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AWS confirms European 'sovereign cloud' to launch in Germany by 2025, plans €7.8B investment over 15 years | TechCrunch

May 15, 2024 12:05 PM0


Amazon Web Services (AWS), Amazon’s cloud computing business, has confirmed further details of its European “sovereign cloud” which is designed to enable greater data residency across the region. The company said that the first AWS sovereign cloud region will be in the German state of Brandenburg, and will go live by the end of 2025. […]

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Software Development in Sri Lanka

Robotic Automations

Accel leads $4M investment in Egyptian corporate cards platform Swypex | TechCrunch

May 7, 2024 1:52 PM0


Cards are gaining ground in Egypt, with over 30 million in circulation (prepaid cards, particularly, are seeing more use than debit and credit cards combined). This surge in card usage, about 14% in the last four years, is primarily due to the incentives introduced by fintech companies and banks, attracting millions of Egyptian consumers who previously relied mainly on cash for their transactions.

The adoption of corporate cards tells a different tale. Businesses of all sizes have hesitated to embrace corporate cards because of limited access and inadequate spending controls over their usage.

Traditionally, banks have been the primary providers of corporate cards across the country; however, fintech companies are now entering the scene to boost adoption. Swypex, one such fintech that’s offering corporate cards and management tools for businesses, raised $4 million, which it will use to expand its business and technical capabilities of its platform.

Image Credits: Swypex

Around 3.8 million businesses in Egypt face challenges with complicated and rigid financial systems, according to a UNDP report. Like many across Africa, these businesses are using multiple disconnected methods to handle their finances, causing inefficiencies. Employee fraud is also a problem, with businesses losing an average of 5% of their revenues yearly to fraudulent activities that often arise from cash transactions like asset misappropriation and financial misreporting.

Gearing up for launch

Yet, there are significant tailwinds from a regulatory perspective; for instance, Egypt’s apex bank, the Central Bank of Egypt (CBE), launched initiatives such as the Instant Payment Network (IPN) to reduce cash-based transactions and encourage digital payments.

Several fintechs in Egypt, including Swypex, are leveraging such initiatives to launch necessary financial services while adhering to the central bank’s guidelines. CEO Ahmad Mokhtar explained that the startup, founded in early 2022 but only emerging from stealth mode now, dedicated its first year to acquiring essential licenses, ensuring regulatory compliance, and collaborating with payment processors and bank sponsors. Swypex then rolled out the beta version to 100 customers last December.

“We spoke to hundreds of different businesses, from startups to SMEs to large corporations, enterprises, and publicly listed companies, to understand what their challenges were at different stages,” said Mokhtar, who launched the startup with Tarek Mokhtar (CPO) and Sasan Hezarkhani (CTO), on the problem Swypex is tackling. “We realized there were specific pains shared that haven’t been met for the last decade or two, like businesses predominantly using cash and losing visibility over their money or using banking services that were a little bit archaic, so they had to visit the banks a lot to sign physical papers and documents to get things moving for their businesses.”

All-in-one financial management platform

Mokhtar said Swypex provides businesses with an “unlimited” number of corporate cards for their employees. The platform enables these businesses to set smart controls to manage spending, such as setting different limits and specifying usage permissions for ATM withdrawals and online transactions. After transactions, employees can upload receipts, invoices and spending details, which are consolidated into a centralized dashboard with integrated data from the government’s e-invoicing platform. In addition to ERP and accounting software integrations, Swypex offers businesses a streamlined and comprehensive overview of all expenses and spending in a single location.

“Businesses using our platform can see analytics around the distribution of spend on each department, merchant, individual and category level,” said Tarek Mokhtar, the company’s chief product officer.“We also categorize all the expenses on the platform to give profound insight into a business’s financial health and each line item, which will help businesses make more data-driven decisions based on the real-time visibility we provide them with.”

Swypex’s competition in the corporate card space across Africa includes YC-backed companies like Boya and Bujeti. In Egypt, it’s banks such as HSBC and National Bank. Mokhtar argues that Swypex is a better option for businesses because it allows for more customization in its offerings and provides a broader range of features and services, including unlimited card issuance and advanced controls. “Our focus on things like user experience and instant controls over these cards like blocking them, and having all of that automation built in, is fundamentally new to the market,” the CEO said.

