TechCrunch+ Roundup: AI Vertical, Crypto Losses Declining, Machine Learning Investor Survey

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According to Paris Heymann, partner at Index Ventures, the current wave of AI-powered products and services can be divided into three tiers:

• Foundation models
• AI infrastructure
• AI applications

Some of these applications will be largely horizontal, he writes in TC+, but many AI applications will also be vertical or industry-focused.

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In this market map, Heymann looks at AI stack startups exploring myriad facets of this explosive industry, shares insights on where vertical AI is heading, and offers advice on how SaaS startups should approach embedding of features and functionality.

Proprietary data and distribution will be a winning combination in the race to build both horizontal and vertical AI applications, he predicts.

We’re releasing on a lighter schedule to commemorate Independence Day, so I’ll be back on Friday 7th July with a new roundup of TC+.

Have a good week!

Walter Thompson
Editorial Lead, TechCrunch+
@yourprotagonist

How confidential computing could ensure the adoption of generative AI

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The race for land in generative AI has created a new challenge: How can companies use proprietary data to build powerful models while maintaining security and privacy?

Protecting data and training models must be top priority, says Ayal Yogev, CEO and co-founder of Anjuna.

Encrypting fields in databases or lines in a form is no longer enough.

Big tech corporate venture capital

generative artificial intelligence startup

Image credits: Bryce Durbin/TechCrunch

Generative AI startup Typeface quietly surfaced this year, but the $100 million Series B round that just lifted it to a $1 billion valuation signals big tech companies are busy brandishing their most powerful weapons: checkbooks, writes Alex Wilhelm.

In The Exchange, examine how companies like Microsoft, Salesforce, and other venture capital entities are making their way into AI-adjacent products and services.

As long as your founding team has an AI pedigree and a plan to sell lots of AI technology to big companies, you can expect a flood of cash from big tech funds and traditional venture investors.

Crypto losses halved in the second quarter of 2023 to $204 million

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Are the carpet rolls, exploits, and pump-and-dump schemes that have defrauded so many cryptocurrency consumers becoming a thing of the past?

Second-quarter losses were 55% lower than in the first quarter of 2023, when the industry lost a whopping $462.3 million to hacks, according to a report by De.Fi using information from REKT. and scams, writes Jacquelyn Melinek.

4 VCs illustrate why there’s good reason to be optimistic about the machine learning startup market

Image credits: Bryce Durbin/TechCrunch

Training the expansive models that power AI applications is thirsty work: Machine learning startups can charge clients for anything from optimizing ad campaigns to generating mammoth datasets.

Kyle Wiggers sat down with four investors to understand whether the ML hype cycle is easing or going strong, discuss the technical hurdles holding the industry back, and get their advice for founders building on the industry:

• Lonne Jaffe, managing director, Insight Partners
• Jerry Chen, partner, Greylock
• Ashish Kakran, principal, Thomvest
• Janelle Teng, vice president, Bessemer Venture Partners

Ask Sophie: How do we transfer Ukrainian and Russian team members to the US?

Image credits: Bryce Durbin/TechCrunch

Dear Sofia,

Our startup employs approximately 30 people globally through a combination of direct employment and co-employment based on their country.

Over the past year and a half or so, we have helped several team members relocate from Ukraine and Russia to various non-Schengen countries such as Georgia, Taiwan, Thailand, Turkey and Uzbekistan.

We realize it’s more expensive if we bring these employees to the US, but our startup will be more successful. How do we get them here?

Significant income

Funds of funds are starting to play a different role for venture LPs

While traditional fund-of-funds have fallen out of favor, there is still LP’s appetite for innovative approaches. Image credits:Getty Images

After reviewing the past few years of declining fund-of-funds activity, Rebecca Szkutak found that several factors are causing limited partners to look elsewhere.

There have been far more opportunities to invest in a VC than ever before, said Kyle Stanford, senior venture analyst at PitchBook.

For new LPs entering the market, they didn’t need to go to a fund of funds to gain entry.

Pitch Deck Teardown: Super.com’s $60M Series C deck

Image credits: Super. com (Opens in a new window)

Formerly known as Snapcommerce, travel/fintech/e-commerce startup Super.com has acquired nearly $200 million in funding, including an $85 million Series C in April 2023.

The company, which offers a cashback card for building credit, shared the 17-slide pitch deck it used to close its latest round with TC+:

• Cover the slide
• Mission slide
• Traction chute 1
• Traction chute 2
• Team slide
• Customers (interstitial slide)
• Customer profile
• Target customers / market size
• A Super Savings App (interstitial slide)
• Why now slip
• Why a super slide app
• Product slide
• Product road map slide
• User behavior slide
• Solution slide (SuperCash is critical to the experience)
• Value Proposition Slide (Custom Experiences)
• The Ask slide

11 VCs reveal how difficult it was for their startups to raise money in H1 2023

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Alex Wilhelm interviewed 11 investors to learn about the headwinds their portfolio companies leaned on in the first half of 2023.

From their responses, it appears that startups’ ability to raise money in today’s climate relies on several key factors, including capital efficiency, the market and its needs, he writes.