Anthropic Overtakes OpenAI in Quarterly Sales

Top News

OpenAI’s second-quarter revenue rose 18% to $6.7 billion while its operating loss widened to $12.3 billion. Meanwhile, Anthropic more than doubled revenue to $11.6 billion and surpassed OpenAI in quarterly sales for the first time. The Wall Street Journal has more here.

Speaking of OpenAI, the company launched ChatGPT for Teens with default safety protections, parental controls, and homework reminders, years after teenagers began using the chatbot and amid lawsuits and concerns over its effects on young users. [Said one StrictlyVC intern, “You better not turn that on.”] TechCrunch has more here.

A landmark trial against Meta opened today in Oakland, with 29 states accusing the company of deliberately designing Facebook and Instagram to addict children and improperly collecting minors’ data. Meta denied the claims. Reuters has more here.

DOJ’s Probe into Andreessen Horowitz over Board Seats Baffles VCs

Image Credits: Steve Jennings / Getty Images (composite by TechCrunch)

By Marina Temkin

The Justice Department has launched a probe into Andreessen Horowitz regarding the firm’s partners serving on the boards of competing companies, Bloomberg reported.

The nearly year-long investigation focuses specifically on the firm’s board seats at Databricks, which is valued at $190 billion, and Fivetran, which combined with dbt Labs in June. The firm’s co-founder, Ben Horowitz, serves on the board of Databricks, while partner Martin Casado serves on the board of Fivetran.

Several VCs told TechCrunch they were surprised by news of the probe. Databricks and Fivetran are competitors now, but the two companies weren’t rivals when a16z invested in the startups, according to another Databricks investor who spoke on condition of anonymity. Databricks is largely known for its cloud storage products but, with its Lakeflow product, has expanded into AI data pipelines and application connectors. That’s Fivetran’s main business.

Given that Andreessen Horowitz has backed hundreds of companies, it’s almost inevitable that some startups will pivot or expand into the same markets, becoming competitors.

While backing direct rivals has become more acceptable recently, as evidenced by the many VCs that funded both Anthropic and OpenAI, holding a board seat on competing startups creates a far greater conflict of interest. Directors are generally privy to much more sensitive strategic information than non-board investors ever see.

Massive Fundings

Etched, a four-year-old startup based in San Jose, CA, that makes server racks filled with AI processors optimized for inference workloads, is raising a $700 million round at a $21 billion post-money valuation. (It announced a $300 million Series C round at a $10.3 billion valuation just last month.) Jane Street is the deal lead, with Kleiner Perkins, Sequoia Capital, Andreessen Horowitz, Tiger Global, Bain Capital Ventures, Neo, and Blackstone also participating. TechCrunch has more here.

Neros Technologies, a three-year-old startup based in Torrance, CA, that builds autonomous attack drones, counter-drone interceptors, and multi-drone control systems for U.S. and allied militaries, raised a $250 million Series C round at a $2.5 billion post-money valuation. The deal was co-led by Sequoia Capital and American Strategic Technology Fund, with Interlagos, Valor Equity Partners, Allen & Company, Thiel Capital, Spark Capital, and Dylan Field also opting in. Pulse 2.0 has more here.

Rillet, a five-year-old San Francisco startup that uses AI agents to automate accounting work for finance teams, raised a $100 million Series C round at a $1 billion valuation. ICONIQ was the deal lead, with Bain Capital Ventures, Sequoia Global Equities, Battery Ventures, FirstMark, Scale Venture Partners, and Creandum as well as previous investors Sequoia Capital, Andreessen Horowitz, and Oak HC/FT also stepping up. The company has raised a total of $200+ million. Fortune has more here.

Smack Technologies, a two-year-old startup based in El Segundo, CA, that builds AI decision-making tools and wearable battlefield hardware for the military, raised a $61 million Series B round. Investors include Costanoa Ventures, First In, Point72 Ventures, and Geodesic Capital. Reuters has more here.

Temporal, a seven-year-old startup based in Bellevue, WA, that sells an open-source orchestration platform for running complex code and long-running AI agents without failures, is reportedly in talks to raise around $500 million at a $12+ billion pre-money valuation. Bloomberg has more here.