The 2-year-old all-in-one financial management platform, which offers businesses its first three cards for free, generates revenue from interchange fees, floats and FX markups.

Corporate card surge in coming years?

Accel, the storied venture capital firm making its first investment across the MENA region (though it has backed an African money transfer app), led the $4 million seed round in Swypex. Investors who participated in the round included Foundation Ventures, The Raba Partnership, and other angel investors.

It’s significant for a startup just emerging from beta only after a few months, especially in a challenging funding climate where traction and revenue are priorities. But there are good reasons why it attracted investment even before its official launch: Swypex’s potential to address a sizable market (it’s targeting a portion of the card and payments market worth over $10 billion and expected to grow at a 10% CAGR over the next three years), as highlighted by Mokhtar, along with the founders’ backgrounds in developing products at scale for global companies like Twitter, PlayStation and Spotify.

“As the payments space continues to digitize, the opportunity to provide modern fintech products to Egyptian businesses has become even more important,” said Richard Kotite, vice president at Accel, in a statement. “Ahmad, Tarek and Sasan have spotted a gap in the market for a comprehensive B2B solution that addresses many of the key pain points businesses regularly face while driving a step-change in efficiency. We see a real opportunity for Swypex to become a fintech champion across the Middle East. The team is technically experienced and highly ambitious, and we are delighted to be joining them on this journey.”


Software Development in Sri Lanka

Robotic Automations

Climate tech investment roars back with an $8.1B start to 2024 | TechCrunch

May 3, 2024 10:59 PM0


Climate tech startups raised $8.1 billion in the first quarter, near record amounts of money that suggest 2023’s quite close might have been little more than a blip than the sign of a protracted downturn.

The figure, contained in a new report from PitchBook, shows that climate tech hasn’t succumbed to the same slowdown that has dragged on the rest of the venture community.

While the number of deals was down slightly quarter-over-quarter, the value was up nearly 400%, according to the report. A deeper look into the $8.1 billion raised in the first quarter shows that investors focused their attention on materials, including green steel and battery materials and minerals.

Three early-stage firms closed the most deals. Climate Capital landed 94, Lowercarbon Capital closed 70 and SOSV came in with 59 (a figure that would be higher if you included its Hax and IndiBio programs). Despite those tallies, this year started with fewer deals closing compared with Q4 2023. Total deal count was down 20% this quarter to 244.

Despite the lower deal count, the amount of money raised by climate tech startups in Q1 was second only to Q3 of last year. A handful of noteworthy deals helped keep the sector buoyant.

Top deals

Swedish startup H2 Green Steel led the pack, raising $4.5 billion in debt and $215 million in equity to fund a massive new plant in northern Sweden. The company claims it can produce steel with up to 95% fewer emissions by burning green hydrogen rather than coal. The new plant will initially produce 2.5 million metric tons of steel per year, and the company says customers have already committed to buying half of that volume for the next five to seven years. H2 Green Steel follows Northvolt, a Swedish battery manufacturer, in attracting outsize investments to build large-scale production facilities in the country.

Battery recycler Ascend Elements followed by adding another $162 million to its Series D, bringing the total to $704 million for the round. The company, a unicorn worth $1.6 billion post-money, is vying for a share in an increasingly competitive market for recyclable battery materials, squaring off against former Tesla executive J.B. Straubel’s Redwood Materials.

Continuing the materials theme, battery manufacturer Natron raised a $189 million Series B round to begin construction on a commercial scale factory in western Michigan. The startup specializes in sodium-ion batteries, which are cheaper than lithium-ion but less energy dense.

Lilac Solutions also closed a significant Series C last quarter, raising $145 million to scale up its ion-exchange technology that can extract lithium from salty water. Most of the world’s lithium is produced in evaporation ponds, which require gobs of land and water. Lilac Solutions’ approach looks more like a regular factory, with modular units humming inside an enclosed building. It promises to make lithium extraction commercially viable in the U.S., something automakers will need if their EVs are to qualify for federal tax incentives which are dependent on domestic minerals.

A preview?

The numbers posted in Q1 may feel inflated because of those sizable rounds, but they could also be the beginning of a trend in which nine-figure raises cease to be exceptional.

