Musk’s xAI raises fresh capital while Synapse’s bankruptcy could impact millions | Equity Podcast

This episode is presented by invest Puerto Rico if you believe your business Can go anywhere Puerto Rico is the [Music] Place hello and welcome back to equity Tech crunch's Flagship podcast about the Business of startups today is May 28th 202 4 and I am Becca scoutek a senior Reporter here at Tech crunch we're Kicking off the week a day late due to The holiday weekend here in the US so Let's get caught up on today's show we Have xai $6 billion funding round Synapsis bankruptcy and what that means For other fintech startups pre-b buunk With Google and a pitch Teck tear down For Berlin based startup teror 1 let's Get Started to kick things off those of you Dear listeners who track Tech earnings This week there are definitely a couple Worth keeping your eye on to start we've Got Salesforce uipath and HP all Reporting tomorrow and then we have AA And mongod DB reporting on Thursday and Now on to the big news that matters for The first story of the day we have news About Elon Musk and no it is not about Twitter no it is not about Tesla it is About that fifth sixth or seventh Company that Elon Musk also runs called Xai the company announced that it raised 6 billion in new funding at a 18 billion Pre-money valuation this confirms

Reporting that Tech runch had earlier in April the backers for this deal include Andreon Horowitz sequa capital and Valor Among others you may notice de listeners Those are a lot of the same investors Who helped musk by Twitter a couple Years ago but according to some Reporting from Dan prac over at axios he Confirms that this is all new cash in This deal there's no overlap based on The past deal but the same investors Came back a second time around in a blog Post xai said it plans to use the Capital to build its first set of Products and take them to Market build Some Advanced infrastructure and Accelerate the research and development Of what it plans to do in the future While you may have already seen grock on Your Twitter feed or on your sidebar on X xai says it hopes to be able to Introduce Gro to users beyond x as well This move of course will help musk in Competing with the likes of open AI Which he co-founded Microsoft and [Music] Alphabet and next up we are talking About banking as a service fintech Startup synapse which has recently Collapsed the San Francisco based Tech Operated a service that allowed many Other companies mainly fintech startups To embed Bing Services into their Offerings the startup has run into

Financial trouble and filed for chapter 11 bankruptcy in April but has since had To update that to Chapter 7 bankruptcy And is close to being forced to Liquidate entirely while the financial Fate of one startup isn't necessarily Always big news in the grand scheme of Startup land in this case synapsis news Is because of how interdependent it is With other fintech companies we saw the First example of this already last week Teen banking Focus copper announced that Due to synapsis bankruptcy it had to Pause its Banking and debit Services While thankfully in Copper's case this Will only be temporary as it moves to Another service provider this just shows The first of likely many Ripple effects We're going to see from the synapse news In the weeks to come as our dear friend Maryanne a aeto put it though certainly Not the only bit of bad news it shows Just how treacherous things are for the Often interdependent fintech world when One key player hits trouble I'm sure We'll have more stories and more updates On this in episodes to Come what's next in Tech that's not the Right question it's where Puerto Rico Where an entrepreneurial ecosystem Pulses with connectivity capability and Possibility where the most competitive Tax incentives in the US FastTrack Success and hard work is rewarded with

Sunsets and turquoise Waters if you Believe your business can go anywhere Puerto Rico is the place invest pr.org Pet [Music] Crunch and one last thing before we head Into today's pitch deck tear down the Washington Post reports that election Officials and researchers from Arizona To Taiwan are adopting an approach Called pre-b punking to battle Misinformation if you're unaware of what That is which I was until about an hour Ago this morning to quote the Washington Post Preuninger doses of misinformation Paired with explanations and are aimed At helping the public develop mental Antibodies to recognize and fend off Hoaxes in a heated election year end Quote Google has done a bit of this Themselves they ran a bunch of cartoon Ads on YouTube IG and Facebook called Pre-b with Google and a lead up to the European Union election highlighting Common methods of spreading Misinformation via email and social Media I think this is an interesting Approach I would love to say I think This is going to work but has someone Who has seen people firsthand take a Tiny bit of misinformation and run with It way f than you ever thought they Could I am a little bit skeptical about

