Last week, Dow Jones fell 0.9%, S&P 500 lost 0.3% and Nasdaq Composite was down 1.2%, after reversing from record highs on Friday. Astera Labs said it plans to raise up to US$534 million from its IPO as the eight-year-old server component startup looks to benefit from investor interest in artificial intelligence companies. Reddit is planning to start trading on the NYSE on March 21, following a road show next week. The company is initially seeking a valuation between US$5.5 billion and US$6.5 billion, down from the US$10 billion at which it raised money in 2021. Andreessen Horowitz is close to raising US$6.9 billion in new funds, including a growth fund that comprises about half the total and two AI focused funds. Super Micro Computer is joining the S&P 500 following a historic rally in the stock that has pushed the company’s market cap past US$50 billion. Two Nvidia Corp. directors sold about US$180 million in shares of the chipmaker in recent days, becoming the latest insiders to cash in as the stock continues to push deeper into record territory. MicroStrategy slipped from 24-year high on a convertible note offering to buy more bitcoins. The European Commission fined Apple 1.8 billion euros, or US$1.95 billion, for alleged “abusive App store rules” affecting rival music streaming services. President Joe Biden told reporters on Friday that he would sign a bill that would force ByteDance to divest TikTok or ban the app in the United States if it passed Congress. Temu spent US$2 billion on Meta ads in 2023. Amazon Web Services is paying up to $650 million for a Pennsylvania data center campus next to a nuclear power plant, according to the seller, Talen Energy. In Canada, Sophic Client, Kraken signed a Cooperative Research & Development Agreement with the US Navy for next Generation Synthetic Aperture Sonar (SAS) Beamforming. Toronto-based AI chip startup Taalas has launched out of stealth with $50 million in funding.

Canadian Technology Capital Markets & Company News

Sophic Client Kraken Robotics (PNG-TSXV, KRKNF-OTC) signs Cooperative Research & Development Agreement with US Navy for next Generation Synthetic Aperture Sonar (SAS) Beamforming.

Kraken Robotics announces that its wholly owned subsidiary, Kraken Robotic Systems Inc., has signed a Cooperative Research and Development Agreement (CRADA) with Naval Undersea Warfare Center Division, Newport (NUWCDIVNPT). The objective of this CRADA is to conduct joint research into advanced signal processing techniques for the current and future generation of Synthetic Aperture Sonar (SAS) sensor technologies. This also includes exploration into enhanced image processing techniques such as data fusion, image registration, multi-spectral image enhancement and automated target recognition. Kraken Robotics has engaged in several CRADA’s with US government agencies since 2012, including NUWC Division Newport, NOAA’s Office of Ocean Exploration and Research (OER) as well as the Battery Certification and Integration Branch, Code 636 of NSWC Carderock. These CRADA’s have provided invaluable testing and evaluation for Kraken’s portfolio of underwater technology solutions, including Kraken’s Synthetic Aperture sonar, KATFISH Actively Controlled Towed sonar, and Pressure Tolerant Subsea Batteries. These CRADAs have showcased a strong track record of proven technology solutions and collaboration between Kraken’s world-leading technical team and the US Navy’s Centers of Excellence. They have allowed Kraken to test technology solutions with subject matter experts from the US Navy, providing invaluable feedback on performance and capabilities. Kraken can then point to the publicly-releasable results of our collaborative testing under the CRADA as objective evidence when bidding on opportunities domestically or internationally with other Five Eyes or NATO countries. https://bit.ly/4bZJVDx

Tenstorrent founder reveals new AI chip startup Taalas with $50 million in funding.

Toronto-based artificial intelligence (AI) chip development startup Taalas has launched out of stealth with $50 million in funding. The startup said the $50 million was raised across two rounds led by Quiet Capital and Pierre Lamond, who is an advisor at Eclipse Ventures. According to a report from The Information, the funding comprises a $12 million fundraise closed in September 2023, and a recent $38 million fundraise last month. Founded in 2023, Taalas is developing what it calls an automated flow for quickly implementing specialized chips that can each run different AI models. The startup claims one of its chips is capable of holding an entire large AI model without requiring external memory, adding that by using hard-wired computation, it can allow a single chip to outperform a small GPU data centre, which could dramatically decrease the cost of AI hardware development. https://tinyurl.com/22k74rtw

Contractor management platform PayShepherd closes $7 million as product, market expansion continues.

