OpenAI has reached a deal with Reddit to use the social news site’s data for training AI models. In a blog post on OpenAI’s press relations site, the company said that the Reddit partnership will provide it access to “real-time, structured and unique content” — e.g. posts and replies — from Reddit, allowing its tools […]
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Squarespace, a platform used by SMEs and individuals for building websites, blogs, and online stores, is going private in an all-cash deal that values the company on equity basis at $6.6 billion, or a $6.9 billion enterprise valuation. The acquiring company is U.K.-based private equity firm Permira. This is a breaking story, refresh for updates.
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OpenAI is collaborating with Stack Overflow, the Q&A forum for software developers, to improve its generative AI models’ performance on programming-related tasks.
As a result of the partnership, announced Monday, OpenAI’s models, including models served through its ChatGPT chatbot platform, should get better over time at answering programming-related questions, the two companies say. At the same time, Stack Overflow will benefit from OpenAI’s expertise in developing new generative AI integrations on the Stack Overflow platform.
The first set of features will go live by the end of June.
The tie-up with OpenAI is a remarkable reversal for Stack Overflow, which initially banned responses from ChatGPT on its platform over fears of spammy responses.
Stack Overflow began experimenting with generative AI features last April, promising to craft models that “reward” devs who contribute knowledge to the platform. In July, the company launched a conversational search tool that lets users pose queries and receive answers based on Stack Overflow’s database of over 58 million questions and answers, along with tools for businesses to fine-tune searches on their own documentation and knowledge bases.
Some members of Stack Overflow’s developer community rebelled against the changes, pointing out concerns related to the validity of information generated by AI, information overload and data privacy for individual contributors on the platform.
There was at least some basis for those concerns. An analysis of more than 150 million lines of code committed to project repos over the past several years by GitClear found that generative AI dev tools are resulting in more mistaken code being pushed to codebases. Elsewhere, security researchers have warned that such tools can amplify existing bugs and security issues in software projects.
But despite the apparent flaws, developers are embracing generative AI tools for at least some coding tasks. In a Stack Overflow poll from June 2023, 44% of developers said that they use AI tools in their development process now while 26% plan to soon.
This has precipitated something of an existential crisis for Stack Overflow. Traffic to the platform has reportedly dipped significantly since the release of capable new generative AI models last year — models that in many cases were trained on data from Stack Overflow.
So now, as it cuts costs, Stack Overflow is pursuing licensing agreements with AI providers.
The company’s deal with OpenAI — the financial terms of which weren’t disclosed — comes after Stack Overflow partnered with Google to enrich Google’s Gemini models with Stack Overflow data and work with Google to bring more AI-powered features to its platform. Stack Overflow stressed at the time that the agreement wasn’t exclusive — and indeed, that turned out to be the case.
Prashanth Chandrasekar, CEO of Stack Overflow, previously said that 10% of the platform’s nearly 600 staff was focused on its AI strategy, and has described potential additional revenue from the strategy as key to ensuring Stack Overflow can keep attracting users and maintaining high-quality information.
“Stack Overflow is the world’s largest developer community,” Chandrasekar said in a press release this morning. “Through [our] industry-leading partnership with OpenAI, we strive to redefine the developer experience, fostering efficiency and collaboration through the power of community, best-in-class data, and AI experiences. Our goal with OverflowAPI, and our work to advance the era of socially responsible AI, is to set new standards with vetted, trusted, and accurate data that will be the foundation on which technology solutions are built and delivered to our user.”
Users on TikTok can once again create music clips using tracks from UMG’s catalog, a list featuring some of the biggest names in music today: Taylor Swift, Billie Eilish, and Ariana Grande. That’s because, after months of fighting, the social media platform and Universal Music Group (UMG) have finally called a truce with a new content licensing agreement. The companies didn’t disclose the financial terms of the deal.
