🕶️ The Startup Equity Dilemma

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Happy Thursday! 🎢

Have you ever wondered what you would do differently with your startup if you had to start over? 🤔 We did, and we tell you about it in this new video.

Plus, there's buzz about startups cutting back on hiring and skimping on equity for their team. It's a trend worth noting with some serious consequences 🌪️

Stay in the loop on AI regulations (important news brewing across the pond), the latest scoop on the Techstars/JP Morgan saga, who's topping the charts as the cream of the crop among US startups, and more! 🗽

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How would I run a startup (If I had to start over)

In this video, Caya dives into what he'd do differently if he had the chance to start over 🙀 Join us as we share insights, reflections, and lessons learned along the way. 🎮 Check out our other videos!  

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Six bullets of updates

  1. 💸 Techstars' $80 million collaboration with J.P. Morgan is on shaky ground due to missteps and a failure to meet diversity commitments.

  2. 💼 Spotlight on America's top startups; Forbes and Statista list ranks ONE, an EV battery startup, as #1 employer for its no-ego culture.

  3. 📱 #Apps Despite their popularity, a mere 3.5% of subscription mobile apps hit $10k in revenue, says RevenueCat report.

  4. ✍🏽 AI makes strides in journalism with five Pulitzer finalists using the tech, amidst debates on its ethical implications.

  5. 😯 At SXSW 2024, award-winning duo DANIELS dubs AI cheerleading as terrifying, urging mindful use.

  6. 🛴 Norwegian startup Surf Beyond acquires bankrupt US-based scooter firm Superpedestrian's European business for €5m, boosting its fleet by 25k scooters.

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Fewer workers, less equity, more eye-rolling

Startups are increasingly hiring fewer workers and providing less equity as compensation, according to a recent TechCrunch article. This trend is being driven by a variety of factors, such as the tightening labor market and the increasing burden of regulatory compliance. This shift may be indicative of a broader trend, as more companies are choosing to remain private longer, thereby delaying the liquidity event that traditionally accompanies an initial public offering (IPO).

While this trend might seem advantageous for startups in the short term, as they can save on labor costs and equity dilution, it could potentially be detrimental in the long term. Startups, particularly in the tech sector, rely heavily on their ability to attract and retain top talent. 

Offering less equity could make these companies less attractive to highly skilled workers, who often take on the risk of joining a startup with the expectation of a potentially lucrative equity payout down the line 👀

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These companies just raised money

  1. 🤖 Robotics startup Bear Robotics snares a $60M investment from LG Electronics, making LG its largest shareholder.

  2. 🧬 Biosciences is splicing up the future, securing $11.4M in Series A to expand its AI-guided protein creation platform.

  3. 🌿 Packfleet, a green logistics startup, raises $10m in Series A, set to expand its carbon-neutral courier service in the UK.

  4. 🇫🇮 Finland-based medtech startup Sooma scores €5M to scale its depression-fighting brain stimulation device, already prescribed to over 20,000 users.

  5. 🚗 Salvadoran insurtech Sostengo bags $3.8M seed funding, extending round by $1M for US expansion - 70% of its users got car insurance for the first time.

  6. 🇳🇬 Nigerian identity verification and AML solutions provider, Youverify, secures $2.5 million investment from Elm.

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Europe's AI act and its impact on startups

Europe is stepping up as the global standard-setter in AI regulation, with its AI Act getting a resounding thumbs-up from the European Parliament. This landmark legislation, considered the world’s first comprehensive AI law, adopts a risk-based approach to AI software regulation, varying rules and requirements based on the use-case's associated risk level.

But don't pop the champagne yet, AI-startup founders! You have some homework to do. While the law sees most AI apps as low risk and hence outside its hard rules, a selection of high-risk applications, like AI used in education or employment, will require registration and strict adherence to risk and quality management provisions.

Violation of the Act’s provisions can cost you a whopping 7% of your global annual turnover or €35 million, whichever is higher. The AI Act is expected to come into full force by mid-2027, with a phased implementation plan. Learn more!

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FREE Financial Model Template

Use it to estimate your revenue, expenses, and how much money your startup needs to raise. Available to download in Excel and Google Sheets. Being on top of your Financial Model can make the difference and allow managers and founders to make game-changing decisions.