Category: TECH

  • Grammarly secures $1B in non-dilutive funding from General Catalyst

    Grammarly secures $1B in non-dilutive funding from General Catalyst

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    Grammarly has secured a $1 billion commitment from General Catalyst. The 14-year-old writing assistant startup will use the new funds for its sales and marketing efforts, freeing up existing capital to make strategic acquisitions.

    Unlike a traditional venture round, General Catalyst will not receive an equity stake in the company in return for the investment. Instead, Grammarly will repay the capital along with a fixed, capped percentage of revenue it generates from the use of General Catalyst’s funds.

    The investment comes from General Catalyst’s Customer Value Fund (CVF), a capital pool that helps late-stage startups with predictable revenue streams deploy new funding specifically to growing their businesses. CVF’s alternative financing strategy essentially “lends” capital that is secured by a company’s recurring revenue.  

    For companies like Grammarly, this form of financing is advantageous because it’s non-dilutive and does not reset the company’s valuation. Grammarly was valued at $13 billion in 2021, during the peak of the ZIRP era. However, the company’s valuation in today’s market is significantly lower, according to an investor in the company who asked to remain anonymous.

    Grammarly didn’t immediately respond to a request for comment.

    In December, Grammarly acquired productivity startup Coda and appointed its CEO, Shishir Mehrotra, to lead Grammarly. The company, which is evolving into an AI productivity tool following the acquisition, has annual revenue of over $700 million.

    General Catalyst’s Customer Value Fund has provided funding to nearly 50 companies, including insurtech Lemonade and telehealth platform Ro. CVF maintains its own distinct limited partners and was not included in the firm’s recent $8 billion capital raise.

    General Catalyst head honcho Hemant Taneja and Pranav Singhvi, co-head of CVF, talked with TechCrunch in greater length about the group’s specialized financing strategy last fall.

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  • Four VW execs found guilty in trial that transformed Europe’s auto market

    Four VW execs found guilty in trial that transformed Europe’s auto market

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    Four former Volkswagen executives received prison sentences Monday for their role in the emissions-cheating scandal that fundamentally transformed Europe’s car market. The verdict, delivered after a three-year trial in Braunschweig, Germany, marked the latest chapter in a 10-year-long saga that reshaped the continent’s relationship with diesel technology.

    Jens Hadler, who oversaw diesel engine development, received the harshest sentence of four and a half years for orchestrating what judges called “particularly serious” fraud. His team had installed software allowing vehicles to recognize emissions testing, temporarily increasing pollution controls during inspections while running dirty the rest of the time.

    The scandal’s impact extended far beyond corporate boardrooms. Before 2015, diesel vehicles commanded over half of Europe’s car market, marketed as environmentally friendly alternatives to gasoline. Today, that figure has collapsed to just 10% of new car sales.

    The whole affair also accelerated Europe’s transition toward electrification. Electric vehicles and plug-in hybrids now account for 25% of new car sales, while Volkswagen itself has become Europe’s leading EV manufacturer, selling three times as many battery-powered cars as Tesla in April, reports The New York Times.

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  • Khosla Ventures among VCs experimenting with AI-infused roll-ups of mature companies

    Khosla Ventures among VCs experimenting with AI-infused roll-ups of mature companies

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    Venture capitalists have always focused on investing in companies that leverage technology to either disrupt established industries or create entirely new business categories.

    But some VCs are starting to flip the script on their investing styles. Rather than funding startups, they are acquiring mature businesses — such as call centers, accounting firms, and other professional service firms —and optimizing them with artificial intelligence to serve more customers through automation.

    This strategy, often likened to private equity roll-ups, is being employed by firms such as General Catalyst, Thrive Capital, and solo VC Elad Gil. General Catalyst, touting this as a new asset class, has already backed seven such companies, including Long Lake, a startup that scoops up homeowners associations in an effort to make the management of communities more streamlined. Since its founding less than two years ago, Long Lake has secured $670 million in funding, according to PitchBook data.

    While the strategy is still new, a few other venture outfits have told TechCrunch that they are also considering trying out the investment model.

    Among them is Khosla Ventures, a firm known for making early bets on risky, unproven technologies with long development timelines.

    “I think we’ll look at a few of these types of opportunities,” Samir Kaul, general partner at Khosla Ventures, told TechCrunch.

    Interestingly, this PE-flavored approach could be a surprising benefit to the multitudes of AI startups VCs are backing. If a VC marries old businesses with new technology, AI startups wanting to serve these industries would essentially gain instant access to large, established clients.