The move is coming at a critical moment for the company. TikTok is facing yet more threats of being banned in key markets, including the U.S. So scoring this win with UMG is important not just to beef up its content, but to amp up its profile with consumers that TikTok is counting on to rally for it. While the company has decided to fight the threat of a ban in the U.S. in the courts, it could use positive news like this.
The catalog will be available for video creation in one or two weeks. That also means that existing videos using UMG music, which had been muted, will be unmuted once the catalog is available.
“Fans on TikTok can look forward to the return of UMG’s recorded music and publishing catalogs and once again enjoy creating videos using music from some of the world’s biggest artists and songwriters as well as exciting emerging talent,” TikTok said in a post.
The deal comes after a selection of Taylor Swift’s music returned to TikTok last month — largely because she owns the masters of some of her albums.
“Music is an integral part of the TikTok ecosystem, and we are pleased to have found a path forward with Universal Music Group. We are committed to working together to drive value, discovery, and promotion for all of UMG’s amazing artists and songwriters and deepen their ability to grow, connect, and engage with the TikTok community,” He said.
Earlier this year, UMG pulled its catalog from the short video platform after refusing to renew its agreement with TikTok. Separately, UMG signed a new deal with Spotify for music videos.
OpenAI has landed a new content deal with the FT. But instead of being a merely simple deal in which OpenAI gets words, and FT gets money, the two are teaming up a bit more deeply. Look to see FT.com links in ChaptGPT in the future.
But the FT-OpenAI tie-up tells us a bit more than that one media company will soon have a few more ducats in its pockets. No, it’s yet another OpenAI deal that will see the Microsoft-backed AI shop further cement its ability to ingest training material without legal risk, and start to pay some of the providers of said material for their work.
All good, right? In a sense, but there’s a concern that as some AI companies work to start paying for training data after they consumed oceans of it, they could wind up pulling the training ladders up behind them. If that happens, other AI companies that might want to follow in their footsteps could find steeper, and more expensive, the same path that the OpenAIs of the world already hiked.
It’s a weird and irksome situation in which you want to see fair payment for materials used, but also ensure that we don’t hand the future of AI to a bunch of already wealthy companies. That would just cement oligopoly. And, of course, media companies that are spending all their money and more to report and write need fair comp. Those are the stakes. Let’s talk about it!
Darktrace is set to go private in a deal that values the U.K.-based cybersecurity giant at around $5 billion.
A newly-formed entity called Luke Bidco Ltd, formed by private equity giant Thoma Bravo, has tabled an all-cash bid of £6.20 ($7.75) per share, which represents a 44% premium on its average price for the three-month period ending April 25. However, this premium drops to just 20 percent when juxtaposed against Darktrace’s closing price yesterday, as the company’s shares had risen 20% to £5.18 in the past month.
Founded out of Cambridge, U.K., in 2013, Darktrace is best known for AI-enabled threat detection smarts, using machine learning to identify abnormal network activity and attempts at ransomware attacks, insider attacks, data breaches, and more. The company claims big-name customers including Allianz, Airbus, and the City of Las Vegas.
After raising some $230 million in VC funding and hitting a private valuation of $1.65 billion, Darktrace went public on the London Stock Exchange in April, 2021, with an opening-day valuation of $2.4 billion. Its shares hit an all-time high later that year of £9.45, and plummeted to an all-time low of £2.29 last February. But they had been steadily rising since the turn of the year, and hadn’t fallen below £4 since the beginning of March.
The full valuation based on Thoma Bravo’s offer amounts to $5.3 billion (£4.25 billion) on what is known as a full-diluted basis, which takes into account all convertible securities and is designed to give a more comprehensive view of a company’s valuation. However, the enterprise value in this instance is approximately $4.9 billion (£4 billion), which includes additional considerations such as debt and cash positions.
