Five months ago, Crunchbase CEO Jager McConnell was telling me over Zoom how he had been cutting costs across the company: They had canceled the holiday party. Hiring was frozen. But no layoffs—that would be a last resort.
Obviously, a lot has changed since the end of February—and especially at Crunchbase, the Mayfield and OMERS Ventures-backed startup that has become a go-to provider for data and fundraising information on private companies and investors. Three weeks ago, McConnell posted on LinkedIn that he had laid off at least 49 of the 241 staffers Crunchbase had in March—predominately in its go-to-market teams, including sales and marketing. (In total, 63 employees were impacted—as McConnell says some voluntarily left when he warned employees layoffs were coming a month prior, and others didn’t want to be added to the list he shared on his social media profile.)
So what happened? In the five months since our last conversation, McConnell says he had come to a major realization: Because of recent developments in artificial intelligence (so-called generative A.I.) Crunchbase’s executive team had determined at an offsite that the company needed to hire more data scientists and engineers and rethink every layer of its business—how they sourced data, how they interpreted the data, and then how they delivered it to the end user—”or we would have been left behind,” he says.
“It’s an existential threat to your business if you don’t think of things as in an A.I.-first world,” McConnell says, equating the changes they are making to building a “new department in a lot of ways from what we had before.”
Right now, Crunchbase pulls data from its platform users, from 4,000 data partnerships, and from A.I. tools Crunchbase’s data teams have already built, which perform tasks like identifying new companies that should be added to Crunchbase or verifying whether a company is still in business. Now Crunchbase is planning to double its data engineering teams—from two to four—with plans to hire machine learning engineers, data engineers, data scientists, data project managers, and data engineering managers. To be able to afford those new staffers, McConnell says they had to let other staffers go.
Crunchbase is currently developing a model to write short company descriptions for its site—which, at the moment, costs about 50 cents a pop for humans to put together, making it the most expensive task for their software. McConnell says they are also planning to build a new search function for more intuitive user interactions with Crunchbase data, and even some new predictive capabilities, such as when companies will be fundraising soon, or which companies people are talking about at the moment (or should be).
Crunchbase hired Chief Product Officer Megh Gautam at the end of May—the focus being how the company can better push into the direction of A.I.
Crunchbase is likely not an outlier with the generative A.I. wave crashing across the entire business ecosystem right now: Every company is strategizing how they can utilize large language models to transform the way their business functions. But it’s a stark reminder of exactly what people have been warning about—that the newfound obsession with A.I. will come at a cost for preexisting jobs. In coming months, I’m expecting to see many more iterations of what Crunchbase is doing. Likely more layoffs, too—not because of pressure from investors to free up cash, but because businesses are rethinking the very structure of how they run.
That’s yet another burden to the tens of thousands of people who have already been laid off due to rampant cost cutting across the tech and startup ecosystem.
“I wish I had a better sense of this happening and how it was going to impact us,” McConnell says. “Maybe that would have changed our hiring decisions earlier…[This was certainly hard] on our employees and the people that were impacted, and that’s on me, and that means I was making mistakes.”
Form D chatter…Lone View Capital, the new Los Angeles-based private equity firm started by 19-year Golden Gate Capital vet Rishi Chandna, that we mentioned in yesterday’s newsletter filed another amended SEC filing, disclosing it has raised more than $466 million for its very first fund. This wasn’t the final close, a person familiar with the matter told Term Sheet.
Annuity, annuity, annuity…While some private equity and alternative investment firm businesses are floundering, Apollo Global yesterday reported that its second-quarter adjusted net income bumped up 75% from the same period last year. Apollo can thank growth in its retirement products for a good bit of that.
See you tomorrow,
Jessica Mathews
Twitter:@jessicakmathews
Email: jessica.mathews@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.
VENTURE DEALS
- Airalo, a Lewes, Del.-based eSIM connectivity provider, raised $60 million in Series B funding. e& Capital led the round and was joined by Antler Elevate, Liberty Global, Rakuten Capital, Singtel Innov8, Surge, and others.
