Nvidia might be clouding the funding climate for AI chip startups, but Hailo is still fighting

This is our Wednesday show, when we take a moment to dig into a raft of startup and venture capital news. No big tech here! Keep in mind that Y Combinator's demo day kicks off today, so we're going to be snowed-under in startup news the rest of the week. Consider today's show the calm before the storm. AUDIO On the podcast this morning we have BlaBlaCar's new credit facility and how it managed to land it, how PipeDreams could be onto a new model of startup construction, GoStudent's rebound and profitability, Hailo's chip business and massive new funding round, and the two new brands that GGV calls home as it divides up its operations on both sides of the Pacific Ocean. Equity is TechCrunch’s flagship podcast and posts every Monday, Wednesday and Friday, and you can 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 interview transcript, for those who prefer reading over listening, read on, or 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

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  Hello and welcome back to Equity, the TechCrunch Podcast, where we unpack the numbers and the nuance behind the headlines. This is Alex and today is April 3, 2024. Welcome back to our Wednesday show where we dig into the critical and important startup and venture capital stories from the week thus far. Now, if you're asking yourself, what about last week? We didn't do this last week. What happened to the Wednesday show? Well, I got an eye infection and so last Wednesday morning I was at the doctor and not at the microphone, but we're back and there is much to talk about. On the pod today, I have BlaBlaCar and why it is ready to buy smaller startups, a startup that has a new model that I really dig, ghost students turnaround,

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  an AI chip company that is taking on Nvidia and some venture capital news that was long in the making. To work.

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  Starting off, BlaBlaCar is an iconic name over in the French startup ecosystem. That's according to our own Roman over on TechCrunch. The carpooling and bus ticketing company, however, has been around for so long that it's hard to really think of it as a startup anymore. But it did start life as a scrappy online hitchhiking community, did raise hundreds of millions of dollars and did reach unicorn status. So this is definitely a startup story. Now, the company eventually expanded across countries and continents before scaling back its ambitions and starting to think about profitability. But that's not why it's on the show today.

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  Today, the company announced that it has secured a 100 million euro revolving credit facility. However, that credit access is not actually designed to help fund BlaBlaCar's own operations. How is that possible? Well, the company told us it has been profitable since April of 2022. Now, the question then becomes why the capital? Well, it turns out the word is acquisition. I think that's brilliant. Right now, many companies are cheap, talent is affordable. So if you're doing well financially, use some credit, go out there and snap up stuff while it is still cheap. Now, back to the profit point. Co-founder and CEO Nicholas Bresson told TechCrunch that back in 2022,

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  the company saw 195 million euro worth of revenue and was almost profitable, but because of a very tough first quarter, wasn't. But from the second quarter of 2022 and since, the CEO said that Blabla Car has been profitable and last year it saw revenue of 250 million euro. So it's growing about 30% a year and profitable. Nice. That's actually fantastic. The company I think should go public and then wow the French public with its success. But in the meantime, if you are a startup in Europe and you need a place to land, well, Blabla Car has money. Next up, here's a fun startup story. You've heard this one before.

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  Dan Lauffer swore off ever founding a startup again after he sold apartment rental platform Rent Lingo back in 2021. But, and I'm sure you saw where this was going, he couldn't ignore the potential to solve a problem he saw unfolding back when he was the head of growth and product marketing at Nextdoor. And what was that problem he wanted to solve? Well, according to Lauffer, quote, "The top use of Nextdoor is people looking for providers, HVAC especially." Now, take that and mix in the fact that a huge number of folks out there are heading towards retirement, and Lauffer came up with Pipe Dreams, a startup that acquires mom and pop HVAC and plumbing companies, scales them using its own software, and then helps them operate.

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  Ask anyone out there who owns a house how easy or how hard it is today to find trade-related help, and they'll tell you it's absolutely not easy. So Pipe Dreams is probably chasing after a market that is, well, not a pipe dream. And investors agree. The company just raised a $25.5 million Series A, led by Canvas Ventures, that also saw capital from Plural, and a couple of angels came up. Along for the ride, including Tony Zhu, the founder of DoorDash and Thomas Leighton, the former CEO of OpenTable. The company is making real progress thus far, has purchased nine companies and is, I think, a unique combination of like a private equity,

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  roll-up, vertical SaaS, startup and IRL business all at once. I don't know quite what to call Pipejames, but I do think it's absolutely awesome. How about more good startup news? I deliver. GoStudent, an online tutoring marketplace last valued at $3.2 billion, has carved out a position for itself, TechCrunch reports, as one of the biggest and most popular startups to ever come out of Austria. It has 11 million families and 23,000 tutors on its platform. That is enormous scale. It's a big valuation. How is it all working out for the company financially? Well, GoStudent is adding another distinction to its list of accolades, and that is profitability.