There has been a swathe of “take-private” deals of late, with Vista Equity this month announcing plans to acquire revenue optimization platform Model N in $1.25 billion deal — its fifth take-private deal in 18 months. And last month, Thoma Bravo revealed it was taking critical event management software company Everbridge private in $1.8 billion transaction.
In an investor relations’ document published today, Thoma Bravo said that iDarktrace represented an “attractive opportunity to increase its exposure” to the fast-growing cybersecurity market.
“Darktrace is at the very cutting edge of cybersecurity technology, and we have long been admirers of its platform and capability in artificial intelligence,” Thoma Bravo partner Andrew Almeida said. “The pace of innovation in cybersecurity is accelerating in response to cyber threats that are simultaneously complex, global and sophisticated.”
Separately, Darktrace said it had previously rebuffed approaches from Thoma Bravo on the grounds that the offers were too low — something that the duo have now clearly resolved with the amended bid.
“The proposed offer represents an attractive premium and an opportunity for shareholders to receive the certainty of a cash consideration at a fair value for their shares,” Darktrace chair Gordon Hurst said. “The proposed acquisition will provide Darktrace access to a strong financial partner in Thoma Bravo, with deep software sector expertise, who can enhance the company’s position as a best-in-class cyber AI business headquartered in the U.K.”
The deal is of course still subject to shareholder approval, but the companies said that they expect to complete the transaction by the end of 2024.
It’s going to be a big week! Tech earnings are coming up, the EV wars are on (and how!), and it feels like venture capital has its head in the clouds. All that adds up to one packed Equity episode!
Today, we dug into the latest markets news, including upcoming earnings, IPOs, and what impact — if any — the bitcoin halving has had on the value of the cryptocurrency.
We also had two new venture capital funds to discuss: A new vehicle from Seraphim focused on space, and TLcom Capital’s new Africa-focused fund. From there, it was time to chat EVs and what impact recent price cuts are having on the value of EV companies.
To close out, we dug into the emerging startup cluster in vector databases and search. In short, normal databases are hot garbage when it comes to the sort of queries we need for AI, but vector search is pretty good at it. Enter startups, venture capital and the biggest tech companies. May the startups win.
Equity is TechCrunch’s flagship podcast and posts every Monday, Wednesday and Friday, and you can subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.
You also can follow Equity on X and Threads, at @EquityPod.
For the full interview transcript, for those who prefer reading over listening, read on, or check out our full archive of episodes over at Simplecast.
Model N, a platform used by companies such as Johnson & Johnson, AstraZeneca, and AMD to automate decisions related to pricing, incentives, and compliance, is going private in a $1.25 billion deal with private equity firm Vista Equity Partners. The acquisition underscores how PE firms continue to scoop up tech companies that have struggled to perform well in public markets in the last couple of years.
Vista Equity is doling out $30 per share in the all-cash transaction, representing a 12% premium on Friday’s closing price, and 16% on its 30-day average.
This is Vista Equity’s fifth such acquisition in the past 18 months, following Avalara ($8.4 billion); KnowBe4 ($4.6 billion); Duck Creek Technologies ($2.6 billion); and EngageSmart ($4 billion).
Founded in 1999, Model N’s software integrates with various data sources and internal systems to help companies analyze trends, pricing efficacy, market demand, and more. The platform is typically used in industries such as pharmaceuticals and life sciences, where there may be complex pricing structures, and where regulatory or market changes can impact business.
The San Mateo-headquartered company went public on the New York Stock Exchange (NYSE) in 2013, and it has generally performed well in the intervening years — particularly since around 2019, when its market cap steadily started to increase, hitting an all-time high of $1.6 billion last year. However, its valuation has generally hovered below the $1 billion market for the past six months, sparking Vista Equity Partners into action today.
Vista said that it expects the transaction to close in the middle of 2024, though it is of course subject to the usual conditions, including shareholder approval.
Reuters reported on Thursday that Google’s parent company, Alphabet, is exploring the possibility of buying Boston-based HubSpot, a CRM and marketing automation company with a market cap of over $33 billion — a number that has been climbing on those reports.
