We took the pulse of emerging fund managers about what it’s been like for them during these post-ZERP, venture-capital-winter years.
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AI may be inching its way into the newsroom, as outlets like Newsweek, Sports Illustrated, Gizmodo, VentureBeat, CNET and others have experimented with articles written by AI. But while most respectable journalists will condemn this use case, there are a number of startups that think AI can enhance the news experience — at least on the consumer’s side. The latest to join the fray is Rio, an “AI news anchor” designed to help readers connect with the stories and topics they’re most interested in from trustworthy sources.
The new app, from the same team behind AI-powered audio journalism startup Curio, was first unveiled at last month’s South by Southwest Festival in Austin. It has raised funding from Khosla Ventures and the head of TED, Chris Anderson, who also backed Curio. (The startup says the round has not yet closed, so it can’t disclose the amount.)
Curio itself was founded in 2016 by ex-BBC strategist Govind Balakrishnan and London lawyer Srikant Chakravarti; Rio is a new effort that will expand the use of Curio’s AI technology.
First developed as a feature within Curio’s app, Rio scans headlines from trusted papers and magazines like Bloomberg, The Wall Street Journal, Financial Times, The Washington Post and others, and then curates that content into a daily news briefing you can either read or listen to.
In addition, the team says Rio will keep users from finding themselves in an echo chamber by seeking out news that expands their understanding of topics and encourages them to dive deeper.
Image Credits: Curio/Rio
In tests, Rio prepared a daily briefing presented in something of a Story-like interface with graphics and links to news articles you could tap on at the bottom of the screen that would narrate the article using an AI voice. (These were full articles, to be clear, not AI summaries.) You advance through the headlines in the same way as you would tap through a Story on a social media app like Instagram.
Curio says Rio’s AI technology won’t fabricate information and will only reference content from its trusted publishers partners. Rio won’t use publisher content to train an LLM (large language model) without “explicit consent,” it says.
Image Credits: Curio/Rio
Beyond the briefing, you can also interact with Rio in an AI chatbot interface where you can ask about other topics of interest. Suggested topics — like “TikTok ban” or “Ukraine War,” for example — appear as small pills above the text input box. We found the AI was sometimes a little slow to respond at times, but, otherwise, it performed as expected.
Plus, Rio would offer to create an audio episode for your queries if you want to learn more.
Co-founder Balakrishnan said that Curio users had asked Rio over 20,000 questions since it launched as a feature in Curio last May, which is why the company decided to spin out the tech into its own app.
“AI has us all wondering what’s true and what’s not. You can scan AI sites for quick answers, but trusting them blindly is a bit of a gamble,” noted Chakravarti in a statement released around Rio’s debut at SXSW. “Reliable knowledge is hard to come by. Only a lucky few get access to fact-checked, verified information. Rio guides you through the news, turning everyday headlines from trusted sources into knowledge. Checking the news with Rio leaves you feeling fulfilled instead of down.”
It’s hard to say if Rio is sticky enough to demand its standalone product, but it’s easy to imagine an interface like this at some point coming to larger news aggregators, like Google News or Apple News, perhaps, or even to individual publishers’ sites. Meanwhile, Curio will also continue to exit with a focus on audio news.
Curio is not the only startup looking to AI to enhance the news reading experience. Former Twitter engineers are building Particle, an AI-powered news reader, backed by $4.4 million. Another AI-powered news app, Bulletin, also launched to tackle clickbait along with offering news summaries. Artifact had also leveraged AI before exiting to TechCrunch’s parent company, Yahoo.
Rio is currently in early access, which means you’ll need an invitation to get in. Otherwise, you can join the app’s waitlist at rionews.ai. The company tells us it plans to launch publicly later this summer. (As a reward for reading to the bottom, five of you can use my own invite link to get in.)
What is worth $11 billion and wants to go to Mars to collect rocks? NASA’s mission to Mars to collect rocks that was expected to cost $11 billion and take ages. So, the U.S. space agency is throwing the doors open to get more input, and that means that startups are looking at an opportunity that is truly out of this world.
But that’s not the only thing going on. Today’s Equity episode is focused on all things startups, which means we also got to chat through Two Chairs’ recent and massive Series C, Quilt’s heat pump work and fundraise, and several IPO updates. Here’s hoping that after Ibotta and Rubrik get out the door, more IPOs follow.
Also on the show today was a grip of venture capital news. Bay Bridge Ventures is raising a $200 million climate fund — it has lots of good company there, given rising LP interest in climate tech more generally — and a SpaceX alum is building a new VC firm that we covered.
To close, the massive, gobsmackingly big $7.2 billion worth of new funds from a16z. We dug into their breakdown on the podcast, but the short version is that it appears that the venture slowdown has not managed to impede the venture firm’s golden touch when it comes to fundraising. Hit play, let’s have some fun!
Equity is TechCrunch’s flagship podcast and posts every Monday, Wednesday and Friday. You can subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.
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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.
Eniac Ventures has closed two funds totaling $220 million, the seed-stage firm shared exclusively with TechCrunch.
New York-based Eniac has raised $60 million for Select 1, the firm’s vehicle for follow-on later-stage investments in portfolio companies, and $160 million for Eniac VI. The firm has made 11 investments out of Select 1, which actually closed in 2021 but was not publicly announced until now. The firm plans to make its first investment “shortly” out of its sixth fund, according to co-founder and general partner Nihal Mehta. It plans to make about 40 investments across both funds.