- Kyverna Therapeutics, an Emeryville, Calif.-based clinical-stage cell therapy company for autoimmune diseases, raised $60 million in extension Series B funding. Bain Capital Life Sciences, GordonMDGlobal Investments, Gilead Sciences, Westlake Village BioPartners, Vida Ventures, Northpond Ventures, RTW Investments, Insight Partners, CAM Capital, LYFE Capital, jVen Capital, and others invested in the round.
- TytoCare, a New York-based virtual care company, raised $49 million in additional funding. Insight Partners led the round and was joined by MemorialCare, Healthcare of OntarioPension Plan, and Clal.
- Lula, a Miami-based insurance infrastructure platform, raised $35.5 million in Series B funding. NextViewVentures and Khosla Ventures co-led the round and were joined by Founders Fund, Plug and Play Ventures, and others.
- Transcend Software, a Princeton, N.J.-based SaaS provider of generative design tools, raised $20 million in Series B funding. Autodesk, HG Ventures, PureTerra, Arosa Capital, and Riverstone Holdings invested in the round.
- Haus, a New York-based growth platform for brands, raised $17 million in Series A funding. Insight Partners led the round and was joined by Baseline Ventures, Haystack Ventures, Upside Partnership, Octave Ventures, and Mantis Venture Capital.
- HOLOGATE, a Munich-based extended reality solutions company for entertainment and enterprise, raised €8.3 million ($9.09 million) in Series A funding. Bolero Holdings and VesterPartners co-led the round and were joined by Cherry Ventures.
- Functional Finance, a software platform that integrates and automates data and reporting functions for insurance companies, raised $8 million in seed funding and $2 million in SAFE funding. New Enterprise Associates led the round and was joined by Walkabout Ventures, Altai Ventures, C.V. Starr Insurance, and others.
- Orbital, a London-based traditional finance and crypto solutions platform, raised £5 million ($6.35 million) in funding. Golden Record Ventures led the round and was joined by New Form Capital, GSRV, Psalion, and Luminous Futures.
- Acelab, a New York-based building product selection company, raised $5.3 million in funding. Pillar VC, PJC, and Draper Associates co-led the round and were joined by Alpaca, Transcend Partners, Branagh Construction, and others.
- Reflex, a San Francisco-based open-source, full-stack python framework for app building and development raised $5 million in seed funding. Lux Capital led the round and was joined by Abstract Ventures, Box Group, Y Combinator, Picus Capital, and OutsetCapital.
- EMTECH, a New York-based central banking software platform, raised $4 million in seed funding led by Matrix Partners India.
- Polars, an Amsterdam-based DataFrame library for data scientists and engineers, raised $4 million in seed funding led by Bain Capital Ventures.
- Divirod, a Boulder, Colo.-based flood management and water risk analytics company, raised $3.6 million in bridge funding. GHD, Thin Line Capital, and TDK Ventures invested in the round.
- Jericho Security, New York-based cybersecurity startup, raised $3 million in pre-seed funding. Era led the round and was joined by Lux Capital, FoundersXFund, MetaLabs, Alcove, Textbook, Alumni Venture Group, Thorntree, Contrary, and others.
PRIVATE EQUITY
- CoreMedia, an OpenGate Capital portfolio company, acquired BySide, a Porto, Portugal-based SaaS customer journey, engagement, and personalization solutions provider, and Smarkio, a Porto, Portugal-based SaaS chatbot solutions provider to B2C brands. Financial terms were not disclosed.
- Mubadala Investment Company acquired a minority stake in Aligned Data Centers, a Plano, Texas-based data center company. Financial terms were not disclosed.
OTHER
- SimplePractice agreed to acquire the assets of Luminello, a San Francisco-based electronic medical record and practice management platform. Financial terms were not disclosed.
- Waystar acquired HealthPay24, a Mechanicsburg, Pa.-based financial engagement solution and patient payment platform. Financial terms were not disclosed.
PEOPLE
- OMERS, a Toronto-based pension fund, hired Michael Hill as an executive vice president and global head of infrastructure. Formerly, he was with CPP Investments.
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