Calgary-based billing software startup PayShepherd has secured $7 million in its second seed financing aimed at expanding the company’s presence in its target markets across North America, namely in the forestry, mining, manufacturing, and energy sectors. The startup also looks to bolster its platform with artificial intelligence this year, which will allow some clients to automate components of their administrative processes. The all-equity funding round, which closed in early February, was led by Inovia Capital and saw participation from existing investors Nashville Capital Network, Thin Air Labs, Accelerate Fund III (which is managed by Yaletown Partners with support from A100), as well as undisclosed strategic angel investors. https://tinyurl.com/4s9dj47u

Global Markets: IPOs, Venture Capital, M&A

Astera Labs plans US$534 million IPO at US$4.5 billion valuation.

Astera Labs said it plans to raise up to US$534 million from its initial public offering as the eight-year-old server component startup looks to benefit from investor interest in artificial intelligence companies. The Santa Clara, Calif.-based company is selling 17.8 million shares, including 3 million shares offered by existing stockholders, priced between US$27 and US$30 each, according to a securities filing Friday. At the higher end of that range, the startup would be valued at US$4.51 billion, 43% higher than the US$3.15 billion valuation it fetched during its last funding round in 2022. In addition, the underwriters could purchase 2.6 million shares, which would give it a valuation of US$4.6 billion. With its IPO, Astera is hoping to cash in on demand for developing next-generation chipsets to power AI software. The company sells products that help enterprise businesses deploy and manage AI technical infrastructure including data centers. Sutter Hill Ventures, one of Silicon Valley’s oldest venture firms, and Fidelity Management have 13.7% and 7% stakes in the company’s outstanding shares. Last year, Astera’s revenue rose 45% to US$115.8 million, while its losses have narrowed to US$26.3 million from US$58.4 million in 2022. The Astera counts Microsoft and Amazon Web Services among its customers. The Amazon cloud unit has already agreed to buy warrants in the startup at US$20.34 per share, significantly lower than the IPO price. In return, Amazon will complete up to US$650 million in business transactions with Astera over a seven-year exercise period that started in 2022. https://tinyurl.com/3hjhy76y

Reddit plans IPO for March 21.

Reddit is planning to start trading on the New York Stock Exchange on March 21, following a road show to woo investors next week, people close to the deal said. The company is initially seeking a valuation between US$5.5 billion and US$6.5 billion, or between US$31 and US$34 a share, the people said. That would be down from the US$10 billion at which it raised money in 2021. Reddit board of directors previously approved a stock plan for CEO Steve Huffman that kicks in should the company trade list publicly above US$5 billion. The company’s listing is the first major test for the stagnant IPO market in 2024, following mixed results for venture-backed tech firms such as Instacart and Klaviyo in 2023. Investors will have to gauge whether Reddit will be able to accelerate ad revenue growth and reach profitability. Reddit plans to sell at least US$650 million worth of shares in the deal, including secondary sales from existing shareholders, one of the people said. Morgan Stanley is leading the deal. https://tinyurl.com/6eu3jknn

Andreessen Horowitz to raise nearly US$7 billion in new funds.

Andreessen Horowitz is close to raising US$6.9 billion in new funds, including a growth fund that comprises about half the total and two AI focused funds, according to Axios. It also plans another gaming fund and one focused on “American Dynamism,” or companies in defense and other industries that support U.S. national interests. The Information previously reported the firm was planning at least three additional sector-specific funds, widening the number of its sector-specific funds beyond crypto, biotech and gaming to AI and defense, as part of plans to raise US$3 billion for early-stage deals. The new funds would include an AI fund focused on enterprise software and one focused on consumer AI apps. The structure will also include a master fund that would allocate investments across the funds. The growth fund target is less than the US$5 billion growth fund it raised in early 2022. The high total fundraising target establishes Andreessen Horowitz as one the firms that’s continued to raise large amounts of capital even as many firms struggle to hit their targets. It also gives more autonomy to individual partners.  Last year the firm combined its finance and consumer investment staff to create a team led by general partner Alex Rampell called apps, focused on AI. https://tinyurl.com/ya86uxfd

Singapore’s Temasek in discussions to invest in OpenAI.

