Glam life, scam life
Elizabeth Holmes of Theranos famously lived alone in a Los Altos, CA mansion and expensed the rent. Holmes, who has since been charged with massive fraud, also refused to fly commercial and at one time reportedly had a security team of 20 (not to mention being a fount of strange inspirational quotes like the below).
In fact, there is a tendency of unsavory startup founders and venture capitalists to show their hands by spending funders’ money on blingy nonsense and frills.
The above are just 4 anecdotes from our 17 tales of recent startup frauds.
- The two founders of augmented reality motorcycle helmet Skully allegedly used millions raised through Indiegogo on Dodge Viper sports cars, four motorcycles, limousine rentals, and entertainment at “a gentlemen’s club.”
- Mobile payments company Mozido raised $314M of outside money, before going down in a blaze of lawsuits and fraud allegations. Founder Michael Liberty was accused of diverting money to pay for interior decorating.
- Rothenberg Ventures was purportedly a humble seed capital fund, but the main partner's spending habits, which attracted SEC scrutiny, were reminiscent of Bobby Axelrod: a Super Bowl suite for investors, celebrity appearances at parties, and co-producing a Coldplay music video.
They are useful cautionary tales. While most of Silicon Valley glories in success, we always try to look beyond survivorship bias to see what doesn’t work and why. Grift and fraud are, unfortunately, part of that story.
Most startups, of course, fail for more honest and prosaic reasons. Our VC funnel research report shows just how much carnage there is as part of the venture capital process, both in terms of outright failures and “walking dead” companies.
The race is on
Electric cars still account for a small percentage of cars on the road. But with technical capabilities improving, production costs decreasing, and a global demand for sustainable solutions, that could soon change.
Electric vehicle sales are growing quickly, and the market is becoming more and more competitive. We dive deep into the state of the EV industry, the major players, technical challenges, and more. Check it out here.
They've just got that something
Our analysts picked 100 of the most promising AI startups from around the world.
These companies are providing hardware and data infrastructure for AI applications, optimizing machine learning workflows, and tackling challenges across 12 different industries.
See them all here.
Digital health innovations are transforming how clinicians and hospital administrators approach patient care.
From diagnostics to radiology to infection control, we take a look at 90+ companies building the hospital of the future. Clients can see them all here.
Competition? Why yes, I would love some
Several major automakers are making moves in the electric vehicle space, but Tesla, Nissan, and BAIC are leading the pack. Together, they accounted for roughly a quarter of EV sales last year.
But competition in the space is heating up. Incumbents like GM, BMW, and Volkswagen are ramping up their operations, and startups are rising to challenge them. We take a closer look at the race for the EV here.
At Future of Fintech (June 11-13, NYC), we’re bringing you talks from the most active fintech investors.
Partners at these firms will share more on where they’re placing their bets. Their firms were a part of 20+ fintech/insurtech deals this year alone.
Buy a ticket to FoF today with code moneytalks and save $500. Prices go up June 1!
Have a great rest of the week.
P.S. Our new self-reporting data pipelines needed to fulfill several important goals. Here's how our engineering team tackled the challenge.
This week in data:
- -$1B+: Uber reported a quarterly loss of over $1B on revenue of $3.1B in its first earnings report since going public. Meanwhile, the company has said that it will begin deactivating riders who receive consistently low ratings from drivers — a threshold which would vary by city. We discussed how Uber retains customers and generates revenue in our report on How Uber Makes — And Loses — Money.
- $35B: Fiat Chrysler Automobiles (FCA) and Renault have announced plans for a proposed merger that is estimated to be worth around $35B. FCA stated that the combined entity would sell around 8.7M vehicles and be the 3rd-largest automaker in the world. If approved, the deal could boost FCA’s electric vehicle offerings by tapping into Renault’s expertise in the area. Expert Intelligence clients can see where competing auto incumbents are placing their EV bets here.
- $17B+: MacKenzie Bezos, who is set to receive around $35B worth of Amazon stock from her divorce settlement with Jeff Bezos, has pledged to give away at least half her wealth. Other signatories of the “Giving Pledge” include Warren Buffett, Bill Gates, and Mark Zuckerberg.
- $60.5M: LinkedIn is set to acquire advertising tech startup Drawbridge in a bid to build out its quickly growing marketing platform. California-based Drawbridge had previously raised around $60.5M, attracting investment from prominent investors like Sequoia Capital and Kleiner Perkins. The startup was last valued at $166M during its 2016 Series C round.
- 1st: Astronauts on board the International Space Station used CRISPR to alter the genome of yeast — the first time the technique has been used in space. The research aims to improve understanding of how DNA repairs in space and could contribute to protecting astronauts from radiation during long-term space missions. Not sure why CRISPR is important? Here’s our explainer.
- 25K: Facing a reported decline in seasonal workers due to Brexit, a UK berry grower is testing an autonomous robot that can pick 25K raspberries a day, almost 2x more than a human worker can achieve. Farming isn’t the only industry becoming more automated — clients can take a look at 9 companies applying robotic process automation to traditionally white collar roles.
- $1.3M: A virus-loaded laptop, which has been purposely infected with 6 high-profile viruses from the last 20 years, sold at an art auction for $1.3M. The piece, called “The Persistence of Chaos,” is intended to comment on the threat posed by a highly digitally connected world, with the artist drawing attention to “weaponized viruses that affect power grids or public infrastructure.” For insights into future cybersecurity threats, and the companies seeking to stop them, check out our 2019 Cyber Defenders report.