    According to Kaul, such access would be helpful when new startups have difficulties securing customers on their own. With the rapid rate of change in AI, the number of startups pouring into the market, and the historically long sales cycles involved in selling to enterprises, such difficulties apply to many AI startups. 

    But Khosla Ventures wants to proceed with caution. “The companies we’re looking at are very unlikely to lose money,” Kaul said, but he doesn’t want the strategy to ruin the firm’s strong return track record. “My biggest stress in life is I’m managing other people’s money, and I want to make sure that I continue to be a good steward of it.”

    While Khosla Ventures is starting to “dabble” in AI roll-up investments, Kaul explained that the firm wants to do a few deals to assess if such investments deliver strong returns for the firm before possibly raising money for some kind of vehicle specifically aimed at this investment strategy.

    If early bets pan out, Khosla would likely partner with a PE-style firm to help it with acquisitions rather than hire a team. “We wouldn’t do it alone, we don’t have that expertise,” he said.

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  • Luminar kicks off another round of layoffs amid CEO’s sudden resignation

    Luminar kicks off another round of layoffs amid CEO’s sudden resignation

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    Luminar, the lidar company founded by recently replaced CEO Austin Russell, is going through another restructuring, according to a recent regulatory filing.

    This new round of layoffs, which the company did not provide figures for, follows extensive cuts to the workforce in 2024. Luminar cut about 30% of its workforce in 2024, a reduction that was expected to cost $4 million to $6 million in additional cash charges. Some of those layoffs spilled into the first quarter of 2025. A total of 212 employees were laid off.

    In its latest regulatory filing, the company said it began additional layoffs May 15. These new layoffs are expected to cost $4 million to $5 million in cash charges. These costs are expected to be incurred in the second and third quarters of this year.

    The layoffs are the latest complication for Luminar. Earlier this month, the company’s board replaced Russell as CEO and board chair. The board issued a press release saying he resigned as the result of an ethics inquiry without providing any additional information. Luminar’s board replaced Russell and appointed Paul Ricci to the role. Ricci is the former chairman and CEO of Nuance.

    A day after the leadership change was announced, board member Jun Hong Heng also resigned, according to a regulatory filing, which stated his decision was not due to any disagreements with the company on any matter relating to the company’s operations, policies, or practices.

    The company has not responded to requests for comment.

    Russell became a billionaire after his lidar startup Luminar went public in 2021 after the company merged with special purpose acquisition company Gores Metropoulos Inc., with a post-deal market valuation of $3.4 billion. Luminar raised $250 million prior to the SPAC announcement.

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  • Microsoft’s Satya Nadella is choosing chatbots over podcasts

    Microsoft’s Satya Nadella is choosing chatbots over podcasts

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    While Microsoft CEO Satya Nadella says he likes podcasts, he might not actually be listening to them anymore.

    That tidbit comes towards the end of a longer Bloomberg profile of Nadella, with a focus on Microsoft’s AI strategy and its complicated relationship with OpenAI. To illustrate how much he uses the company’s Copilot AI assistant in his daily life, Nadella said that instead of listening to podcasts, he now uploads the transcripts to Copilot, then talks to Copilot about the content during his drive to the office.

    In addition, Nadella — who jokingly described his job as “email typist” — said he relies on at least 10 custom agents developed in Copilot Studio to summarize emails and messages, prepare for meetings, and perform other tasks around the office.

    AI already seems to be transforming Microsoft in more substantial ways, with programers reportedly the hardest hit in the company’s recent layoffs, shortly after Nadella declared that 30% of the company’s code was written by AI.

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  • Billionaire founder of Luminar replaced as CEO following ethics inquiry

    Billionaire founder of Luminar replaced as CEO following ethics inquiry

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    Austin Russell, who became a billionaire after his lidar startup Luminar went public, appears to be out as CEO, according to the company’s board.

    Luminar’s board announced Wednesday — the same day of its first-quarter earnings report — it had replaced Russell and appointed Paul Ricci to the role. Ricci is the former chairman and CEO of Nuance.

    The press release states that Russell resigned as president and CEO and as the chairperson of the board, effective immediately. The board said in the press release the resignation followed a code of business conduct and ethics inquiry for the audit committee of Luminar’s board. Russell will remain on the board and be “available to the incoming Chief Executive Officer on transition and technology matters,” according to the release.

    However, it’s not clear if Russell was forced out or if he resigned willingly. Russell could not be reached for comment. The board did not provide further details of this ethics inquiry except that it “does not impact any of the company’s financial results.”