Singapore’s Temasek Holdings is holding talks about investing in OpenAI, a deal that would mark the first time a state-backed group has funded the ChatGPT maker. Senior executives at Temasek, one of the world’s biggest and most active investors, have met OpenAI’s chief executive Sam Altman multiple times over recent months, according to two people with knowledge of the talks. Another person familiar with the discussions said the Singaporean group had initially been interested in investing in Altman’s venture capital fund Hydrazine Capital, but more recent talks had included OpenAI itself. Despite huge revenue growth since the launch of ChatGPT in November 2022, Altman has said OpenAI remains lossmaking because of the vast costs of building and training its models. Estimates from Altman and others of the cost of building out artificial intelligence infrastructure have varied from hundreds of billions of dollars to as high as US$7 trillion over the coming years — figures that price out traditional tech venture capitalists. Temasek’s US$287 billion portfolio includes some of the world’s top tech start-ups including payments group Stripe. AI is a key focus for investment, according to the fund’s management. Among its existing investments in the space are UK legal technology company Robin AI, South Korean fabless AI chip start-up Rebellions and Silicon Valley-based generative AI chip designer d-Matrix. https://archive.is/H2fk9

Super Micro to join S&P 500 after stock price soars more than twentyfold in two years.

Super Micro Computer is joining the S&P 500 following a historic rally in the stock that has pushed the company’s market cap past US$50 billion. The shares, up more than twentyfold in the past two years and over 200% just since the start of 2024, climbed another 8% in extended trading on Friday. Super Micro is replacing Whirlpool, according to a press release. Deckers Outdoor is also joining the S&P 500, replacing Zions Bancorporation. Stocks added to the benchmark index often rise in value because funds that track the S&P 500 will add it to their portfolios. The median market cap for companies in the S&P 500 is US$33.7 billion. Super Micro has been one of the main beneficiaries of the artificial intelligence boom sweeping the technology industry. The company makes servers and other computer infrastructure, and it’s one of the primary vendors for building out Nvidia -based “clusters” of servers for training and deploying AI models. In the quarter that ended December, Super Micro’s revenue more than doubled to US$3.66 billion. Analysts expect sales in the current quarter to more than triple. https://tinyurl.com/3y8jsx43

Nvidia directors reap windfall with US$180 million share sale.

Two Nvidia Corp. directors sold about US$180 million in shares of the chipmaker in recent days, becoming the latest insiders to cash in as the stock continues to push deeper into record territory. Tench Coxe, a former managing director at venture capital firm Sutter Hill Ventures who has been on Nvidia’s board since 1993, sold 200,000 shares on March 5 at US$850.03 to US$852.50, according to a filing. Coxe still holds more than 3.7 million shares. Mark Stevens, a director since 2008, sold 12,000 shares on March 4 at US$852.06 to US$855.02. The sales come amid a blistering rally for Nvidia that’s seen the stock soar 79% this year on optimism that brisk sales of its chips used for artificial intelligence computing will continue unabated. Nvidia closed at another record on Wednesday as it extended its win streak to a fifth day, and now boasts a market value of US$2.2 trillion, trailing only Microsoft Corp. and Apple Inc. in the S&P 500 Index. Last month, other directors unloaded 99,000 shares after Nvidia’s blowout earnings report. The shares sold were worth about $80 million at the time. https://archive.is/soE2C

CrowdStrike shares surge on earnings beat, strong full-year guidance.

CrowdStrike shares surged as much as 21% in after-hours trading Tuesday after the cybersecurity company reported a beat on the top and bottom lines, plus issued stronger-than-expected guidance for the upcoming quarter and full year. The company also announced it would acquire Flow Security for an undisclosed price in a cash-and-stock deal, slated to close in the company’s fiscal first quarter. The company has been stepping up its merger and acquisition activity in recent months. https://tinyurl.com/4c9reah9

Stitch Fix forecasts revenue drop, shares tumble 16%.