Today, it would be easy to dismiss massive deals like H2 Green Steel’s as an outlier, but that would also ignore the fact that many climate tech companies, which often sell physical goods instead of software, need large sums if they’re to successfully reach commercial scale. Currently, there are simply fewer companies ready to make the leap. As early stage companies mature, that should change.

Large rounds coupled with fewer deals may be cold comfort for early stage founders in need of cash now. But the reality is that investors have been trending in that direction for several quarters. The exuberance that was on display during the pandemic caused valuations to skyrocket, making it challenging to justify additional investment without a down round.

In conversations over the last few months, VCs have told me they’ve preferred to put their money behind companies with customer traction and some revenue on the books. In climate tech, there’s a much smaller pool to draw from since many companies still harbor a decent amount of technical risk. Investors’ bias toward de-risked, revenue generating startups is reflected in Q1’s numbers, which was dominated by established companies raising large rounds.

That dynamic can’t continue forever, though. In the next 25 years, the world will need to invest $230 trillion to reach net zero carbon emissions, according to McKinsey. For investors, it’s an opportunity that’s too large to ignore, and founders have been rushing to fill the gap with novel technologies and business models.

Investors have been meeting founders at the starting blocks, but as early stage companies begin to think about scaling, they frequently encounter a challenging fundraising environment, something that’s become known as the “valley of death.”

The ‘valley of death’ for climate lies between early-stage funding and scaling up

As companies like H2 Green Steel, Ascend Elements and others traverse the valley, the lessons learned will inform investors and startups who are on a similar journey. It might take a few years to develop a playbook, but once that happens, large rounds like the kind seen this quarter should start becoming the norm, not the exception.


Software Development in Sri Lanka

Robotic Automations

OpenAI Startup Fund quietly raises $15M | TechCrunch

April 26, 2024 9:13 PM0


The OpenAI Startup Fund, a venture fund related to — but technically separate from — OpenAI that invests in early-stage, typically AI-related companies across education, law and the sciences, has quietly closed a $15 million tranche.

According to a filing with the U.S. Securities and Exchange Commission, two unnamed investors contributed the $15 million in new cash on or around April 19. The paperwork was submitted on April 25, and mentions Ian Hathaway, the OpenAI Startup Fund’s manager and sole partner.

The capital was transferred to a legal entity called a special purpose vehicle, or SPV, associated with the OpenAI Startup Fund: OpenAI Startup Fund SPV II, L.P.

SPVs allow multiple investors to pool their resources and make an investment in a single company or fund. In the VC sector, they’re sometimes used to invest in startups that don’t fit a fund’s strategy or that fall outside a fund’s terms. SPVs can also be marketed to a wider range of non-institutional investors.

It’s the second such time the OpenAI Startup Fund has raised capital through an SPV — the first time being in February for a $10 million tranche.

The OpenAI Startup Fund, whose portfolio companies include legal tech startup Harvey, Ambiance Healthcare and humanoid robotics firm Figure AI, came under scrutiny last year after it was revealed that OpenAI CEO Sam Altman had long legally controlled the fund. While marketed like a standard corporate venture arm, Altman raised capital for the OpenAI Startup Fund from outside limited partners, including Microsoft (a close OpenAI partner and investor), and had the final say in the fund’s investments.

Neither OpenAI nor Altman had — or have — a financial interest in the OpenAI Startup Fund. But critics nonetheless argued that Altman’s ownership amounted to a conflict of interest; OpenAI claimed that the general partner structure was intended to be “temporary.”

In April, Altman transferred formal control of the OpenAI Startup Fund to Hathaway, previously an investor with the VC firm Haystack, who’d played a key role in managing the Startup Fund since 2021.

As of last year, the OpenAI Startup Fund — whose ventures also include an incubator program called Converge — had $175 million in commitments and held $325 million in gross net asset value. It’s backed well over a dozen startups including Descript, a collaborative multimedia editing platform valued at $553 million last year; language learning app Speak; AI-powered note-taking app Mem; and IDE platform Anysphere.

OpenAI hadn’t responded to TechCrunch’s request for comment as of publication time. We’ll update this post if we hear back.


