Hey — It’s Nico.

Today’s issue takes 5 minutes to read. If you only have one, here are the five main things:

• Mobius Motors, a Kenyan car manufacturer has shut down — read why below.

• 11 tactics from top startups on going multi-product.

• 7 lessons from Clio's path to $200M ARR.

• GitHub Copilot rival Anysphere raises $60M Series A from a16z. 

• FLUX.1 makes the most realistic human images so far — read more below.

This issue is brought to you by Bigin, by Zoho CRM.

Let’s get into it.

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This Week In Startups

🔗 Resources

Reflections of a first-time founder.

Rob Bailey on building AI companies and scaling Kustomer to a $1B exit.

Lessons from Clio's path to $200M ARR.

11 tactics from top startups on going multi-product.

PostHog's marketer shares A/B testing lessons.

📰 News

Balderton raises $1.3B to back European startups.

AdTech startup funding hits its slowest year in over a decade. 

Box acquires intelligent content management Alphamoon.

Pitchoook shows 30% of VC deals are flat or down rounds.

China's autonomous vehicle startup, WeRide targets US IPO with a $5B valuation.

💸 Fundraising

PayZen raises $32M Series B and $200M debt to grow its 'care now, pay later' platform. 

Oyo's valuation plummets over 75% in latest $173.5M funding round.

GitHub Copilot rival Anysphere raises $60M Series A from a16z. 

AI search startup Profound secures $3.5M in seed funding.

Fail(St)ory

The Kenyan Jeep

A few days ago, Mobius Motors, a promising Kenyan vehicle manufacturer, decided to enter voluntary liquidation.

The company's closure has sparked significant discussion about the challenges local manufacturers face in Africa and the broader implications for the region's economy.

What Was It: Mobius Motors was founded in 2010 by Joel Jackson, a British entrepreneur with a vision to transform Africa’s mobility landscape. The company aimed to produce strong, low-cost SUVs specifically designed for the continent's challenging roads. 

Mobius cars were built with simplicity in mind—no frills, just the essentials needed for durability and performance in harsh environments.

The first model, launched in 2014, was priced at approximately USD 10,000, making it an affordable alternative to the more expensive second-hand imports that dominated the market. 

Mobius quickly gained attention for its innovative approach by focusing on small and medium-sized enterprises in infrastructure, agribusiness, and remote supply operations.

The Numbers:

• 📅 Founded in 2010 by Joel Jackson.

• 💰 Raised $56M over five rounds.

• 🚗 Launched its first model in 2014 with a price tag of $10,000.

Reasons For Failure:

• Financial Struggles and Debt: Mobius Motors was burdened with significant financial liabilities, which escalated to approximately $5 million by 2020. These financial pressures were compounded by the inability to meet growing operational costs and other obligations.

• High Entry Barriers: Entering the vehicle manufacturing industry is notoriously difficult. Mobius required significant capital to develop their prototype and even more to scale up for mass production.

• Market Saturation: Mobius Motors entered a market where second-hand imports from countries like Japan and the UK were abundant. Despite the innovative product and the substantial funding it received, Mobius could not compete with the well-established preference for imported vehicles.

• Legal and Tax Challenges: The company also faced substantial tax increases in Kenya, which further eroded its already slim profit margins. In 2018, Mobius became embroiled in a legal dispute with the Kenya Revenue Authority (KRA), which demanded hundreds of thousands of dollars in unpaid taxes. Although the company considered relocating to escape these challenges, the complexities involved led to the abandonment of these plans.

Why It Matters:

• Mobius Motors serves as a stark reminder of the difficulties in launching and sustaining a manufacturing business in Africa, particularly in a capital-intensive sector like automotive production.

• The collapse of Mobius Motors has opened the door for global automakers like Toyota and Volkswagen, who are now eyeing opportunities in African markets, including Kenya and Rwanda. 

• The story of Mobius Motors underscores the importance of realistic goal-setting, financial prudence, and the need to thoroughly understand market dynamics before scaling operations. It also highlights the critical role that government policies play in either supporting or stifling local industry.

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Trend

AI Hyperrealism

Last week, Black Forest Labs, a startup from Germany, unveiled their latest creation: FLUX.1, a text-to-image AI model that has quickly garnered attention for its ability to generate strikingly realistic images.

Just take a look at these images of fake TED speakers—it’s hard to believe they’re not real.

Why it Matters:

• FLUX represents a significant leap in AI's ability to generate lifelike images of people.

• Unlike previous models, FLUX can accurately render human hands and legs (say goodbye to those awkward six-fingered hands).

• FLUX has now become one of the most advanced text-to-image models out there, surpassing most Stable Diffusion models.

• Plus, it’s free and open-source.

What is FLUX: Black Forest Labs isn’t just another AI startup; it’s the brainchild of former Stability AI researchers who have managed to secure a whopping $31M in seed funding.

At its core, FLUX.1 combines transformer and diffusion techniques, packing a hefty 12 billion parameters. This makes it more advanced than many of its predecessors, including Stability Diffusion 3 models.

While FLUX.1 is already making waves with its image-generation capabilities, Black Forest Labs is not stopping there. They are actively developing a text-to-video generator to compete with existing models like OpenAI’s Sora and Runway’s Gen-3 Alpha.

FLUX + Runway: However, many users aren’t waiting for FLUX’s video models to be released—they’ve taken matters into their own hands.

By combining FLUX-generated images with Runway’s AI video generation, they’ve created incredibly realistic videos.

In my opinion, this combination produces some of the most lifelike AI-generated videos I’ve seen.

In fact, some of these videos are so convincing that it’s almost unsettling—AI catfishing is about to get a lot more serious.

What do you think…

Help Me Improve Failory

That's all of this edition.

Cheers,

Nico