Hey — It’s Nico.

Welcome to another Failory edition. This issue takes 5 minutes to read.

These are the 5 most important things:

• Lilium, an air-taxi startup has shut down after raising $1B — learn why below.

• Garry Tan shared how they YC picks winners.

• Packy McCormick’s advice on what to do with an idea.

• General Catalyst secures $8B for new funds.

• Waymo raised $5.6B in Series C — learn why this matters below.

Let’s get into it.

This Week In Startups

🔗 Resources

5 lessons from Folk’s CRM founder on how to make users adopt “Aha” features.

Garry Tan’s advice for AI founders and details on how they YC picks winners.

9 growth frameworks for startups.

40+ ICP marketing plays to build a sales pipeline.

Packy McCormick on what to do with an idea.

📰 News

General Catalyst secures $8B for new funds.

Chemistry raises $350M to back fintech, developer tools, and work software startups.

Rental car startup Kyte cuts staff and scales back to two markets to survive.

ElevenLabs acqui-hires open-source reader app Omnivore.

OpenAI partners with Broadcom and TSMC to develop its first in-house AI chip.

💸 Fundraising

Finix secures $75M to rival Stripe as a payment processor.

Read AI raises $50M to bring its AI copilot to Slack, Zoom, Teams, and Gmail and more.

Reality Defender raises $33M to tackle deepfake and AI-generated content.

Bluesky lands $15M Series A as it prepares to launch subscriptions.

Fail(St)ory

Flying Taxis

Lilium, the German air-taxi startup with dreams of changing urban air travel, has announced it’s shutting down.

With its vision of building an all-electric aircraft capable of vertical takeoff and landing (eVTOL), Lilium captured plenty of attention and investor dollars. But after years of high costs, technical setbacks, and financial strain, the company has had to ground its ambitions and file for insolvency.

What Was Lilium: Lilium was founded in 2015 by four engineers and PhD students with a shared vision: transforming how people get around congested cities. 

The company aimed to create a new category of “air taxi” by developing a sleek, fully electric aircraft with the potential to carry passengers at speeds up to 100 km/h. Unlike conventional planes, Lilium’s eVTOL design allowed for vertical takeoff, which meant it could operate in tight, urban spaces without needing runways.

The vision was ambitious: Lilium's aircraft promised to bring regional air travel within the reach of many. For example, a commute to the airport that normally takes over an hour could, in theory, be reduced to just a few minutes.

The design attracted high-profile investors, including Tencent, and secured partnerships, including an order of 100 jets from Saudi Arabia and another deal with UK-based Volare Aviation. But a journey like this doesn’t come cheap.

The Numbers:

• 🚀 Founded in 2015 by a group of engineers and visionaries.

• 💸 Raised over $1B before going public, then another $525M after its public debut on the Nasdaq in 2021.

• 📈 Peaked at a valuation of $3.3B.

• 🔥 Burned over $1B developing and testing its technology, with costs reaching an unsustainable level by 2023.

Reasons For Failure:

• Funding Struggles and Insolvency: Despite all its initial success in securing funds, Lilium couldn’t maintain the level of capital needed for a resource-intensive venture like eVTOL development. The company recently failed to secure a €50M emergency loan from the Bavarian government, and without this crucial support, Lilium couldn’t continue its operations.

• Safety Setbacks: Developing an entirely new aircraft means the stakes are high, and every technical issue carries significant weight. In 2020, one of Lilium’s prototypes caught fire during maintenance, stalling further testing on the new models until they could get to the root of the issue. This incident raised concerns about safety, slowed down progress, and strained investor confidence.

• Regulatory and Legal Hurdles: The eVTOL industry has to navigate a complex regulatory environment, which adds another layer of risk. For Lilium, securing regulatory approval meant tackling a heavy bureaucratic process in multiple countries. These delays and legal requirements made it difficult to move quickly or predict when a fully certified product could hit the market.

• Uncertain Demand: Flying taxis represent a futuristic solution that has yet to prove itself in a real-world market. It’s unclear whether consumers and cities are ready for air taxis or if they’ll be able to afford their projected $10M price tag. Even with a successful launch, convincing people to change their commuting habits could be a significant barrier.

Why It Matters:

• This is a $1B failure — proof that even massive funding can’t guarantee success in deep-tech ventures.

• Lilium’s prototype fire shows that safety risks in eVTOL aren’t just theoretical; they’re real and costly.

• Despite all the hype, flying taxis still seem far off.

Trend

Waymo’s $5.6B Series C

Last week, Waymo secured a massive $5.6B in funding to fuel its self-driving technology.

This Series C round, backed by Alphabet, Andreessen Horowitz, Silver Lake, and other major players, marks Waymo’s second big fundraising push since its $2.25B Series B in 2020.

With this latest raise, Waymo is now the uncontested boss of the self-driving industry.

Why It Matters:

• Waymo’s Market Expansion: With this new influx of capital, Waymo will probably continue to reach new cities. Their robotaxi services have already rolled out in Phoenix, San Francisco, Los Angeles, and are now making their way to Austin and Atlanta.

• A Threat to Uber and Lyft: As Waymo scales, it becomes a credible alternative to Uber, especially as driverless tech could eventually offer rides at a lower price point—cutting out the need to split revenue with drivers.

• Advancing Self-Driving Technology: This funding also allows Waymo to invest in refining its technology, which is critical in gaining public trust and improving safety.

A Threat to Uber: One of the first things I did after arriving in San Francisco a couple of months ago was to ride in a Waymo. It seemed like one of those “only in SF” experiences I had to try, just for fun. 

However, after that first ride, I found myself using it again and again. Waymo just felt surprisingly convenient. Unlike traditional rideshares, Waymo lets me set the music, control the temperature, and talk freely without a driver listening in. While it’s generally around 50% pricier than Uber, the experience is more comfortable and personal.

And it’s not just me—Waymo is quickly gaining traction across multiple cities. In the past couple of years, Waymo’s user base has exploded, jumping from 10,000 weekly rides in May 2023 to 150,000 today. 

That’s a huge leap in a short time. This kind of growth puts Waymo in a strong position to challenge Uber, especially with the economic advantages of driverless services. Without the need to share fares with a driver, Waymo has the flexibility to lower prices and compete more directly on cost, likely drawing in more regular users as it scales.

In a future where Waymo can offer rides at a lower rate, Uber and other traditional rideshare companies may struggle to keep up. Waymo’s technology has the potential to shift the balance, making autonomous rides more than just a novelty—they could soon be the standard.

The Risks Are High: Waymo’s momentum and potential are undeniable, but the self-driving industry is one of the riskiest out there. One accident or system failure can change everything for these companies, bringing scrutiny and regulatory setbacks that can wipe out years of progress.

Take, for example, what happened to one of Waymo’s biggest rivals: Cruise. In October of last year, a Cruise self-driving car struck a pedestrian, running over her, stopping, and then dragging her for 20 feet as it attempted to pull over. 

Just days later, the California Department of Motor Vehicles responded by suspending Cruise's permit to test and operate autonomous vehicles without a safety driver, forcing Cruise to recall nearly 1,000 cars from the streets.

For any self-driving startup, an incident like this doesn’t just affect their reputation; it impacts the entire industry’s image and fuels concerns about the safety and readiness of autonomous vehicles.

Waymo, like every player in this space, is under constant pressure to prove its safety standards and maintain public trust. As it scales up, it will need to strike a delicate balance—pushing forward with innovation while ensuring every single ride meets the highest safety standards.

So, what do you think?

Help Me Improve Failory

That's all of this edition.

Cheers,

Nico