A new trend for Seed VCs, and the scariest part about OpenAI's data breach

Jul 8, 2024

A significant OpenAI security breach raises alarms about data vulnerabilities in the AI sector. Meanwhile, the EV startup Fisker faces dire circumstances as it seeks to liquidate inventory at drastically reduced prices amidst bankruptcy concerns. Additionally, a new trend in venture capital gives seed investors a lifeline, allowing them to protect their equity stakes. As pro rata rights discussions heat up, the complexities of funding dynamics illustrate how the startup landscape is evolving.

Ask episode

AI Snips

Chapters

Transcript

Episode notes

ANECDOTE

Fisker's Bankruptcy

Fisker, an EV startup, filed for Chapter 11 bankruptcy protection and is selling its remaining inventory at significantly reduced prices.
This follows other EV startups like Arrival and Ambry that also filed for bankruptcy this year.

INSIGHT

OpenAI Data Breach Significance

OpenAI's recent security breach, while minor, highlights the vulnerability of AI companies.
These companies hold vast amounts of valuable data, making them attractive targets for hackers.

INSIGHT

Pro-Rata Funds for Seed VCs

Smaller venture funds are using new pro-rata funds to maintain their equity stakes in later funding rounds.
This allows them to exercise their pro-rata rights, even with increasing valuations, potentially creating more competition with bigger firms.

Get the Snipd Podcast app to discover more snips from this episode

Get the app

On today's episode of Equity, we're taking a look at news you might've missed over the holiday weekend here in the U.S., starting with the recent OpenAI security breach. While it doesn't seem that people have to be too worried about what the hackers actually accessed, the fact that it happened is worth paying attention to. TechCrunch's Devin Coldeway argues that AI companies are treasure troves of data and will likely become more of a target for hackers. Companies that work with the large AI companies should pay attention.

We also had an update on Fisker’s slide into bankruptcy. The EV startup, that you've already heard about on Equity, had a new update this week. The company asked its bankruptcy judge for permission to sell its remaining inventory for $14,000 a vehicle, a noticeable drop from the $70,000 Fisker was initially asking for. This has some fearing that this chapter 11 bankruptcy could turn into a chapter 7.

To close out, we looked at a new trend of venture funds helping seed investors exercise their pro rata rights and avoid their equity stake being diluted. This is interesting because while it could be good for smaller funds to have a way to maintain their equity stakes, pro rata rights discussions can get contentious and bringing more capital to the table won't necessarily help that.

Equity will be back on Wednesday with an interesting conversation between Mary Ann and angel investor and Floodgate Co-Founder, Mike Maples Jr, so we’ll talk to you then!

Equity is TechCrunch’s flagship podcast, produced by Theresa Loconsolo, and posts every Wednesday and Friday. Subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.

You also can follow Equity on X and Threads, at @EquityPod. For the full episode transcript, for those who prefer reading over listening, check out our full archive of episodes over at Simplecast.

Credits: Equity is produced by Theresa Loconsolo with editing by Kell. Bryce Durbin is our Illustrator. We'd also like to thank the audience development team and Henry Pickavet, who manages TechCrunch audio products.

Learn more about your ad choices. Visit megaphone.fm/adchoices