If such a deal were to happen, the cost would likely be pretty substantial, involving some significant premium over the current value. It would have to be to motivate the company to sell and become part of the search giant. It’s worth noting that the two companies have a relationship already — a partnership to use Google ads to drive sales in HubSpot — which can sometimes be the start of an acquisition discussion like this.
While Google/Alphabet has been extremely acquisitive over the years, the largest deal that it’s ever made was spending $12.5 billion for Motorola Mobility in 2011. It later sold it to Lenovo for just $2.91 billion, so it would have reason to be gun shy on a much larger price tag. More recently the largest deal involved spending $5.4 billion for security intelligence platform Mandiant in 2022. Google usually stays under $3 billion, so a deal of this scope would be very much out of character for the company.
When you combine that with the austerity program that most tech companies have been on in recent years, and a warning from Google CEO Sundar Pichai in January that more job cuts were coming, it’s not the type of deal that seems likely in a belt-tightening climate, and certainly one that might be tough to justify to employees if those kinds of optics actually matter. Yet with a huge cash horde of $110 billion on hand as of the end of last year, it certainly has the cash to make the move if it wants to.
Another issue the company could face in trying to buy HubSpot is a hostile regulatory environment for large deals. The U.S., the U.K and the EU have been monitoring large deals closely these days. Some, like Adobe’s attempt to buy Figma for $20 billion didn’t make it to the finish line because of competitive concerns. It’s not clear that Alphabet would face those same concerns with a CRM tool. HubSpot faces pretty powerful competition from Adobe and Salesforce, two well-capitalized firms, so this wouldn’t give Google a lock on that market by any means, but if there’s a risk, there’s sure to be a termination fee involved to hedge against that, another factor the company would need to take into consideration.
The question is what is the likelihood of such a deal coming to fruition and what would it give the companies that they can’t get from the existing partnership. As one analyst said to me, it doesn’t feel likely, but you never know.
Noname Security, a cybersecurity startup that protects APIs, is in advanced talks with Akamai Technologies to sell itself for $500 million, according to a person familiar with the deal.
Noname was co-founded in 2020 by Oz Golan and Shay Levi and is headquartered in Palo Alto but has Israeli roots. The startup raised $220 million from venture investors and was last valued at $1 billion in December 2021 when it raised $135 million in a Series C led by Georgian and Lightspeed. While the sale price is a significant discount from that valuation, the deal as it currently stands would be for cash, the person said. The deal is not final and could change or not happen at all.
Other investors who have backed Noname include Insight Partners, ForgePoint, Cyberstarts, Next47 and The Syndicate Group.
While the potential deal price is half the valuation than Noname’s last private valuation, those who invested at the early stage will receive a meaningful return from the sale. Meanwhile, the deal should allow the later-stage investors, particularly those who invested in the last round, to get a full return on the capital they put in, if not the profit that they hoped for during those heady days of 2021 when money was flowing and valuations were optimistic.
The deal values the company at about 15X annual recurring revenue, the person said. Noname’s approximately 200 employees are expected to transition to Akamai if the sale closes.
Akamai declined comment. A Noname Security spokesperson told TechCrunch, “As a policy, we refrain from commenting on rumors or speculation.”
The Information reported in January that Noname was trying to raise another financing round at a substantially lower valuation. In February, Israeli news outlet Calcalist reported that Noname was in negotiations with several potential buyers, including Akamai.
Many VC-backed companies that raised capital at the height of the tech boom saw their valuations crater after the U.S. Fed raised interest rates. Many are now simultaneously looking for buyers and a new round of funding, known in the finance world as a dual-track process. Meanwhile, many later-stage VCs are looking for liquidity after more than a year of a frozen IPO market. So, the general mood in the venture industry is that, if robust IPOs don’t return soon, it will be bargain shopping time for M&A activity.
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