Software Development in Sri Lanka

Robotic Automations

China tensions underline US investment in TSMC | TechCrunch

April 16, 2024 11:43 PM0


The United States Department of Commerce Monday proposed investing as much as $6.6 billion to fund a third Taiwan Semiconductor Manufacturing Company Limited (TSMC) fab in Arizona. The funding would arrive by way of the CHIPS and Science Act, in a bid to foster more domestic semiconductor production.

The move represents a broader push to bring more manufacturing to the U.S., but unspoken in the fanfare around today’s announcement is the potential escalation of tensions with China.

The proposed fab is a greenfield facility — meaning it’s custom-built from the ground up. It would focus on 2nm (“or newer”) architectures, designed for a slew of different applications, including computing, 5G/6G wireless communications and, of course, AI. TSMC Arizona — the subsidiary behind the proposed construction — has stated that it will build the facility before the end of the decade.

The chipmaker says construction will bring more than 20,000 jobs to the area, while forecasting around 6,000 manufacturing roles once the facility is operational.

US to award TSMC $6.6B in grants, $5B in loans to step up chip manufacturing in Arizona

Localized manufacturing has been a key focus for the Biden administration, as the COVID-19 pandemic highlighted vulnerabilities in the global supply chain. Those issues have been exacerbated by the ubiquity of silicon in our daily lives. Those numbers are only growing. According to a semiconductor trade association, global sales hit $47.6 billion in January 2024 — marking more than a 15% increase over the prior year.

“TSMC’s renewed commitment to the United States, and its investment in Arizona represent a broader story for semiconductor manufacturing that’s made in America and with the strong support of America’s leading technology firms to build the products we rely on every day,” President Biden said in a release tied to the news.

Much of the administration’s funding has focused on U.S. firms like Intel, which was targeted with its own $8.5 billion proposal toward the end of March. TSMC, however, is an 800-pound gorilla, both in terms of market share and technological advances. The firm has, however, found itself in the middle of looming geopolitical concerns. The United States and allies would be at a massive disadvantage should China seize control of Taiwan and its manufacturing capabilities.

TSMC has its own concerns over such a scenario. For one thing, the company’s two biggest customers — Apple and Nvidia — are American. For another, some in the U.S. have even gone so far as suggesting the country bomb chipmakers, should such things come to pass.

“We should make it very clear to the Chinese, if you invade Taiwan, we will blow up TSMC,” Massachusetts Congressman Seth Moulton said at an event back in May.

The Democratic representative has since distanced himself from the clip, stating that it was selectively edited by the Chinese Communist Party. However, he is hardly alone in floating such suggestions. Earlier the same year, former Trump National Security Advisor Robert O’Brien stated, “The United States and its allies are never going to let those factories fall into Chinese hands,” suggesting the country destroy the factories. O’Brien went so far as comparing such hypothetical actions to Britain’s actions during the Second World War.

Such saber rattling has drawn international criticism. Beyond the clear ethical questions, such an evasive action would have a massive impact on the global economy. In addition to Apple and Nvidia, TSMC also serves Sony, MediaTek, AMD, Qualcomm and Broadcom, among others.

For all the money the United States government continues to invest, Intel is simply playing catch-up to TSMC’s multiyear technological head start. TSMC makes around 90% of the world’s most advanced chips. For now, the best defense the U.S. has against future disruptions — be they pandemics or geopolitical conflicts — is diversification of supply. That applies to where and by whom components are manufactured.

While the architects of the CHIPS and Science Act would no doubt love to elevate U.S. companies manufacturing domestically, ours is a global economy. TSMC is certainly aware of the value of distributing the supply chain.

“The proposed funding from the CHIPS and Science Act would provide TSMC the opportunity to make this unprecedented investment and to offer our foundry service of the most advanced manufacturing technologies in the United States,” the chip giant’s chairman Mark Liu said in a release tied to the news. “Our U.S. operations allow us to better support our U.S. customers, which include several of the world’s leading technology companies. Our U.S. operations will also expand our capability to trailblaze future advancements in semiconductor technology.”

Among those who monitor U.S.-China relations, the upcoming presidential election could mark a key turning point. Former President Trump dramatically escalated trade tensions, for one. Huawei’s addition to the entity list marked a massive setback for the mobile firm, as it lost access to key components from American companies like Google and Qualcomm.