Stitch Fix shares fell more than 16% in morning trading Tuesday after the company said late Monday it expected revenue to slump as much as 22% in the current quarter from the same period a year earlier. CEO Matt Baer, who joined the company in July 2023, has taken some steps to try to cut costs and restart growth with Stitch Fix’s core customers, including by exiting the U.K. market and bringing on Amazon Fashion alum Tony Bacos as the company’s chief product and technology officer late last year. But sales are still declining and the company isn’t profitable, mainly because the company is losing active customers and shoppers are spending less on its site. Stitch Fix said Monday that it estimated that sales would decline as much as 20% for the full fiscal year, which ends in July. It burned through more than US$26 million of cash in the most recent quarter, mainly due to payments for inventory purchases from the previous quarter. https://tinyurl.com/yn7xdvme

Zillow Drops as short seller highlights industry legal pressure.

Zillow Group Inc. shares fell after short seller Spruce Point Capital Management said it was betting against the stock and highlighted challenges facing the company, including antitrust litigation targeting broker commissions in the US housing industry. Spruce Point, founded by Ben Axler, said that shares could fall by 40% to 60% over the long term, arguing that the company’s core business model of selling marketing services to real estate agents is under pressure from multiple directions, according to a report released Tuesday. Lawsuits targeting how agents are compensated threatens to “dramatically” impact Zillow’s customer base, the report said. Shares fell 2.5% to US$53.98 at 10:37 a.m. New York time. The stock is up by 30% over the last 12 months as Zillow sales outperformed the US housing market, which saw fewer transactions last year after a surge in interest rates pressured buyers. Zillow isn’t the only housing company exposed to antitrust lawsuits, which have targeted residential brokerages and the National Association of Realtors. Warren Buffett’s energy business was added as a defendant to a class-action lawsuit targeting the typical structure for setting agent commissions. The lawsuits threaten to upend a decades-old system for compensating agents. But any shift is likely to play out over many years, Zillow Chief Executive Officer Rich Barton has said in past earnings conference calls. He said the company’s large consumer audience positions it to thrive even if commission rules change. In addition to antitrust issues, Spruce Point noted that Zillow is facing new competition from CoStar Group Inc.’s Homes.com, which has been spending heavily to attract prospective buyers to its website. Zillow has been working on a “super app” for housing to broaden its revenue base, but those efforts are merely designed to stoke investor optimism, Spruce Point said. https://archive.is/icQIk

MicroStrategy slips from 24-year high on convertible offering to buy more bitcoins.

Shares of MicroStrategy, dropped about 8.5% on Tuesday after the software firm announced plans to raise funds through a US$600 million private offering of convertible notes to buy more bitcoins. The listed company with the biggest bitcoin holding hit a 24-year peak on Monday, as the cryptocurrency surged in recent weeks. Bitcoin surpassed its 2021 record high on Tuesday, hitting US$69,202 for the first time. U.S. companies have raised nearly US$7 billion in the last two weeks through convertible bonds at lower coupon rates in a high interest rate environment. MicroStrategy, which began buying bitcoins in 2020 and hoarding, will buy more with the funds, as revenue from its software business has been declining. Last month, MicroStrategy bought about 3,000 bitcoins, taking its total holdings to 193,000 bitcoins — bought at an average price of $31,544 apiece as of Feb. 25. https://tinyurl.com/mv4wbk3t

Cadence to buy BETA CAE Systems for US$1.24 billion.

Cadence Design Systems, opens new tab will buy BETA CAE Systems International AG, which makes software for analyzing car and jet engine designs, for US$1.24 billion in cash and stock, Cadence said on Tuesday. California-based Cadence, whose shares fell more than 3%, will pay about US$744 million in cash and the rest in stock. The company said it will take on debt to pay for the deal but will pay that down with cash generated from operations. https://tinyurl.com/792eabea

European Commission fines Apple 1.8 billion Euros.

