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The Ripple Effects of Turmoil at OpenAI
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By Brian Gormley, WSJ Pro
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Good day. The possibility of an exodus of employees from OpenAI threatens many startups that rely heavily on that company’s technology, venture capitalists said.
OpenAI’s future is in jeopardy now that nearly all the generative artificial-intelligence startup’s more than 700 employees have threatened to quit, following the decision by the company’s board Friday to fire co-founder and Chief Executive Sam Altman.
Software companies that build technology on another company’s platform always face supply-chain risk, said Anand Sanwal, co-founder and chief executive of market tracker CB Insights.
“I think a lot of companies at a minimum are trying to make sure they have contingency plans, because they don’t know what might happen with OpenAI,” he added.
Nikhil Basu Trivedi, co-founder and general partner at venture firm Footwork, said that his bet is “that any business that is heavily reliant on OpenAI is thinking about the implications of this, how to not be reliant on them moving forward.”
Uncertainty at OpenAI helps competitors, such as venture-backed Anthropic, and gives laggards time to catch up in the large language-models sector, analysts said. “Anthropic and other competing LLM providers will take advantage in the market to compete more aggressively,” Tomasz Tunguz of Theory Ventures wrote in a blog post.
—Yuliya Chernova contributed to this article.
More WSJ Coverage of OpenAI:
And now on to the news...
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A jump by Microsoft’s shares helped drive major stock indexes higher. PHOTO: JUSTIN LANE/SHUTTERSTOCK
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Stocks extend rally. Investor enthusiasm for artificial intelligence took center stage again Monday, after Microsoft announced it was hiring freshly ousted OpenAI CEO Sam Altman to lead its new advanced AI research team, The Wall Street Journal reports. The news spurred a rally in Microsoft shares, helping power stock indexes higher.
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The S&P 500 climbed 0.7%, and the tech-heavy Nasdaq Composite advanced 1.1%. The Dow Jones Industrial Average rose 0.6%, or around 204 points.
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The S&P 500 is now up 8.4% this month and 18% for the year.
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The recent rally has been fueled by growing bets that the Federal Reserve is done raising interest rates. But optimism about AI has continued to be a tailwind as well.
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EV Startup Fisker Has Lost Another Chief Accounting Officer
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Electric-vehicle startup Fisker has lost its second chief accounting officer in less than a month, the latest setback for a company that only recently started selling its first model, WSJ reports. Florus Beuting, who was named chief accounting officer in early November, has left the automaker, the company said in a regulatory filing Monday. His exit follows the departure of his predecessor, who left in late October after roughly three years at the startup to take a job with another company.
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SEC Charges Kraken With Operating As Unregistered Exchange
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The Securities and Exchange Commission on Monday charged cryptocurrency trading platform Kraken with operating as an unregistered securities exchange, WSJ reports. The charges are the latest effort by regulators to crack down on crypto companies, some of which the SEC views as illegally selling securities without registering with the commission. Kraken said in a blog post following the news that it disagrees with the SEC and plans to defend its position in court.
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Funds
LG Technology Ventures raised an additional $300 million this year to continue investing in sectors including artificial intelligence, batteries and mobility.
Brooklyn, N.Y.-based growth equity firm SEVA closed its debut fund at $85 million, far exceeding its original $50 million target.
People
Defy.vc added Medha Agarwal as general partner and Amy Yin as venture partner.
Aerin Medical, which is focused on developing treatments for chronic nasal conditions, appointed Derrick Sung as chief financial officer. He was previously CFO at Pulmonx.
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LucidLink, a San Francisco-based storage collaboration platform for remote and hybrid teams of creative professionals, scored $75 million in Series C funding. Brighton Park Capital led the round, which included participation from Headline and others.
Matsmart-Motatos, a Sweden-based online reseller of food and consumer-goods that traditional retailers can’t buy, picked up a €40 million (about $43.7 million) growth capital round. Circularity Capital led the investment, which included additional support from SevenVentures and others.
Crisp, an Amsterdam-based grocery app focusing on seasonal and local food, closed a €35 million (about $38.3 million) funding round from investors including Keen Venture Partners and Target Global.
Qortex, a New York-based video marketing startup, picked up a $10 million investment. GFT Ventures led the round, with Managing Partner Jeff Herbst joining the company’s board.
Medmo, a New York-based medical imaging technology startup, landed a $9 million investment. Lerer Hippeau led the round, which included participation from investors including Jerusalem Venture Partners.
Munch, a Tel Aviv-based automation platform for social media, was seeded with a $7.2 million investment led by A* Capital.
Lasso Security, a Tel Aviv-based large language model cybersecurity startup, grabbed a $6 million seed round led by Entrée Capital.
Zerve, an Ireland-based data science and artificial intelligence startup, raised $3.8 million in pre-seed funding led by Elkstone Ventures.
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Amazon’s effort reflects a growing awareness among companies that AI could change how millions of people do their jobs. PHOTO: MARK LENNIHAN/ASSOCIATED PRESS
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