Speaking last year, Biden’s now-former U.S. Director of National Intelligence Avril Haines noted that if a U.S. invasion halts TSMC’s Taiwan-based product, “it will have an enormous global financial impact that I think runs somewhere between $600 billion to $1 trillion on an annual basis for the first few years.”


Software Development in Sri Lanka

Robotic Automations

Investors are growing increasingly wary of AI | TechCrunch

April 15, 2024 9:04 PM0


After years of easy money, the AI industry is facing a reckoning.

A new report from Stanford’s Institute for Human-Centered Artificial Intelligence (HAI), which studies AI trends, found that global investment in AI fell for the second year in a row in 2023.

Both private investment — that is, investments in startups from VCs — and corporate investment — mergers and acquisitions — in the AI industry were on the downswing in 2023 versus the year prior, according to the report, which cites data from market intelligence firm Quid.

AI-related mergers and acquisitions fell from $117.16 million in 2022 to $80.61 million in 2023, down 31.2%; private investment dipped from $103.4 million to $95.99 million. Factoring in minority stake deals and public offerings, total investment in AI dropped to $189.2 billion last year, a 20% decline compared to 2022.

Yet some AI ventures continue to attract substantial tranches, like Anthropic’s recent multibillion-dollar investment from Amazon and Microsoft’s $650 million acquisition of Inflection AI. And more AI companies are receiving investments than ever before, with 1,812 AI startups announcing funding in 2023, up 40.6% versus 2022, according to the Stanford HAI report.

So what’s going on?

Gartner analyst John-David Lovelock says that he sees AI investing “spreading out” as the largest players — Anthropic, OpenAI and so on — stake out their ground.

“The count of billion-dollar investments has slowed and is all but over,” Lovelock told TechCrunch. “Large AI models require massive investments. The market is now more influenced by the tech companies that’ll utilize existing AI products, services and offerings to build new offerings.”

Umesh Padval, managing director at Thomvest Ventures, attributes the shrinking overall investment in AI to slower-than-expected growth. The initial wave of enthusiasm has given way to the reality, he says: that AI is beset with challenges — some technical, some go-to-market — that’ll take years to address and fully overcome.

“The deceleration in AI investing reflects the recognition that we’re still navigating the early phases of the AI evolution and its practical implementation across industries,” Padval said. “While the long-term market potential remains immense, the initial exuberance has been tempered by the complexities and challenges of scaling AI technologies in real-world applications … This suggests a more mature and discerning investment landscape.”

Other factors could be afoot.

Greylock partner Seth Rosenberg contends that there’s simply less appetite to fund “a bunch of new players” in the AI space.

“We saw a lot of investment in foundation models during the early part of this cycle, which are very capital intensive,” he said. “Capital required for AI applications and agents is lower than other parts of the stack, which may be why funding on an absolute dollar basis is down.”

Aaron Fleishman, partner at Tola Capital, says that investors might be coming to the realization that they’ve been too reliant on “projected exponential growth” to justify AI startups’ sky-high valuations. To give one example, AI company Stability AI, which was valued at over $1 billion in late 2022, reportedly brought in just $11 million in revenue in 2023 while spending $153 million on operating expenses.

“The performance trajectories of companies like Stability AI might hint at challenges looming ahead,” Fleishman said. “There’s been a more deliberate approach by investors in evaluating AI investments compared to a year ago. The rapid rise and fall of certain marquee name startups in AI over the past year has illustrated the need for investors to refine and sharpen their view and understanding of the AI value chain and defensibility within the stack.”

“Deliberate” seems to be the name of the game now, indeed.

According to a PitchBook report compiled for TechCrunch, VCs invested $25.87 billion globally in AI startups in Q1 2024, up from $21.69 billion in Q1 2023. But the Q1 2024 investments spanned across only 1,545 deals compared to 1,909 in Q1 2023. Mergers and acquisitions, meanwhile, slowed from 195 in Q1 2023 to 176 in Q1 2024.

Despite the general malaise within AI investor circles, generative AI — AI that creates new content, such as text, images, music and videos — remains a bright spot.