The European Commission fined Apple 1.8 billion euros, or US$1.95 billion, for alleged “abusive App store rules” affecting rival music streaming services, particularly related to Apple’s rules blocking streaming services from using their apps to steer consumers to lower cost ways of subscribing. Apple responded in a statement, claiming that the commission had failed to “uncover any credible evidence of co nsumer harm,” noting that Spotify was both the “primary advocate” and “biggest beneficiary” of the decision. Spotify has 56% of the European music streaming market, it added. In a statement, commission executive vice president Margrethe Vestager said “Apple’s rules ended up in harming consumers,” as some consumers may have paid more for subscriptions because they weren’t aware of lower-cost options. The fine comes as Europe’s new Digital Markets Act is coming into effect, forcing Apple to overhaul its App Store rules. Vestager said the commission would examine how Apple has changed its store rule to ensure it was compliant with the new law. https://tinyurl.com/2a3bjzn3

Analyst: Apple’s China iPhone sales fell 24% ahead of lunar new year.

Apple’s iPhone sales fell 24% in China in the first six weeks of 2024 when compared with the same period a year earlier, according to analyst firm Counterpoint Research. The data spanning that period – which covers one of the busiest shopping seasons in China ahead of the Lunar New Year holiday – suggest Apple will face a slowdown in China sales for the remainder of this year due to stiff competition from Chinese brands. Counterpoint said iPhone sales fell in China due to intense competition from brands such as Oppo, Vivo, Xiaomi and Huawei, which are squeezing Apple on both sides with low- and high-end phones. It added that Apple’s iPhone sales in China during the first six weeks of 2023 were abnormally high, which also made a year-on-year comparison even more dramatic. That’s because iPhone manufacturing issues caused by an outbreak of Covid in China in late 2022 caused some sales in China to be deferred to the beginning of 2023. https://tinyurl.com/ycxh9eev

Coinbase shrugs off site crash as shares of the top U.S. crypto exchange surge.

Shares of Coinbase Global, the biggest U.S. cryptocurrency exchange, have nearly doubled over the last month—and were up some 265% over the last year—through trading on Monday, which saw the biggest single-day gain since January 2022. The stock closed at US$229.15 after reaching as high as US$236.46. Shares within the last year had fallen to as low as US$46.43. Investors are eyeing Coinbase thanks to the wider crypto rally, which has seen Bitcoin climb 54% this year to surpass US$67,000 on Monday, edging closer to its all-time high of US$68,991 in November 2021. The original cryptocurrency gained more than 7% on Monday and surpassed US$1.3 trillion in market cap for the second time in history. But for the second time in a week on Monday, many Coinbase users saw zero-dollar balances when logging into the platform. https://tinyurl.com/ydm3nmwk

A quarter of Robinhood’s trading volume often comes after hours.

Robinhood Markets Inc. is seeing as much as 25% of total trading volume coming outside of traditional market hours as investors take advantage of extended days on the retail-brokerage platform. Consumers have traded more than US$10 billion in volume overnight since Robinhood launched its 24-hour, five-day-a-week trading capabilities last May — data the firm hasn’t previously announced. Robinhood defines “overnight” as between 8 p.m. and 7 a.m. in New York from Sunday through Friday, and a fourth of trading now takes place outside standard market hours on the platform’s busiest days, the company said Robinhood said the most overnight volume came on the evening of March 3 into the morning of March 4 — an increase pegged to news that Super Micro Computer Inc. would join the S&P 500, Quirk said. On a typical day, around 15% to 20% of trading takes place outside standard market hours. Investors can trade 922 stocks overnight in the US, including Apple Inc., Amazon.com Inc. and Tesla Inc. https://tinyurl.com/yhazkezm

Emerging Technologies

AR/VR headset market experiences surge in Q4 2023.

The augmented and virtual reality (AR/VR) headset market experienced a resurgence during the holiday season of 2023, defying previous trends. According to the latest data from the International Data Corporation (IDC), Q4 2023 saw a 130.4% year-over-year growth, signaling a shift in consumer interest and technological advancements. This surge in the AR/VR market comes after a challenging year marked by macroeconomic uncertainties and a reliance on legacy products. The latter part of the year saw a shift in momentum, with new product launches and an easing of economic pressures contributing to the impressive Q4 performance. Meta regained its footing in the market after previously losing share to competitors Pico and Sony. Despite the Q4 rebound, the overall shipments of AR/VR headsets in 2023 experienced a 23.5% decline compared to 2022. The first half of the year was particularly challenging, with demand suppressed by macroeconomic uncertainty and a lack of new product releases. It was only with the economic recovery in key regions and the introduction of new products that the market began to recover, albeit insufficiently to offset the earlier declines. https://tinyurl.com/52pd99r

Media, Streaming, Gaming & Sports Betting

Discord to offer rewards for gamers as CEO considers IPO.

