suit accusing Google of abusing its market dominance with Google Play to prevent competition in the way apps are distributed on Android devices. U.S. District Judge James Donato has yet to determine what remedies Google will face in the suit, but Donato could order Google to make changes that would give non-Google app stores a chance to gain against Google Play. The new suit, filed in federal court in San Francisco, centers on an “Auto Blocker” feature that Samsung turned on by default on its phones in July. Samsung has said the feature is intended to block malicious software. According to the complaint, it also blocks Android app downloads from app stores that Google doesn’t own, including Epic’s. The complaint alleges that Google and Samsung colluded to launch the feature as a way to lessen the blow of Google’s loss in the earlier Epic Games antitrust case, although it provided only circumstantial evidence—like timing of the change and previous Google and Samsung collaboration—for that claim. A Google spokesperson called it a “meritless lawsuit and added that “Android device makers are free to take their own steps to keep their users safe and secure.” The suit adds to the cascade of antitrust cases that Google is currently facing. Google wrapped up its arguments in a case alleging it has an illegal monopoly in advertising technology last week; closing arguments in that case are expected to happen in November. Last month, a judge ruled that Google has an illegal monopoly in search. The judge is expected to decide punishments by August next year. https://tinyurl.com/3p48axvk

Amazon to hire 250,000 workers for holiday season, same as 2023.

Amazon plans to hire 250,000 workers for its U.S. fulfillment and transportation operations this holiday season, the company said Thursday. That’s the same hiring figure Amazon announced for last year’s holiday season. Amazon’s e-commerce business has been growing more slowly than during the pandemic. North America revenue was up 11% during the first six months of 2024, a figure that includes e-commerce and several other Amazon businesses but excludes cloud computing. The unchanged hiring figure for 2024 indicates Amazon expects moderately higher sales compared to last year. The 250,000 hires include full-time, part-time and seasonal jobs but exclude drivers who work for subcontractors that deliver Amazon packages. https://tinyurl.com/bde4vrbe

Amazon closes more of its cashierless convenience stores.

Amazon continues to scale back efforts around its cashierless checkout technology, Just Walk Out. The e-commerce giant closed three of its Go convenience stores in New York last week, leaving just 17 across the nation. (Amazon notes it recently opened one in Washington.) These convenience stores use AI systems to track what customers pick up, allowing them to buy items without ever having to formally check out with a cashier. Since 2023, Amazon has cut the number of Go storefronts it operates nearly in half. Amazon pulled Just Walk Out technology from its grocery stores earlier this year, saying at the time it would focus more on smaller grab-and-go shops – but maybe not its own. Amazon licenses Just Walk Out technology to lots of third party convenience stores, and Amazon says it’s still committed to the Go format and technology as a whole. https://shorturl.at/BFGyj

PayPal completes its first business transaction using stablecoin.

PayPal Holdings Inc. completed its first business payment using its proprietary stablecoin as a way to demonstrate how digital currencies can be used to improve often-clunky commercial transactions. PayPal paid an invoice to Ernst & Young LLP on Sept. 23 using PYUSD, the stablecoin the firm launched last year, relying on an SAP SE platform to complete the transaction. SAP’s platform, known as the digital currency hub, allows enterprises to send and receive digital payments instantly, around the clock. The invoice amount wasn’t disclosed. Stablecoins are cryptocurrencies usually designed to track traditional currencies one-to-one. PYUSD, which has a current market capitalization of almost US$700 million, tracks the US dollar. While the consumer-facing benefits of stablecoins often dominate conversations, this payment demonstrates other use cases for the digital currency, according to Jose Fernandez da Ponte, PayPal’s senior vice president of its blockchain, cryptocurrency and digital currency group. Business-to-business transactions – especially those that cross borders – can be drawn out, expensive and, in some cases, risky, given the requisite reliance on third parties. The speed and availability of settlement with this use case is far more attractive, Fernandez da Ponte said. https://archive.ph/LuVIA