    In a further twist, the company’s earnings report and slide presentation makes no mention of the change of leadership. The first-quarter press release even includes an upbeat statement from Russell that outlines the company’s strategy to drive down cost with its new Halo product.

    “In a world of macro uncertainty and adversity, we’re firing on all cylinders to ramp up production, ramp down costs, and capitalize on the future, as evidenced by our announcements today,” Russell said in the statement. “This kicks off our new operating plan for Luminar with a unified product platform, enabling radical focus and streamlining of the business, as well as unlocking value throughout our organization.”

    Meanwhile, the press release from the board tells another story.

    “We are excited to announce Paul as our next CEO,” board member Matt Simoncini said in a statement. “His track record speaks for itself. He is a visionary leader with a rare combination of technical insight and operational excellence. His commitment to innovation, his ability to scale organizations, and his instinct for anticipating where technology is heading make him the ideal person to lead us into our next chapter of growth. The Board has full confidence in his leadership, and we are excited about what lies ahead.”

    Simonici, who retired as CEO of Lear in 2018, is chair of the board’s audit committee, which also includes Jun Hong Heng, who is the founder and chief investment officer of technology investment firm Crescent Cove Advisers, Evergreen Capital Partners founder Dominick Schiano, and Daniel Tempesta, who served as executive VP and CFO at Nuance.

    Luminar burst onto the autonomous vehicle scene in April 2017 after operating for years in secrecy. Russell, who was just 22 years old at the time, was thrust into the spotlight and became a Silicon Valley success story. Luminar was founded by Russell in 2012, but it would be years before his company would be known by the public. He worked on the Luminar technology as a Thiel fellow, which gives young people $100,000 over two years to drop out of college and pursue their ideas.

    In 2021, Luminar merged with special purpose acquisition company Gores Metropoulos Inc., with a post-deal market valuation of $3.4 billion. Luminar raised $250 million prior to the SPAC announcement.

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  • 23andMe customers notified of bankruptcy and potential claims — deadline to file is July 14

    23andMe customers notified of bankruptcy and potential claims — deadline to file is July 14

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    23andMe, the genetic testing giant once valued in the billions, is now navigating Chapter 11 bankruptcy and notifying millions of current and former customers that they may be eligible to file claims as part of the restructuring process. The company and 11 of its subsidiaries, including Lemonaid Health and LPRXOne, filed for bankruptcy protection on March 23 of this year in the Eastern District of Missouri. Customers were alerted Sunday that they have until July 14 to file claims for losses incurred.

    The bankruptcy follows a tumultuous 18 months for 23andMe, marked by declining sales, executive departures, and a devastating data breach that compromised sensitive personal information of nearly 7 million users. The breach, publicly disclosed in October 2023, exposed customers’ names, birth years, relationship labels, percentages of DNA shared with relatives, ancestry reports, and self-reported locations, according to TechCrunch. The fallout triggered multiple class action lawsuits and a wave of customer mistrust that severely undercut the company’s consumer-facing business.

    Now, customers who were affected by that breach — specifically those notified by 23andMe that their information was compromised between May and October 2023 — may file what is known as a Cyber Security Incident Claim. Those who suffered financial or other damages due to the breach can submit a claim as part of the bankruptcy case. Customers with other types of grievances unrelated to the cyberattack, such as issues with DNA test results or the company’s telehealth services, may submit a separate claim under the General Bar Date Package.

    Congress has also expressed concerns about the privacy implications of the bankruptcy.

    23andMe’s fall from grace was swift, and its woes were compounded by its ambitious but costly expansion into digital health and telemedicine, which included the $400 million acquisition of Lemonaid Health in 2021. Originally aimed at diversifying 23andMe’s offerings beyond consumer DNA testing, the moves strained 23andMe’s financial resources and failed to deliver the growth the company needed.

    A proposed $30 million settlement in a related class action lawsuit over the cyberattack remains on hold due to the bankruptcy proceedings. (23andMe’s attorneys say the settlement is in dispute now that the company is in bankruptcy.) Customers who want to preserve their right to compensation must submit a formal proof of claim regardless of their participation in the class action.

    TechCrunch has reached out to 23andMe for comment.

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  • One of Elon Musk’s longtime VCs is suing his former employer after allegedly being fired

    One of Elon Musk’s longtime VCs is suing his former employer after allegedly being fired

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    Josh Raffaelli, who has deep roots as a Silicon Valley investor and has backed a number of Elon Musk companies, is suing his former employer, the massive trillion-dollar AUM Brookfield Asset Management, reports The New York Times. 