Company’s sales have quadrupled to US$600 million since 2020. The growth reflects the fact that people are increasingly turning to private chat rooms rather than public posts. Discord, the instant-messaging app favored by video gamers, is launching a product that offers rewards for online play, part of an effort to generate a profit at the company this year. Quests, as the product is called, let Discord users try out new games with friends and win stuff, Chief Executive Officer Jason Citron said in an interview. Video-game companies, including some big names, will pay Discord to offer rewards tied to their games. https://tinyurl.com/yckf4684

Adtech, Privacy & Regulatory

Biden backs house bill to force tiktok divestment or ban.

President Joe Biden told reporters on Friday that he would sign a bill that would force ByteDance to divest TikTok or ban the app in the United States if it passed Congress, the Wall Street Journal reported. Biden’s endorsement of the bill came hours after former president Donald Trump, who sought to ban TikTok during his presidency in 2020, said on Thursday that a TikTok ban would only help Facebook. The bill seems to represent the most serious threat to ban TikTok since 2020. Introduced by a bipartisan group of representatives on Tuesday, the bill passed the House Energy and Commerce Committee unanimously on Thursday, and House majority leader Steve Scalise said he would bring it to a House vote next week. In response, TikTok has stepped up its lobbying efforts, including showing users an in-app popup asking them to call their representatives. House offices were inundated with calls on Thursday, with at least one office going so far as to turn off their phones, The Information reported on Thursday. https://tinyurl.com/3zrw97hy


Temu spent US$2 billion on Meta ads in 2023.

Temu was Meta’s top-spending advertiser in 2023, The Wall Street Journal reported Thursday, spending nearly US$2 billion on the platform as part of a marketing blitz fueling the two-year-old shopping app’s explosive growth. Temu also was a top five spender on Google ads, according to the report. Meta and Google executives have previously highlighted Asian advertisers as a key source of ad revenue growth, without disclosing specifics. And Temu’s heavy spending has roiled other online sellers like Etsy, whose CEO told analysts late last year that Temu and fellow Asian e-commerce giant Shein were “single handedly” impacting online ad prices. A Temu spokesperson disputed the $2 billion figure to the Journal, but didn’t provide additional figures. Temu has rapidly grown since its launch in September 2022 and had more than 51 million U.S. users on its app in January according to Sensor Tower data. But some U.S. lawmakers are pushing for a ban on imports of goods sold on Temu, The Information previously reported, arguing that the company doesn’t do enough to prevent forced labor in its supply chain. https://tinyurl.com/577nk258

Target will launch unlimited rush shipping subscription to rival Amazon Prime.

Target is launching Target Circle 360, a US$99 annual subscription that will offer free, unlimited delivery and rush shipping on online orders. First announced during Target’s earnings call on Tuesday, the new plan will rival similar offerings by Walmart and Amazon that axe shipping costs for an annual fee. Target Circle 360 members will receive free two-day shipping and free same-day delivery on orders US$35 and up. The plan will debut on Aprill 7, and will be priced at US$49 until May 18 as a launch promotion. This isn’t Target’s first entry into paid subscriptions. In fact, Target Circle 360 doesn’t appear to be a new plan as much as a rebranding and upgrade of its current delivery offerings. Shipt, which is owned by Target, already offers free same-day delivery (with local delivery drivers) from nearby Target stores for US$99 a year. Target.com also currently offers free two-day shipping for online orders of US$35 and more, no subscription needed. The new Target Circle 360 plan appears to combine the Shipt membership and free two-day shipping — but no order minimums. So for Target lovers who already subscribe to Shipt, the new US$99 plan won’t be too different. Target Circle 360 will also include access to the Shipt Marketplace, which means free delivery from other stores too. Target’s new plan arrives at a time when the lines between ecommerce and brick-and-mortar are blurrier than ever. Both Target and Walmart pull from nearby brick-and-mortar stores and warehouses for online orders. Meanwhile, Amazon’s vast network of warehouses and fulfillment centers means there’s always a delivery hub nearby. Amazon plans to build even more Same-Day Delivery sites this year, which can fulfill, sort, and ship products from one location. All three companies rely on both gig workers as well as large third-party delivery partners like UPS, Fedex, and USPS, which come with added labor and shipping costs. While Target won’t ever be able to compete with Prime on delivery, but it can still lure away some of its customers by offering a similar membership. https://tinyurl.com/mr2ac69c

