Early Investing

News Fix: Startups Face a Souring Economy, SpaceX Skyrockets to $125 Billion

News Fix: Startups Face a Souring Economy, SpaceX Skyrockets to $125 Billion

In the wake of yet another mass shooting, many Americans are outraged and terrified. While lawmakers continue to argue over gun control legislation, the effects of gun violence are being felt across the country. 

That includes businesses too. The May 24 shooting in Uvalde, Texas — which left 19 children and two adults dead — has prompted thousands of Salesforce employees to push their company to cut ties with the National Rifle Association. 

Employees addressed co-CEOs Marc Benioff and Bret Taylor and other company leaders in a letter. Here’s an excerpt: 

It’s not in our power to get background checks or other gun control measures passed by Congress — but we can effect change by ending our commercial relationship with our customer, the National Rifle Association.

The NRA uses Salesforce products to drive their marketing and fundraising efforts. It is unconscionable to consider their use of Marketing Cloud to capitalize on mass shootings.

Salesforce isn’t the first company to be urged to take action on gun violence or other social issues. But it is an important reminder that many Americans hold companies — startups and otherwise — accountable for responding to national tragedies and social issues. For many Americans, “corporate social responsibility” is not just a buzzword. It’s essential. 

Let’s hope that accountability makes the world a little safer than it was before.

On to the News Fix.

Sequoia Capital Warns Startups to Cut Costs or Else

Sequoia Capital is one of Silicon Valley’s most successful venture capital (VC) firms. And it’s worried. In a presentation to its portfolio companies, the company warned that the economy is unlikely to recover anytime soon — and companies should cut costs or risk a “death spiral.”

Sequoia predicts that sustained inflation and geopolitical conflicts will make it difficult for any “quick fix” policy solutions — like cutting interest rates or quantitative easing — to help businesses.

“Companies who move the quickest have the most runway and are most likely to avoid the death spiral,” the memo says. “Look at this as a time of incredible opportunity. You play your cards right and you will come out as a strong entity.”

Sequoia isn’t wrong. Fear of a death spiral is certainly gripping the tech industry. Netflix, Robinhood and Klarna have all announced large layoffs. Meta, Uber and Nvidia are slowing their hiring processes. 

For investors, it’s typically a good sign to see a startup accomplishing big things on a small budget. Today, stretching those dollars seems more important than ever.  

SpaceX Raises $1.5 Billion, Grows to $125 Billion Valuation

SpaceX just keeps climbing. According to an investor who spoke to The Wall Street Journal, the space transportation company raised at least $1.5 billion in its latest funding round. This pushes the company’s valuation to $125 billion — just a little on the expensive side for a startup. 

But SpaceX seems to need all the money it can get. The company has ambitious and pricey plans to manufacture a Starship spacecraft and rocket to carry both humans and cargo to the moon, Mars and beyond. Space transportation is not cheap. 

That said, SpaceX founder and CEO Elon Musk is trying to make it more affordable. Musk said earlier this year that the company’s Starship will be able to reach orbit for less than $10 million a flight within the next two to three years. By space standards, that’s actually not bad. Still might need to save up for it, though.

New Minneapolis VC Fund Aims for LGBTQ, Women and Minority Founders

The VC world generally remains a very white and male-dominated space. But that’s slowly changing. Earlier this year, Amanda Heyman, Adam Choe and Danielle Steer launched Tundra Ventures, a $10 million national VC fund in Minneapolis. The fund targets technology, healthcare and consumer packaged goods startups founded by women, people of color and members of the LGBTQ community. 

Tundra has invested in five startups so far, four of which are based in Minnesota. The partners hope to eventually invest in 36 companies. 

Tundra seems to be meeting a big need — not just for underrepresented founders, but also for founders outside of Silicon Valley, who are often ignored by traditional VC firms. Steer said about 90% of all VC deals go to companies located on the coasts, so Tundra is targeting underserved entrepreneurs in the Southeast and Midwest regions of the country.

Silicon Valley doesn’t have a monopoly on talent, so we’re encouraged by Tundra’s approach. Tundra joins Backstage Capital, Black Angel Tech Fund and a growing list of other VC firms focused on underrepresented founders. 

DeLorean Brings Its Brand Back to the Future With an EV

To end the News Fix on a lighter note… DeLorean Motor Company is bringing its iconic gull-winged car to the electric vehicle (EV) world. 

The original DeLorean company became defunct in 1982, but a Texas-based company bought the rights to the DeLorean brand in 1995. The company has been servicing existing DeLorean cars ever since. In April, the company teased an all-electric revival of the brand. 

The Alpha 5 EV may have an estimated range of 300 miles and a top speed of 155 mph. While the car is less angular than its predecessor, it still maintains the distinctive DeLorean shape. And it’s pretty snazzy-looking

DeLorean hasn’t revealed any pricing information. But if you’re not saving up for that SpaceX trip… this might be more your speed.

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