A New Trend for Seed VCs and the Scariest Part about OpenAI’s Data Breach
By Rebecca Szkutak
July 8, 2024
6 minutes read
In today’s episode of Equity, we’re taking a closer look at news you might have missed over the holiday weekend here in the U.S. We’ll start with the recent OpenAI security breach and discuss its implications on AI companies. Then, we’ll examine Fisker’s slide into bankruptcy and explore the new trend of venture funds helping seed investors exercise their pro rata rights.
The Scariest Part about OpenAI’s Data Breach
While it seems that people don’t have to worry too much about what the hackers actually accessed, the fact that the breach occurred is still a cause for concern. TechCrunch’s Devin Coldewey argues that AI companies are treasure troves of data and will likely become more attractive targets for hackers in the future. As a result, companies working with large AI companies should take notice and prioritize their cybersecurity.
The Consequences of OpenAI’s Data Breach
OpenAI’s security breach raises several concerns for the industry as a whole. Firstly, it highlights the importance of robust cybersecurity measures in protecting sensitive data. Secondly, it underscores the need for AI companies to be more transparent about their security protocols and vulnerabilities. Finally, it serves as a reminder that even the most advanced technologies are not immune to cyber threats.
Fisker’s Slide into Bankruptcy
The EV startup asked its bankruptcy judge for permission to sell its remaining inventory for $14,000 per vehicle, a significant drop from the initial asking price of $70,000. This development has sparked concerns that Fisker’s Chapter 11 bankruptcy might turn into a Chapter 7 filing. A Chapter 7 bankruptcy would allow creditors to liquidate Fisker’s assets and distribute the proceeds among its debtors.
The New Trend of Venture Funds Helping Seed Investors
In recent months, there has been a growing trend of venture funds helping seed investors exercise their pro rata rights and avoid equity dilution. While this development may be beneficial for smaller funds looking to maintain their equity stakes, it also raises questions about the potential consequences of contentious pro rata rights discussions.
The Impact on Seed Investors
Seed investors who exercise their pro rata rights can enjoy several benefits, including maintaining their equity stake and avoiding dilution. However, this process can become complex and contentious, leading to disputes between investors and founders. Furthermore, bringing more capital to the table does not necessarily guarantee a smooth resolution.
Conclusion
In conclusion, the recent OpenAI security breach serves as a reminder of the importance of robust cybersecurity measures in protecting sensitive data. Fisker’s slide into bankruptcy highlights the risks associated with Chapter 11 filings and the potential consequences for creditors. Finally, the new trend of venture funds helping seed investors exercise their pro rata rights underscores the complexities involved in this process.
Equity will be Back on Wednesday
Don’t worry; we’ll be back on Wednesday with an interesting conversation between Mary Ann and angel investor and Floodgate co-founder Mike Maples Jr. We’ll explore the latest trends and developments in the world of venture capital and startups.
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Full Episode Transcript
For those who prefer reading over listening, check out our full archive of episodes over at Simplecast. We’re committed to providing you with in-depth analysis and expert insights into the world of venture capital and startups.
Rebecca Szkutak Senior Reporter, Venture
Rebecca is a senior writer at TechCrunch that covers venture capital trends and startups. She previously covered the same beat for Forbes and the Venture Capital Journal.
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