Fintech, Blockchain & Cryptocurrency

Final bids due soon for bankrupt FTX’s stake in Anthropic.

Prospective bidders have submitted preliminary, non-binding bids for the bankrupt cryptocurrency exchange FTX’s stake in Anthropic, according to three people involved with the sale process. Final bids are expected by the end of this week, one of the people said. The crypto exchange has been trying to unwind its assets since it went bankrupt in late 2022, with proceeds eventually going to repay its creditors. A court recently approved the sale of FTX’s 7.8% stake in the artificial intelligence startup, which was valued at more than $15 billion in its most recent funding round. Perella Weinberg Partners, the investment bank running the sale process for FTX’s stake in Anthropic, has asked bidders to submit offers at $30 per share or higher, the same price as the most recent funding round, the people said. Venture firms and offices managing family wealth are among the prospective bidders, according to the people. It’s unclear whether other types of firms, like hedge funds or mutual funds, are also in the mix. https://tinyurl.com/547e9z72

NFT fantasy sports startup Sorare lays off 13% of staff as web3 gaming continues to sputter.

Web3-enabled fantasy sports platform Sorare laid off 22 employees based in its New York office in February. The move comes as the startup wants certain teams to be concentrated at the company’s Paris headquarters to improve communication and efficiency, a source familiar with the matter told TechCrunch. An additional 11 employees in the New York office were asked to relocate to Paris, a source familiar with the matter said. Sorare is not shutting down its New York office. It will keep certain teams there like those that work with U.S. customers or on its U.S. brand partnerships with leagues like the MLB and NBA. Sorare’s partnerships with these sports leagues are locked in for several years, a source added. While a source familiar with the matter said that these layoffs were not financially driven, the source did add that like many other web3 companies, the time horizon for how long it will take Sorare to reach its growth goals is longer than it originally thought. Sorare’s users can buy and sell NFT cards from other players on its platforms, although Sorare primarily makes its money by issuing and selling new cards. Sorare saw US$200 million in user transaction volume in 2023, a source familiar with the situation said. The company declined to say if it was profitable or what runway it had left. Sorare hasn’t raised capital since its US$680 million Series B round in 2021, which valued the company at US$4 billion. According to secondary data platforms, Sorare hasn’t been garnering much interest from investors there. To be fair, the declining interest isn’t strictly an issue for Sorare — web3 companies have largely fallen out of favor with investors. Startups in the category raised US$7 billion in 2023, a drop of 74% from 2022’s US$26 billion. For context, overall venture funding dropped 38% in the same timeframe. https://tinyurl.com/mt6btf2h


TSMC to win more than US$5 billion in grants for us chip plant.

Taiwan Semiconductor Manufacturing Co. is set to win more than US$5 billion in federal grants to support a chipmaking project in Arizona, according to people familiar with the matter, in what would mark a major milestone in President Joe Biden’s effort to revitalize American semiconductor manufacturing. The award is not yet finalized, the people said, asking not to be named to discuss confidential conversations. It is also not yet clear whether TSMC will tap the loans and guarantees also on offer from the 2022 Chips and Science Act. https://tinyurl.com/mrr3v9wx

China readies US$27 billion chip fund to counter growing US curbs.

Local government, SDIC may join China’s biggest-ever chip fund Washington urges allies to tighten China export controls. China is in the process of raising more than US$27 billion for its largest chip fund to date, accelerating the development of cutting-edge technologies to counter a US campaign to thwart its rise. The National Integrated Circuit Industry Investment Fund is amassing a pool of capital from local governments and state enterprises for its third vehicle that should exceed the 200 billion yuan of its second fund, according to people familiar with the matter. https://tinyurl.com/mtaumjh8


AWS to pay up to US$650 million for nuclear data center campus.