When making new investments, Eniac’s average check size is $1.5 million. Follow-on checks are typically larger, Mehta said, with the largest check invested out of its Select fund being $6 million.
Eniac is a sector-agnostic firm, with Mehta describing the team as “pre-product-market-fit generalists.” Despite being sector agnostic, even Eniac has been bitten by the artificial intelligence bug, with Mehta noting that “machine learning and AI has been a predominant theme” for the firm over the past decade.
“There is some hype in AI, but we believe it to be the most transformative wave of computing we have seen since the internet,” he said.
Portfolio companies include 1up Health, Alloy, Anchor, Attentive, Brightwheel, Embrace, Ghost, Hinge, Hive, Level.ai, Maestro, Owlet and Vungle. Eniac also was an early investor in Airbnb and has seen exits in companies such as TapCommerce (to Twitter), Anchor (to Spotify), Dubsmash (to Reddit), Hinge (to IAC), Workflow (to Apple), Vungle (to Blackstone) and Vence (to Merck Animal Health).
Mehta declined to name specific LPs, noting only that they are a mix of “top foundations, endowments, pensions and fund of funds,” and that the majority of them are “mission-driven.”
Despite the challenging fundraising environment, Mehta said the fundraise “ironically was the quickest” Eniac has done in 15 years.
“We attribute this success to being able to return multiple funds in the past few years,” he told TechCrunch, though he declined to provide specific figures around returns.
The size of Eniac’s funds has grown significantly over the years. Eniac raised its inaugural $1.5 million fund in 2010, raised $100 million for its fourth fund in 2017 and raised another $125 million for Eniac Fund V in 2021. Over the years, it has backed more than 250 startups.
If you ask investors to name the biggest challenge for venture capital today, you’ll likely get a near-unanimous answer: lack of liquidity.
Despite investing in startups or VC funds that increased in value, due to the dearth of IPOs, those bets are not generating much, if any, cash for their backers. That’s the drawback of private investment versus the public market. Shares of companies in private companies like startups cannot be sold at will. The companies must authorize their existing investors to sell their shares to approved others, known as secondary sales.
Cash-hungry venture investors, whether VCs themselves or their limited partners, are increasingly looking to sell their illiquid positions to secondary buyers.
Now, add in that many early-stage startups were overvalued during the fundraising frenzy that peaked in 2021 and that those shares may now be worth less. That presents a new and unique opportunity to buy stakes in seed-stage VC funds, as well as shares in startups, at relative bargains.
Today, Cendana Capital, a fund of funds that invests in dozens of seed-stage venture firms, and partner Kline Hill Partners, a firm focused on buying small previously owned private assets, are announcing a new $105 million Kline Hill Cendana Partners fund, which is well above the $75 million target they initially hoped to raise.
“Over the past two years, we’ve been hearing from our portfolio funds, ‘We have a family office that wants to sell their $2 million commitment. Would you be interested in buying it?’” said Michael Kim, founder and managing director of Cendana Capital.
Kim felt the opportunity to increase his firm’s ownership in venture funds and promising startups at a substantial discount was too good to pass up. But, since investing in secondary assets requires expertise that none of Cendana’s investors had, he decided to join forces with Kline Hill.
Raising money for this fund was easy, Kim said. Cendana’s limited partners were asking Kim to take advantage of this buyer’s market.
“We simply passed the hat around to our existing LPs at Kline Hill and Cendana,” said Kim.
Michael Kim, founder and managing director of Cendana Capital. Image Credits: Michael Kim
What sets Kline Hill/Cendana’s investing vehicle apart is that it’s buying secondary interest in seed-stage firms and individual companies from seed funds. Most existing secondary players are too large to go after this opportunity, according to Kim.
It’s hard not to see the symbiosis between the two firms. Cendana’s relationships with its portfolio funds, including Lerer Hippeau, Forerunner Ventures and Bowery Capital, are helping it take the lead on sourcing secondary deals. It then passes these opportunities to Kline Hill, which values, underwrites and negotiates the transaction price.
While Kline Hill has been investing in secondary VC since the firm’s founding in 2015, Chris Bull, a managing director at the firm, said that partnering with Cendana brings the type of information that’s extremely valuable to the investment process.
“What’s most exciting for us is we’re able to get transactions done where I think either of us individually would have had difficulty getting across the line,” Bull said.
The current plan is to invest the whole $105 million fund through the end of 2024. The two firms are giving this joint venture a try, and if it goes well, they’ll raise a successor fund next year.
The two firms are not alone in noticing a large opportunity in scooping up previously owned venture stakes. Traditional secondary investors, such as Lexington Partners and Blackstone, recently raised their largest secondary funds ever. While these vehicles target all types of private assets, investors say a portion of that capital is bound to go to venture. In addition, Industry Ventures has picked up a nearly $1.5 billion fund dedicated to secondhand VC.
But billion-dollar funds like these “typically focus on much, much larger, more multistage firms,” Kim said. Applying such big finance tactics to the seed stage is far less prevalent.
Kline Hill/Cendana is on to something. With VC-backed companies tending to stay private longer than their investors’ 10-year fund cycles, the need for liquidity will likely only continue to grow.
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