Hey — It’s Nico.

Today’s issue takes 5 minutes to read.

If you only have one, here are the five main things:

• Running Tide, a carbon removal startup has shut down (3 reasons why below).

• BeReal was acquired by video game publisher Voodoo.

• Subscription vitamin company Care/of is shutting down.

• India’s Oyo raises $125M, slashing its valuation from $10B to $2.5B.

• Luma released Dream Machine, the newest AI video-generation tool (best examples below).

Let’s get into it.

This Week In Startups

🔗 Resources

A guide to finding pricing-market fit.

10 product-led growth strategies for startups.

5 best unspoken advice for building a startup.

How to navigate startup challenges and industry cycles.

Greg Isenberg shares 8 startup ideas.

A free mastermind on how to raise funding from your community.

📰 News

Subscription vitamin company Care/of is shutting down.

Perplexity AI partners with SoftBank to target Japanese users.

Insurance startup Loop cuts staff after 20 months of fundraising efforts.

Amazon commits up to $230M to startups developing generative AI apps. 

Global deal activity drops for European VCs.

Electric car manufacturer Fisker files for bankruptcy.

💸 Fundraising

Hotel startup Oyo finalizes up to $125M raise, slashing valuation from $10B to $2.5B.

AI detection startup GPTZero raises $10M in a Series A funding round.

Lightspeed leads $4.3M seed in automated financial reporting startup InScope.

Zeta Labs raises $2.9M in pre-seed funding to build AI agents.

Fail(St)ory

Carbon Removal Market

Running Tide, a carbon capture company, has announced its closure this week.

Why It Matters:

• Running Tide was a pioneer in the ocean carbon removal industry.

• In 2023, they removed 25,000 tons of CO2, more than any other organization globally.

• They were leading the way in developing accurate systems to verify CO2 removal, which is crucial for the industry’s credibility and effectiveness.

• This is part of a bigger trend. The climate tech industry is in a sharp decline.

What Was Running Tide: Running Tide specialized in ocean-based carbon capture.

Their method involved deploying buoys filled with limestone to stimulate algae growth, which in turn absorbed carbon dioxide from the atmosphere. This approach not only promoted marine life but also provided a scalable solution for carbon sequestration.

The Numbers:

• 📅 Founded in 2017.

• 💰 Raised $54M in Series B funding in 2022.

• 🌊 Last year, they delivered over 21,000 carbon removal credits.

• 🏢 They had over 25 major clients like Microsoft, Stripe and Shopify.

Reasons For Failure:

• Lack of Demand: Despite their innovative methods and successful projects, Running Tide struggled to find enough companies willing to invest in carbon removal. The industry as a whole is still very reliant on a couple of really big companies pouring in money. Here is a list of the biggest carbon removal credit buyers. We can see that Microsoft is at the top by a wide margin.

  

• Market Downturn: The climate tech sector experienced a 30% decline last year, impacting investment and growth opportunities. This can be devastating for startups like Running Tide, which require these investments to continue their R&D efforts and scale their solutions.

  

• Negative Opinions on Carbon Credits: In recent years, public opinion on companies that purchase carbon credits has become increasingly negative. Many view this practice as a form of "greenwashing," where companies try to appear more environmentally friendly than they truly are. Some studies suggest that carbon credits not only fail to effectively reduce emissions but may also contribute to increased pollution in the long run. This skepticism has led to decreased interest in buying carbon credits, shrinking the market and further challenging companies like Running Tide.

The Future: Running Tide’s closure highlights the challenges facing the carbon removal industry, including the need for increased investment and broader market adoption to scale solutions effectively.

The carbon removal industry, as a whole, has removed less than 1 million tons of CO2 to date, which is insufficient to meet global climate goals. Running Tide estimated that achieving climate change targets requires scaling carbon removal efforts by a factor of 1,000 to 10,000 times. 

Go Deeper: A detailed report on the current state of the Climate Tech industry.

Win or Fail?

BeReal

Last week, BeReal was acquired by the mobile video game company Voodoo.

BeReal is a social media app that notifies all its users at a random time of the day and gives them two minutes to “be real” by taking a photo of what they are doing at that moment.

• The company was acquired for $537M.

• BeReal is in a bad financial state, with only about 10 months of runway left.

• Voodoo, primarily a mobile game developer, has already built and run social platforms of their own.

• Voodoo’s CEO is confident that he can grow BeReal and make it profitable.

• Voodoo is known for filling its games with ads, often disregarding the user experience.

• Some BeReal users are concerned that Voodoo might flood the app with ads to monetize it.

Trend

Dream Machine

Dream Machine is the latest competitor in AI-generated videos. It was created by San Francisco AI startup Luma and currently has a free version that everyone can try.

From the examples I have seen, the videos generated are similar in quality to those of OpenAI’ Sora. In other words, they are pretty impressive. Dream Machine can create convincing and photorealistic videos from text or images. 

Of course, they are still far from perfect: if you look closely, you can spot several mistakes, and they still have an uncanny aspect, especially when it comes to human faces. Still, the videos generated are much better than the ones that were possible only one year ago.

The best part about Dream Machine is that it is open for everyone to try out, unlike Sora. This, of course, means a bunch of memes.

Luma’s ultimate goal is to create a “universal imagination engine” that can develop any video concept, from short films and music videos to feature-length films.

This might seem like science fiction, but I believe we are much closer to achieving it than we think. For instance, one user has already created a music video that could easily fool me if I didn't know it was AI-generated:

Currently, this example leverages what video generation AIs excel at: generating short, one-shot clips. In the context of a music video, editing these clips together works seamlessly.

However, when it comes to creating films with characters and various shots, AI still faces significant challenges. For the time being, generative video AIs are best suited for creating small video clips. But who knows what they will be capable of in the future?

Help Me Improve Failory

That's all of this edition.

Cheers,

Nico