Briefing Document: StrictlyVC Newsletter - January 31, 2025

Overall Theme: The newsletter provides a snapshot of the fast-evolving tech landscape, focusing heavily on AI advancements, funding activity, and some notable shifts in the industry. The tone is informal, but the content is packed with significant developments and emerging trends.

I. Key Themes and Developments:

AI Model Competition Intensifies:
DeepSeek's Rise: DeepSeek is presented as a major disruptive force in the AI space, challenging the dominance of OpenAI with its more cost-effective and efficient models. Anjney Midha, a Mistral board member and a16z VC, acknowledges DeepSeek's impact:
"Now we can get 10 times more output from the same compute."
OpenAI's Response: OpenAI is reacting to DeepSeek's challenge by releasing a new mini-LLM to counter the perception of DeepSeek's cost efficiency.
AI2 Joins the Race: The Allen Institute for Artificial Intelligence (Ai2) is also in the running with a new contender for the world's fastest LLM, further highlighting the competitive landscape.
GPU Consumption Debate: Despite DeepSeek's efficiency, Midha argues that the hunger for GPUs in the AI space will not diminish as companies seek to maximize what they can do with the compute power they can acquire.
"Does DeepSeek mean that all that billion dollars is completely unnecessary? No, actually, it’s extraordinarily valuable for them to be able to look at DeepSeek’s efficiency improvements, internalize them, and then throw a billion dollars at it.”
AI Safety and Ethical Concerns:
DeepSeek's R1 Failures: The newsletter notes that DeepSeek's R1 model failed every test by safety researchers, raising questions about safety.
Open-Sourcing Debate: Sam Altman, CEO of OpenAI, admits that his company has been "on the wrong side of history" regarding open-sourcing technologies, hinting at a potential shift in approach.
Government Scrutiny: The U.S. government is investigating whether DeepSeek illegally purchased Nvidia GPUs, indicating growing regulatory interest and possible concerns over how AI companies are obtaining key resources.
Funding Frenzy (with a focus on AI):
Large Funding Rounds: Several startups, particularly in the AI space, secured significant funding. For example, ElevenLabs, a voice generation software company, raised a $180 million Series C at a $3.3 billion valuation.
Variety of Sectors: Funding extended beyond just AI, with companies in real estate tech, security, fintech, healthtech and more receiving investments. The newsletter provides a good overview of the types of companies investors are betting on.
Corporate Relocations & Reorganizations:
Meta's Texas Consideration: Meta is considering reincorporating in Texas, potentially moving away from Delaware. This could signal a shift in the corporate landscape, and perhaps a reaction to regulatory or tax policies.
Prediction Markets & Elections:
Kalshi's Rise: Kalshi, a prediction market, has gained significant traction, particularly after its accurate prediction of the U.S. election.
Brokerage Integration: Kalshi is on the verge of making its services available through brokerages, further legitimizing its position in the market.
Shifting Tech Landscapes
Apple AR Challenges Apple seems unsure about the future of its Vision Pro headset and has cancelled plans for a competing AR glasses product, signaling potential issues within the organization and possibly an underwhelming market reception.
Amazon vs. Washington Post: The tension between Amazon and the Washington Post, particularly surrounding the investigation of Amazon's Project Kuiper satellite facility, highlights the complex relationships and potential conflicts of interest within large corporate structures.
Other Notable Items
Tether's Profitability: Tether is reporting a significant profit of $13 Billion from BitCoin and Gold.