Hey — It’s Nico.

Happy 4th of July to our US readers 🇺🇲.

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

• Hydrogen aviation pioneer Universal Hydrogen shuts down, having raised $100M (read why below).

• Lead-gen startup Clay raises $62M and shares how they achieved product-market fit.

• Rohlik secures €160M to expand its European grocery delivery service.

• Beehiiv acquires website builder Typedream.

• Figma and Perplexity face criticisms over plagiarized content from their AIs (read what happened below).

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This Week In Startups

🔗 Resources

How lead-gen startup Clay achieved product-market fit.

How Fintech startup Unit21 generated millions with a printed book.

How AI software is advancing marketing and sales.

Understanding founder equity splits.

Forerunner Ventures on the rise of AI service-based firms.

📰 News

Beehiiv acquires website builder Typedream.

Kleiner Perkins has raised $2B for two new funds.

Stability AI gets a new CEO and $80M amid company troubles.

Amazon acqui-hires Adept AI.

Toys "R" Us releases an OpenAI SORA generated brand commercial.

💸 Fundraising

Rohlik secures €160M to expand its European grocery delivery service.

AI document search startup Hebbia raises $100M led by a16z.

Lead gen startup Clay raises $62M to continue growth plans. 

YC alumnus Fluently raises $2M to enhance english skills for non-native professionals.

Fail(St)ory

Goodbye Universal Hydrogen

In 2023, Universal Hydrogen became the first company to fly an aircraft primarily powered by hydrogen.

Sadly, Universal Hydrogen will not have the opportunity to fly its plane again. This week, they announced they were shutting down.

Why It Matters:

• Commercial air travel accounts for over 2% of energy-related carbon dioxide emissions annually.

• Hydrogen-powered flight has the potential to significantly reduce aviation's carbon footprint.

• Unlike alternative jet fuels, which still emit CO2 when burned, hydrogen does not produce carbon emissions.

• Universal Hydrogen had made lots of technological achievements in the hydrogen aviation field.

• The startup’s failure is part of the broader challenge of securing funding for sustainable aviation initiatives.

What Was Universal Hydrogen: Universal Hydrogen was a Los Angeles-based startup founded with the mission to decarbonize air travel.

The startup had a two-pronged strategy focused on developing both hydrogen-powered planes and the necessary hydrogen infrastructure in parallel.

By creating modular hydrogen capsules that could be easily transported and swapped, they aimed to simplify the logistics of hydrogen refueling, addressing one of the major barriers to the adoption of hydrogen in aviation.

The Numbers:

• 📅 Founded in 2020.

• 🚀 Successfully flew a 40-passenger hydrogen-powered aircraft in 2023.

• 💰 Raised $100M from investors including GE Aviation, American Airlines, and the venture arms of Airbus, JetBlue, and Toyota.

Reasons For Failure:

• Lack of Funding: Universal Hydrogen was raising a Series B round that nearly closed, but an anchor investor fell through, leading to a cash shortfall. Efforts to secure equity or debt financing and explore strategic exits were unsuccessful.

• Leadership Changes: The departure of founding CEO Paul Eremenko in April 2024 added instability at a critical time, further complicating fundraising efforts and strategic direction.

• Economic and Political Factors: According to Paul Eremenko, private equity firms became less bullish about Universal Hydrogen’s business plan due to higher interest rates, fears of an impending recession, and the prospect of a second Trump administration, which contrasted with the Biden administration's strong support for hydrogen fuel options.

• Regulatory Challenges: Navigating the regulatory landscape proved difficult. Coupled with time constraints, this hindered potential deals with airlines and other stakeholders.

Not All Is Lost: It’s up to ZeroAvia and Val Miftakhov to build the future of hydrogen aviation. 

This California-based startup remains committed to developing hydrogen-electric powertrains for airplanes. In April, they opened a 136,000-square-foot manufacturing facility in Everett and announced plans to sell propulsion system components to other companies.

Trend

AI In The Crosshairs 

Recently, many AI companies have been facing criticism and even lawsuits for using third-party sources to train their LLMs.

Why it Matters:

• As AI spreads into various domains, these issues are becoming more frequent.

• This is a significant problem for AI companies. If their models plagiarize third-party content, they can face legal action.

• The legal status of this practice is still unclear. While new regulations will likely emerge as AI technology advances, scraping third-party content is currently mostly legal.

Perplexity:

Perplexity aims to be the next big search engine by combining traditional web searching with a language model. Their model can "read" and summarize any URL you provide and search the internet to give you a summary of information gathered from multiple sites.

This week, Perplexity faced accusations of plagiarism from Wired and Forbes. The issue arises because their model needs to scrape websites to summarize them, including those that do not permit scraping.

Wired reporters confirmed this by asking the model to summarize various Wired articles and then checking their server logs to find IP addresses associated with Perplexity. In some cases, the model's summaries were almost identical to the original articles.

In response to the accusations, Perplexity stated that the model is simply "responding to a direct and specific user request," which they claim does not qualify as crawling. They also argued that the summaries do not constitute plagiarism and fall within the bounds of fair use.

However, many reporters argue that Perplexity's "summaries" are often so detailed and close to the source that users have no reason to read the full article. This poses a problem for news outlets, which could lose significant revenue if search engines like Perplexity become prevalent.

To address this, Perplexity has announced plans to place ads next to the model's answers in the future, with any cited sources receiving a share of the ad revenue.

Figma:

Last week, Figma held its annual Config Conference, where it announced a new “Make Design” feature that uses AI to generate UI designs and components from text prompts.

However, just a few days later, Figma had to disable this feature after a user noticed that the designs the AI was creating closely resembled Apple's Weather App design.

Dylan Field, Figma’s CEO, acknowledged the issue, stating that the problem was due to a lack of quality assurance (QA). This week, Figma announced they were disabling the AI design feature.

The Future:

• AI companies are likely to face increasing criticism until proper regulations and definitions are established for ethically obtaining large datasets to train language models.

• News outlets and content sites are at risk if users start relying on language models for web searches, potentially reducing traffic to their sites.

• Cases like Figma’s “Make Design” feature highlight the dangers of relying too much on AI-generated content. Designers using such tools could inadvertently create plagiarized designs, leading to potential legal issues.

Help Me Improve Failory

That's all of this edition.

Cheers,

Nico