    Much of Raffaelli’s complaint concerns how Brookfield covered pandemic-related real estate losses and alleges the company fired him after he filed a whistleblower complaint at the SEC. His suit makes allegations like fraud and bribery, while Brookfield vehemently denies any wrongdoing, it told The Times.

    In February, Brookfield quietly shuttered the venture capital unit run by Raffaelli and rolled some assets into another unit, Bloomberg reported at the time. One of Raffaelli’s complaints in the suit is that Brookfield didn’t buy as much stock in Musk-owned companies as he had secured the ability to buy.

    Raffaelli had deals to buy into Musk companies like SpaceX, xAI, and the Boring Company, the suit alleges. And his Brookfield fund was a big backer of Musk’s takeover of Twitter, Bloomberg reported.

    The lawsuit is a very public battle for Raffaelli, who previously worked as a partner at the VC firm then known as Draper Fisher Jurvetson. (Today, it’s a collection of funds.) While at DFJ,  Brookfield helped that firm make investments into Musk companies like SolarCity (acquired by Tesla), SpaceX, and Tesla.

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  • Waymo ramps up robotaxi production at new Arizona factory

    Waymo ramps up robotaxi production at new Arizona factory

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    Waymo has played coy for years about exactly how many Jaguar I-Pace EVs are in its autonomous fleet — a figure that covers vehicles used in testing and commercial robotaxi operations. On Monday, the Alphabet company finally provided a peek at the commercial side of the fleet.

    Waymo said Monday, as part of a larger announcement, that it has more than 1,500 commercial robotaxis in operation. And work is underway to expand it through a multi-million-dollar investment with Magna to build more than 2,000 autonomous I-Pace vehicles at a new factory in Arizona.

    Waymo has worked with Magna for years, namely at a now closed facility in Detroit. The new 239,000-square-foot factory in the Phoenix suburb of Mesa is strategically located in the one of Waymo’s robotaxi markets and close to its other service areas across San Francisco, Los Angeles, and Austin.

    A Waymo spokesperson told TechCrunch the company looked at other locations, but ultimately it chose Mesa for its proximity to other markets and because the consistent weather made it ideal for the validation process required before the robotaxis can be used by the public.

    Waymo said in a blog post announcing the factory that it received final delivery from Jaguar earlier this year. From here, contract builder Magna and Waymo take over to integrate the self-driving system into the vehicles. Waymo emphasized a new process designed to speed up the production-to-validation-to-public use process, noting that the AVs can drive themselves out of the facility and directly into service.

    “In fact, these vehicles can pick up their first public passengers less than 30 minutes after leaving the factory,” Waymo said in its blog post. The company said that vehicles intended for other cities can be deployed into public service in a matter of hours after being shipped to their local depot.

    The Mesa factory is designed to handle other vehicle platforms, notably to integrate the sixth-generation of Waymo’s self-driving system into the Zeekr RT later this year.

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    The plant will introduce an automated assembly line and other efficiencies over time, according to the company, which noted that the plant will be capable of building tens of thousands of fully autonomous Waymo vehicles per year when operating at full capacity.

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  • AI chatbots are ‘juicing engagement’ instead of being useful, Instagram co-founder warns

    AI chatbots are ‘juicing engagement’ instead of being useful, Instagram co-founder warns

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    Instagram co-founder Kevin Systrom says AI companies are trying too hard to “juice engagement” by pestering their users with follow-up questions, instead of providing actually useful insights.

    Systrom said the tactics represent “a force that’s hurting us,” comparing them to those used by social media companies to expand aggressively. 

    “You can see some of these companies going down the rabbit hole that all the consumer companies have gone down in trying to juice engagement,” he said at StartupGrind this week. “Every time I ask a question, at the end it asks another little question to see if it can get yet another question out of me.”

    The comments come amid criticism of ChatGPT for being too nice to users instead of directly answering their questions. OpenAI has apologized for the problem and blamed “short-term feedback” from users for it.

    Systrom suggested that chatbots being overly engaging is not a bug, but an intentional feature designed for AI companies to show off metrics like time spent and daily active users. AI companies should be “laser-focused” on providing high-quality answers rather than moving metrics in the easiest way possible, he said.

    Systrom didn’t name any specific AI companies in his remarks. He didn’t immediately respond to a request for comment.

    In response, OpenAI pointed TechCrunch to its user specs, which state that its AI model “often does not have all of the information” to provide a good answer and may ask for “clarification or more details.”

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    But unless questions are too vague or difficult to answer, the AI should “take a stab at fulfilling the request and tell the user that it could be more helpful with certain information,” the specs read.

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