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  The company's CEO Felix Oswald told TechCrunch that his company is now in the black across its global footprint. What does that mean? Well, it means that GoStudent is both EBITDA positive and has positive operating cash flow across both GoStudent and the GoStudent Group. But for startup founders out there who wish they were profitable, let me tell you, it was not easy for the company to get there. GoStudent lost 89 million euro back in 2021, with that figure ballooning to 220 million euro in 2022. That led to several rounds of layoffs and, as you can imagine, major cost cuts. Quoting from the CEO here, "From 2019 to 2022,

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  we scaled our core business model to more than 100 million euro in revenue, and it was amazing." But the company also had, quote, "A cash burn of over 150 million euro in 2022 alone," end quote. Put another way, it is possible to have gotten a bit too fast-moving during COVID and the ensuing quarters and still find a way forward that is super sustainable. GoStudent did it. It just had to struggle its way there. But now, on the other side of the fence, welcome to the land of profitability.

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  And to close out our startup coverage, the funding climate for AI chip startups, once as sunny as a mid-July day in Chicago, is beginning to cloud over like a Seattle fall as Nvidia asserts its dominance over the market. How bad is the data? Well, according to a recent report, US chip firms raised just $881 million in the first quarters of 2023, down from $1.79 billion in the same first three quarters of 2022. That is a very, very sharp decline. As a result, there is turbulence out there in the market with AI chip company Mythic running out of cash back in 2022. It was nearly forced to actually

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  halt operations, and Graphcore, a once well-capitalized rival, now faces mounting losses. But don't worry, not all is lost in the world of AI chips because Halo, which is H-A-I-L-O, which designs specialized chips to run AI workloads on edge devices, just raised $120 million this week in an extension to its Series C. Also, Halo claims 300 customers, which is good. More competition equals more good, and while Nvidia is doing great and everyone wants more of its stuff, it's better if someone is trying to chase them down and steal their crown.

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  And just one more venture capital story before we go. Now, the VCs who long ran GGV Capital, a 24-year-old cross-border firm that was something akin to a bridge between the US and China, have finally settled on two new brands roughly a half year after announcing they were going to split their US and Asian operations. So, veteran investors Ginny Lee and Jixun Fu have rebranded their Singapore-based group as Granite Asia, which Forbes first reported, and meanwhile, Hans Tung, a firm co-founder who lives in the Bay Area, announced on X very recently that the US team is now called Notable Capital.

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  This is not a shock. US and China economic ties are at a very strained point, and with the two countries competing across a Host of domains, it's hard today to invest in both regions and not run afoul of one of the two governments. Other firms, of course, have made similar changes, including Sequoia. I would say that this story is evidence that the global market today really isn't, which is probably a tough pill for some to swallow because lots of VC firms invested in China and did rather well. Today, however, with capital controls in place that are very strict in China, it's actually tough at times to cash out even winning bets. And so the shift of global funds to a more geo-specific entity model, I think, is going to take a very long

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  time to reverse. That said, the trend of venture capital firms having incredibly boring names appears to be still going in full force.

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  And that is our Wednesday show for this lovely week. I am off now into Y Combinator Demo Day land for the next two days. So please don't call me. I am busy. We will have all of notes about that over on the Friday news roundup that comes to you on Friday morning. In the meantime, if you need even more from Team Equity, we are Equity Pod over on X and Threads, TechRunch Pods over on TikTok, and we are so lucky to have a sister show in Found, talking to founders about how they built what they did. This is Alex. This is Equity. We'll talk to you soon.

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  Equity is hosted by myself, Alex Wilhelm, and TechRunch Senior Reporter, Mary Anne Azvedo. We are produced by Teresa Locan Solo with editing by Kell. Bryce Durbin is our illustrator, and a big thank you to the audience development team and Henry Pickavet, who manages TechCrunch Audio Products. Thank you so much for listening and we'll talk to you next time.