Funding for generative AI startups reached $25.2 billion in 2023, per the Stanford HAI report, nearly ninefold the investment in 2022 and about 30 times the amount from 2019. And generative AI accounted for over a quarter of all AI-related investments in 2023.

Samir Kumar, co-founder of Touring Capital, doesn’t think that the boom times will last, however. “We’ll soon be evaluating whether generative AI delivers the promised efficiency gains at scale and drives top-line growth through AI-integrated products and services,” Kumar said. “If these anticipated milestones aren’t met and we remain primarily in an experimental phase, revenues from ‘experimental run rates’ might not transition into sustainable annual recurring revenue.”

To Kumar’s point, several high-profile VCs including Meritch Capital — whose bets include Facebook and Salesforce — TCV, General Atlantic and Blackstone have steered clear of generative AI so far. And generative AI’s largest customers, corporations, seem increasingly skeptical of the tech’s promises,  and whether it can deliver on them.

In a pair of recent surveys from Boston Consulting Group, about half of the respondents — all C-suite executives — said that they don’t expect generative AI to bring about substantial productivity gains and that they’re worried about the potential for mistakes and data compromises arising from generative AI-powered tools.

But whether skepticism, and the financial downtrends that can stem from it, are a bad thing depends on your point of view.

For Padval’s part, he sees the AI industry undergoing a “necessary” correction to “bubble-like investment fervor.” And, in his belief, there’s light at the end of the tunnel.

“We’re moving to a more sustainable and normalized pace in 2024,” he said. “We anticipate this stable investment rhythm to persist throughout the remainder of this year … While there may be periodic adjustments in investment pace, the overall trajectory for AI investment remains robust and poised for sustained growth.”

We shall see.


Software Development in Sri Lanka

Robotic Automations

Amazon doubles down on Anthropic, completing its planned $4B investment | TechCrunch

April 12, 2024 10:16 AM0


Amazon invested a further $2.75 billion in growing AI power Anthropic on Wednesday, following through on the option it left open last September. The $1.25 billion it invested at the time must be producing results, or perhaps they’ve realized that there are no other horses available to back.

The September deal put $1.25 billion into the company in exchange for a minority stake, and certain tit-for-tat agreements like Anthropic continuing to use AWS for its extensive computation needs.

Amazon reportedly had until the end of the first quarter to decide whether to increase its investment to a maximum of $4 billion, and here we are just before the deadline, and the company has decided to throw in the maximum amount.

Anthropic’s AI models are one of very few that compete at the highest levels of capability (however you define it) yet are available at scale for enterprises to deploy internally or in user-facing applications. OpenAI’s GPT series and Google’s Gemini are the others up there, but upstarts like Mistral may soon threaten that fragile triumvirate.

Lacking the capability to develop adequate models on their own for whatever reason, companies like Amazon and Microsoft have had to act vicariously through others, primarily OpenAI and Anthropic. The two have reaped immense benefits by allying with one or the other of these moneyed rivals, and as yet have not seen many downsides.

What we can take from Amazon’s decision to invest the maximum after (one must assume) getting a pretty close look at how they make the AI sausage over there is, really, pretty scant.

Anthropic’s $5B, 4-year plan to take on OpenAI

It makes too much strategic sense for these companies, which possess enormous war chests saved up for exactly this purpose (outspending rivals when they can’t out-innovate them), to pour cash into the AI sector. Right now the AI world is a bit like a roulette table, with OpenAI and Anthropic representing black and red. No one really knows where the ball will land, least of all the companies that couldn’t predict or create this technology themselves. But if your bitter enemy puts their chips down on red, it only makes sense for you to bet on black.

Especially if you can bet on black at a discount — which is what Amazon got here, since it could invest at Anthropic’s September valuation, which is most certainly lower than it is today.

That said, if things were looking sketchy over there — the way they must have looked at Inflection before Microsoft pounced on it — Amazon could have backed out or just invested less than the full supplemental $2.75 billion. But that might have sent a confusing signal no one wants getting out there, least of all existing multibillion-dollar investors.

We know Anthropic has a plan, and this year we’ll find out what Amazon, Apple, Microsoft and other multinational interests think they can do to monetize this supposedly revolutionary technology.

Why it’s impossible to review AIs, and why TechCrunch is doing it anyway


Software Development in Sri Lanka

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