Good day: The original idea for artificial-intelligence company Hugging Face isn't what ended up creating the most value.
While many startups end up pivoting, Hugging Face's shift-from a chatbot app for teens to a platform for accessing AI models for business users-is among the more dramatic and lucrative in recent startup history. Nvidia's recent agreement to acquire Hugging Face for $12.9 billion highlights this success.
John Borthwick, chief executive and founder of Betaworks, an early backer of Hugging Face, said that while the swivel was surprising, it was also a natural evolution.
"It was just a different articulation of working with the same tech. Instead of building an app, they were building a platform for other apps," Borthwick said.
Borthwick said he's seen many pivots, and they always present a difficult choice. On the one hand, he doesn't want founders to change direction too fast, he said. On the other, he advises them to go deep into their focus area while keeping an eye on adjacent segments.
Founders "may have the right intuition about the ZIP Code, but they may be on the wrong street," Borthwick said.
Unusual pivots also include crypto-mining companies, such as CoreWeave, jumping on the AI bandwagon at an opportune time.
There is a lesson here for investors. Some passed on Hugging Face when it was a consumer app and came to regret it.
Micah Rosenbloom, general partner at venture firm Founder Collective, wrote on X that he had met Clément Delangue, co-founder and chief executive of the startup, early on.
"I thought the idea of a chatbot for kids was so novel-I hadn't seen anything like that. But as a parent I worried it was risky. Big mistake!" Rosenbloom wrote, adding: "A reminder to bet on good people who have a vision for the future."
Those who took the bet stand to get handsome returns. Betaworks owns a stake that could be worth about $650 million at the acquisition price, while A.Capital and SV Angel could collectively generate $1.8 billion in proceeds, according to WSJ Pro's earlier reporting.
Top News
What to know about Anthropic's IPO. Wall Street's marquee event this fall is expected to be Anthropic's initial public offering. It could raise up to $100 billion and value the artificial-intelligence giant at around $2 trillion, The Wall Street Journal has reported. Those figures would top records set by SpaceX's debut in June. Investors are still waiting for a peek at the company's inner financial workings, and the company still has key decisions to make. See here when Anthropic is expected to go public, which banks will land top roles, and whether it'll list on Nasdaq or NYSE.
Meta Launches a Personal AI Agent Designed to Be Easy to Use
Meta Platforms is betting that making AI agents easy to use will get mainstream consumers to start adopting them in their daily lives. The company on Tuesday announced a new personal AI agent that can buy goods online, respond to emails and complete other tasks users authorize it to do for them. Called Muse, the agent is accessible via a dedicated app. Users operate the agent by conversing with it like a typical chatbot and can choose their own names for it.
OpenAI Says It Has Solved a Millennium Prize Problem-a Holy Grail of Math
In a year of unthinkable math progress, as increasingly powerful AI systems have cracked conjectures that had long stumped humans, OpenAI published a breakthrough on Tuesday that represents the most significant advance yet.
Industry News
Funds
TrueBridge Capital Partners closed its TrueBridge Secondaries II fund with $508 million in commitments. The vehicle invests in venture funds and makes direct secondary investments in venture-backed companies.
Palo Alto, Calif.-based Rohati Capital closed its inaugural fund at $50 million.
People
Digital adoption platform Whatfix appointed Vara Kumar as chief executive officer. He succeeds Khadim Batti. Kumar and Batti co-founded the company in 2014.
New Money
Stoke Space Technologies, a Kent, Wash.-headquartered rocket startup developing reusable launch vehicles, completed the initial closing of its $1 billion Series E round. Point72 Ventures and Spark Capital co-led the investment.
The Exploration Company, a Germany-based space transportation developer, scored $450 million in Series C funding from investors including Bessemer Venture Partners, Atomico, Plural, Balderton Capital and others. Bessemer's Alex Ferrara will join the company's board.
Celero Communications, an Irvine, Calif.-based provider of digital signal-processing technology for AI infrastructure, snagged $275 million Series C funding, valuing the company at more than $3 billion. Atreides Management, Valor Equity Partners and CapitalG led the round, which included participation from Sutter Hill Ventures and Maverick Silicon. Gavin Baker of Atreides Management will join Celero's board.
ARC Ride, a Kenya-based electric mobility platform, picked up a $33.3 million investment led by Novastar Ventures and Norrsken22.
Antioch, a New York-headquartered simulation platform for physical AI, secured $32 million in Series A funding. Greylock led the investment, which included contributions from A*, Category Ventures, Box Group and Icehouse Ventures.
HelmGuard, a San Francisco-based agentic security and compliance platform, was seeded with a $7.3 million investment. Infinity Ventures and Frontline co-led the round, which saw additional support from FinTech Collective, Stage 2 Capital and Entrepreneurs First.
Fluencify, a Stockholm-based creator marketing platform, raised $4.3 million in pre-seeding funding led by byFounders.
Veridue, an AI-native due diligence and M&A platform built for energy infrastructure and data centers, collected $4 million in pre-seed funding led by Episode 1 Ventures. The company has offices in London and New York.
Tech News
Think Your Anonymous Account Is Safe? AI Might Figure Out Who You Are
Ford's Use of Chinese Tech Called 'Unacceptable' by Transportation Secretary
The End of the Captcha? Not So Fast
Amazon Sued for Allegedly Discriminating Against Pregnant Employees
U.S. Gets Minority Stakes in Some Quantum Computing Companies in $300 Million CHIPS Act Funding Deal
How Shopify's Push into AI Is Working Out
Block Applies to Establish Builders Bank & Trust
Around the Web
Gen AI Tools Are Now Being Used to Push 'Slop Jihad' (Wired)
Zoos Are Doubling Down on Very Unnatural Habitats (Atlantic)
The WSJ Pro VC Team
This newsletter was compiled by Yuliya Chernova and Zachary Cole.
Share your tips, comments and questions: vcnews@wsj.com
The team: Matthew Strozier, Yuliya Chernova, Brian Gormley and Sarah Klearman.
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