DeepSeek's Delivers Another "DeepSeek Moment"

Happy weekend, all, and a reminder that we're taking a two-week break starting this Monday. (Sometimes we need to escape our containment, too.) We'll be back with your regularly scheduled newsletter on Monday, August 17.

Two quick things before we go: If you're in New York on Thursday night, September 10, we'd love to see you. Also, it's never too early to start thinking about Disrupt — the biggest and best event of the year for anyone who cares about the business of building technology. It's going to be amazing, and you won’t want to miss it. October 13–15.

See you in a couple of weeks!

Top News

DeepSeek’s just-released V4 Flash model nearly matched OpenAI’s GPT-5.6 Luna on an independent benchmark while costing roughly 60% less per task – even after OpenAI cut Luna’s price by 80% – and it delivered stronger performance on agentic work. The Decoder has more here.

New York sued Kalshi, alleging its prediction markets amount to unlicensed gambling and expose under-21 users to betting, while the CFTC filed an emergency motion arguing that federal law gives it exclusive authority over the platform. Reuters has more here.

The Wall Street Journal is reporting that Tesla is considering selling or spinning off its China business to reduce geopolitical risk and potentially pave the way for a merger with SpaceX. Elon Musk tweeted that the story was “absurdly fake news.” More here.

VC-Backed Startups Commit More Fraud, and Researchers Think They Know Why

By Dominic-Madori Davis

A new report from the U.K.’s Imperial College and France’s Emlyon Business School has mapped out the ways Silicon Valley’s VC-backed founders commit fraud — and the role investors play.

For the report, published online in June, researchers built a database of tech founders and companies who faced civil and criminal securities fraud prosecutions from the SEC and DOJ between 2000 and 2023.

Some famous cases of tech founders being convicted of fraud over the past few years include Frank’s Charlie Javice, Kalder’s Gökçe Güven, Terraform Labs’ Do Kwon, and GameOn’s Alexander and Valerie Lau Beckman.

All over X, the tech industry’s social network of choice, the topic of fraud and its gentler word “scam” are discussed, as people debate the limits of ambition and success. “Fraud is much more common and normalized in the startup world than we are ready to admit and accept,” Tim Weiss, one of the authors of the report, told TechCrunch.

He pointed to another report from the University of Toronto (UT) also published in June that looked at 654 fraud cases against U.S. VC-backed startups from 2000 to 2023. It found that fraud is rare overall, but companies with venture funding were more likely to face fraud charges compared to companies that didn’t take venture funding. It found that startups launched during overheated markets with weak oversight and investor due diligence are 19% more likely to later commit fraud.

“The problem here is not just the founders but also those that set and reinforce, at times unreasonable, expectations of high growth,” Weiss said. He added that the current frothy AI startup environment is exactly the kind of conditions that tempt founders into fraud.

Massive Fundings

Smallest, a three-year-old San Francisco startup that builds voice AI models that automate customer conversations, transcription, and speech generation across multiple languages, raised a $13 million Series A round led by Seligman Ventures, with Sierra Ventures and 3one4 Capital also chipping in. The company has raised a total of $21+ million. TechCrunch has more here.

Whatnot, a seven-year-old Los Angeles startup that operates a livestream shopping marketplace for categories such as fashion, sneakers, sports cards, and vinyl records, is reportedly in talks to raise funding at about a $20 billion valuation. Business Insider has more here.

Big-But-Not-Crazy-Big Fundings

Cantina, a three-year-old Miami startup that uses AI agents to prioritize vulnerabilities, coordinate fixes across engineering teams, and verify security risks are resolved, raised an $8 million round led by Framework Ventures. The company has raised a total of $16.5 million. SiliconANGLE has more here.

Smaller Fundings

Discern, a four-year-old startup based in Stamford, CT, that automates state compliance filings, foreign registrations, entity payments, and service-of-process delivery for companies managing legal entities, raised a $10 million Series A round co-led by Walkabout Ventures and Bungalow Capital. The company has raised a total of $17.5 million. More here.

Ellis, a two-year-old New York startup that connects private credit firms’ documents, accounting data, and correspondence to monitor portfolios, flag discrepancies, and prepare reports, raised a $10 million seed round led by First Round Capital, with 645 Ventures, Harlem Capital, Khosla Ventures, Thrive Capital, Slow Capital, and Kearny Jackson also buying in. TechCrunch has more here.

Perceptron, a two-year-old UK startup that operates a decentralized contributor network that lets AI companies commission verified datasets from people across global online communities, raised a $6.5 million round. Investors included Sigma Capital, Selini Capital, QCP Capital, P2 Ventures, CoinDCX Ventures, Momentum6, DeFi Capital, Walrus Foundation, Aethir, Colosseum, GuruDev Capital, Tempo Finance, NewTribe Capital, Digital Consensus Fund, and CodeCraft Capital. CryptoRank has more here.

Vector Legal, a San Francisco startup founded this year that provides startups with AI-assisted legal services for company formation, commercial contracts, trademarks, and financing transactions, raised a $5.2 million seed round led by Base10 Partners. Business Insider has more here.

New Funds

Index Ventures, the 30-year-old venture firm that backed Figma, Wiz, Revolut, and Robinhood, announced $3.5 billion in new capital across a $400 million seed fund, a $900 million venture fund, and a $2.2 billion growth vehicle, with AI a central investment theme. TechCrunch has more here.

Highland Europe, a London- and Geneva-based growth investor, closed a €1.1 billion sixth fund to back growth-stage European technology companies, bringing its total capital raised since 2012 to €3.75 billion after generating more than €1 billion in liquidity over the past year. Tech.eu has more here.

People

The Wall Street Journal does a ticktock on how 24-year-old Leopold Aschenbrenner had to sell most of his hedge fund’s public-stock portfolio to Citadel at a fire-sale discount just as guests arrived in Carmel for his multi-day wedding celebration. The Wall Street Journal has more here.

The New York Times examines Larry Ellison’s debt-fueled effort to turn Oracle into an AI infrastructure giant – including its role in the $500 billion Stargate project – and whether the 81-year-old billionaire could become the face of an AI bubble. More here.

Post-Its

Data

Australia’s world-first social media ban for children under 16 produced only a small decline in usage in its first three months – from 85.9% to 81.5% – as weak age checks allowed most teenagers to keep existing accounts or create new ones. Bloomberg has more here.