Velaura AI, a four-year-old startup based in Santa Clara, CA, that develops low-power chips and software for AI data centers, robotics, and autonomous systems, raised a $110 million Series A round at a $1+ billion valuation. The deal was led by Seligman Ventures, with Capricorn Investment Group as well as previous investors Samsung Catalyst Fund, StepStone Group, and Maverick Silicon also engaging. Reuters has more here.

Big-But-Not-Crazy-Big Fundings

Boom, a six-year-old Austin startup that helps single-family rental and manufactured housing property managers screen tenants, report rent payments, and automate leasing decisions, raised a $15 million Series A round led by S3 Ventures, with Mischief VC as well as previous investors Starting Line VC, Company Ventures, and Gilgamesh Ventures also participating. Commercial Observer has more here.

Craif, an eight-year-old Tokyo startup that develops urine-based tests that analyze microRNA signals to help medical providers detect pancreatic cancer, raised a $33 million Series D round co-led by Granite-Integral and Tauns, with Unreasonable and X&KSK also buying in. The company has raised a total of $88 million. Fierce Biotech has more here.

Leal Therapeutics, a five-year-old startup based in Worcester, MA, that develops neuro-metabolic therapies for serious central nervous system disorders such as schizophrenia and ALS, raised a $30 million Series A extension. Investors included Eli Lilly as well as previous investors Alexandria Venture Investments, Chugai Venture Fund, Euclidean Capital, Newpath Partners, OrbiMed, PhiFund, and SV Health Investors' Dementia Discovery Fund. Clinical Trials Arena has more here.

Palona AI, a two-year-old Palo Alto startup that helps restaurant operators capture customer demand from calls, catering requests, and large-order inquiries and convert it into orders, raised a $20 million Series A round. Investors included Ardenwood Ventures, CrimsonOx, UpHonest, Turbo, Llama Ventures, Neo, Fusion Fund, Defy, and Maynard Webb. Fast Casual has more here.

Smaller Fundings

Birdsview, a nine-year-old startup based in Bergen, Norway, that helps engineers inspect concrete structures without drilling by turning radar and LiDAR scans into 3D models, raised a $4.3 million round led by Sarsia, with Butterfly Ventures, Proptechfonden, Kiilto Ventures, Nordic Makers, and Momentum as well as previous investors Eviny Ventures and Farvatn Venture also anteing up. Tech Funding News has more here.

Entravel Group, a three-year-old Copenhagen startup that helps fintech brands offer white-label travel booking by connecting hotel inventory, supplier data, and payment infrastructure, raised a $7.5 million round co-led by Ethereal Ventures and Finality Capital, with GSR and Varrock also joining in. PhocusWire has more here.

Grounded, a four-year-old Detroit startup that builds modular interiors and power systems that turn commercial vans into mobile healthcare vehicles, command centers, shops, and campers, raised a $5 million seed round. Investors included Animal Capital and the Michigan Outdoor Innovation Fund as well as previous investors Also Capital and The 81 Collection. TechCrunch has more here.

Hypercubic, a one-year-old San Francisco startup that uses AI agents to map, document, and rewrite legacy COBOL applications for banks, industrial companies, and other large enterprises, raised a $5.3 million seed round led by CIV, with Y Combinator, Afore Capital, Pioneer Fund, and Multimodal Investors also digging in. SiliconANGLE has more here.

InfiniG, a three-year-old startup based in Los Gatos, CA, that provides managed indoor cellular coverage for enterprises and property owners that need service across multiple mobile operators, raised a $5.2 million seed round co-led by J2 Ventures and Stormbreaker Ventures. Pulse 2.0 has more here.

Peripheral, a two-year-old Toronto startup that converts standard sports broadcast camera feeds into navigable 3D replays for sports leagues, stadiums, and media clients, raised an $8.7 million seed round co-led by Inovia Capital and Deloitte Ventures, with Khosla Ventures and Entrepreneurs First also stepping up. The company has raised a total of $12.5 million. More here.