Rebecca Szkutak, Senior Reporter, Venture
July 8, 2024 – 6 min read
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. We’ll start with the recent OpenAI security breach.
OpenAI Security Breach: A Warning Sign for AI Companies
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 Coldewey 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.
AI companies possess vast amounts of sensitive information, including user data, financial information, and proprietary technology. This makes them an attractive target for hackers looking to exploit valuable data. The recent OpenAI breach serves as a warning sign for AI companies, highlighting the importance of robust security measures to protect against cyber threats.
Fisker’s Slide into Bankruptcy: A Cautionary Tale
We also had an update on Fisker’s slide into bankruptcy. The EV startup 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 development has some people fearing that this Chapter 11 bankruptcy could turn into a Chapter 7, which would result in the company’s assets being liquidated and distributed among creditors. The implications of such a scenario are far-reaching, affecting not only the company’s stakeholders but also its employees and customers.
The New Trend: Venture Funds Helping Seed Investors Exercise Pro Rata Rights
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. While it could be good for smaller funds to have a way to maintain their equity stakes, pro rata rights discussions can get contentious.
Bringing more capital to the table won’t necessarily help that. In fact, it may even exacerbate the situation by creating more tension among investors. The key is finding a mutually beneficial solution that works for all parties involved.
The Rise of Seed VCs: A New Era in Venture Capital
The trend of venture funds helping seed investors exercise their pro rata rights marks a significant shift in the venture capital landscape. This development highlights the growing importance of seed funding and the need for more support structures to help early-stage companies navigate the complexities of fundraising.
As the industry continues to evolve, we can expect to see more innovation and experimentation in the way that venture funds structure their investments and relationships with seed investors. One thing is certain – the days of traditional venture capital are numbered, and a new era of Seed VCs has emerged to fill the gap.
Conclusion
Equity will be back on Wednesday with an interesting conversation between Mary Ann and angel investor and Floodgate co-founder Mike Maples Jr. We’ll talk to you then!
In conclusion, today’s episode of Equity highlighted several key trends and developments in the world of venture capital and technology. From OpenAI’s security breach to Fisker’s slide into bankruptcy and the rise of Seed VCs, there’s no shortage of news to explore.
Stay Tuned for More
Equity is TechCrunch’s flagship podcast, produced by Theresa Loconsolo, and posts every Monday, Wednesday, and Friday. Subscribe to us on Apple Podcasts, Overcast, Spotify, and all the casts. You can also 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.
About This Episode
Rebecca Szkutak is a senior reporter at TechCrunch that covers venture capital trends and startups. She previously covered the same beat for Forbes and the Venture Capital Journal.
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