[Music] This and that's it for me this morning But keep an eye out on Tech crunch Throughout the week for more Tech Startup and Venture news as always if You want to dive deeper into anything we Talked about today we'll have links to All the stories we covered in the show Notes now let's check in with haa camps For today's pitch deck tear Down thank you all right everyone it's Time for another pitch deck tear down This week we're looking at Terra one's Deck so this is a startup in Berlin Called Terra 1 they've got a mission Make sure we're not wasting all of this Clean energy you know the stuff that Comes from the sun and the wind it turns Out Germany has got a bit of a problem With storing it all and so a lot of it Goes to waste but Tera one has a plan They're building these battery storage Systems to keep all of that tree hugging Green Energy safe and sound and guess What they just raised a cool $7.5 Million to make it happen now the pitch Deck is only 13 slides long but let me Tell you it's packed with almost Everything you need but not quite I'll Get to that in just a moment here's what Works first up I really like their Problem statement it hits you like a ton Of bricks the slide throws some Impressive numbers at you making it

Crystal clear that this is a problem not Just a minor inconvenience and I'll Going be honest I usually roll my eyes At multiple problem slides but here's What Tera one did differently the Additional slides explain why this Problem isn't going to solve itself and It leaves us with the opportunity for Why this company is going to be huge The other thing I really liked was they Had a solid strategic take on the Solution startups I've said it before And I'll say it again investors don't Actually care nearly as much about your Product as you think they do they want To see the big picture and the slide in This deck completely nails that the deck Does have a couple of lines about proven Technology and being profitable without Subsidies and lower costs that's all Lovely but they don't really connected Dos for us so there's a little bit of an Opportunity for improvement there as Well it's a great start but it could Could set themselves up for better Traction ment defendability and solution Slides the other thing I really liked is That the company completely nailed the Product slide it doesn't fall into the Usual trap of drowning Us in technical Detail the slide actually explains what Tera one does without making me want to Gouge my eyes out that point however Leads us perfectly into the three things

That the deck could do to improve first Up is the business model slide it feels A little bit like we're solving a Mystery over here it should lay things Out Simply how does Teran find its Customers what's the sale process and How is it going to make money on that Note it's worth talking about the Pricing right now the deck doesn't Explain how much it's planning to charge Its customers which is a bit of a Problem because the pricing really Speaks to the positioning in the market And who the customers are going to be For me as an investor it helps if the Company can explain the pricing without It it's like trying to guess the price Of a meal at the restaurant without a Menu the other thing worth paying Attention to is unit economics what I Mean by unit economics is how the cost Of delivering the service shifts as the Company hits its stride it'd be very Helpful to explain how the costs change As the company hits scale so as it's Growing will it become more efficient And profitable or are the hidden costs Lurking and of course as an investor I Care about that because I'm not Investing in a company where it is now I'm investing in where it's going and so Understanding how the finances shift Over time is really helpful so just to Cap make sure you have Clarity around

The problem is it a problem worth Solving and are people willing to pay For it you've got to make sure that the Solution is something the customers Actually need and make sure to include That in the deck and finally have really Good Clarity around your business model How are you going to attract these Customers and how are you going to Extract as much value from them as you Can make sure you don't spend too much Time on the products so the investors Care about the future and that future Hasn't been built yet if you talk about Your current product your per definition Talking about the product the way it is Today but that's not what your investors Are investing in make sure you don't Stop talking before you've made your Point you can't just hit at Profitability without quantifying it and Where you're going with it and it's Really important to remember to explain How your company is going to evolve over Time how do you get economies of scale And how does it get better as you get More experience with the products you're Building now I only actually gave Feedback on the stuff that was there but There was a bunch of stuff that wasn't Too like there was nothing about Target Customers nothing about marketing or Sales strategy nothing about Revenue Models or the funding ask and use of

Funds now I have an extended rant on why You need all of that too so check out The post on Tech crunch remember if you Want to submit your pitch deck to my Pitch deck tear down series check out Today's article in the show notes and Follow the submit your deck link that's It for today's episode but don't worry Equity will be back on Wednesday when I'm being joined by VC Jenny Fielding About the series a Chasm if you want to Keep up with us in the meantime you can Follow equity on X and threads under the Handle at Equity B thanks for listen and We'll talk again Soon Equity is produced by Teresa Lo Cons solo with editing by Kell Bryce Durban is our illustrator and we'd like To give a big thanks to our audience Development team and Henry pet who Manages Tech crunch audio products Thanks so much for listening and we'll Talk to you next time

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