Amazon Web Services is paying up to $650 million for a Pennsylvania data center campus next to a nuclear power plant, according to the seller, Talen Energy. It’s one of the first data center sites with direct access to nuclear power. The Information first reported that the site had been drawing interest from cloud providers, which all rapidly needed to expand their data center capacity to handle AI, which consumes more energy than traditional computing. AWS’ interest in the site is significant because cloud providers have been struggling to find enough power for their AI data centers, which contain Nvidia’s graphics processing units. Several people with knowledge of the Talen nuclear site said cloud providers in the past have hesitated to put data centers directly next to nuclear power plants for safety reasons. The AWS deal shows that the increasing need for power might outweigh those concerns. AWS plans to build multiple data centers on the campus, which could eventually use just under 1 gigawatt of power over the next several years. https://tinyurl.com/2vtcmhh7

Step aside, ESG. BlackRock is doing ‘Transition Investing’ now.

Climate investing is booming at BlackRock. Just don’t call it ESG. After crusading for years for investment funds and companies to take into account environmental, social and governance factors, Larry Fink has purged the letters from his vocabulary. BlackRock is still wagering that fighting climate change will be a generational investment opportunity—but the company is no longer pushing for changes in corporate behavior, talking about hard-to-quantify social issues or actively promoting ESG investing criteria. Instead, it is directing billions of client dollars toward infrastructure projects that will help speed the transition from fossil fuels. BlackRock is joining investors such as Brookfield Asset Management in betting on clean-energy infrastructure projects. It doubled down with its recent US$12.5 billion deal to buy Global Infrastructure Partners, an infrastructure fund manager that owns and operates energy, transportation, and waste and water companies around the world. Infrastructure investments can offer steady returns and measurable benefits for fighting climate change. They are in high demand with institutional clients such as pensions, especially after 2022’s climate law introduced rich government subsidies for clean-energy projects. Another reason the ESG movement failed to catch on was because the funds struggled to outpace the broader market and show that they actually benefited the planet. Investors pulled about US$13 billion, or roughly 4% of assets, from publicly traded ESG funds last year, according to Morningstar. BlackRock’s offering of mostly index-tracking ESG funds posted inflows. Investors poured about US$75 billion into private renewable-energy and broad energy-sector investment funds over the same period. The funds have raised nearly US$500 billion in the past five years and dwarfed the amount raised for traditional fossil-fuel funds, figures from Preqin show. Total global investment in energy transition hit about US$1.8 trillion last year, a roughly 17% increase from 2022, according to data provider BloombergNEF. https://archive.is/FZRJG

Sophic Capital Client Insights

Sophic Client ADM Endeavors (ADMQ-OTCQB) – A Whirlwind of Opportunity in Texas.

In Sophic Capital’s Endeavor Unleashed report, we looked at how Sophic client ADM Endeavors, Inc., a diversified, direct marketing and value-added manufacturing company fits into the American markets for promotional products and uniforms. ADM has intentionally pursued contracts with government bodies and schools to secure dependable, reoccurring revenue streams. Every single consumer for every single product is a potential recipient of branded promotional products. Countless thousands of promotional products have a far greater reaching impact than most people might think. In this report, we’ll look at ADM’s revenue model, balance sheet, and catalysts for growth. American promotional products and uniform are robust, multi-billion-dollar industries with over 26,000 businesses in the former alone. ADM Endeavors Inc. is a leader in the Dallas/Fort Worth area that has ample organic and inorganic growth opportunities. The strategic focus on government entities aims to mitigate economic downturn risks, as funding allocations to these sectors tend to remain resilient irrespective of broader economic fluctuations. Plus, the Company anticipates that a new facility about to start construction could add up to 5 times current capacity. Management has extensive industry experience, owns about 51% of the Company’s shares, and has successfully acquired and integrated a competitor. Investors seeking exposure to the promotional products and/or uniform industries should look at ADM Endeavors Inc. https://bit.ly/3Tn3X3M


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