🏦 Hold Off On the Bankruptcy

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🌟 Top News in Startupland 🌟 

OpenAI Is Making Moves to Switch from A Non-Profit and Enter the Private Sector

OpenAI is reportedly looking to restructure its core business and switch from a non-profit entity to a for-profit company.

According to Reuters, the deal is not final but will encompass “significant governance changes.” One such change is OpenAI’s co-founder and CEO Sam Altman receiving equity in the company for the first time. Previously, Altman had rejected the idea of having an equity stake in OpenAI, but should this restructuring happen the company could be worth an estimated $150 billion. A for-profit shift would also mean that OpenAI pivots to a startup status, making it more enticing for investors.

The news of this restructuring has been met with some criticism, with many pointing to the fact that OpenAI is going against its original mission statement to “advance digital intelligence in the way that is most likely to benefit humanity as a whole, unconstrained by a need to generate financial return.” Furthermore, multiple members of the original board have departed in recent months, with the CTO Mira Murati being the most recent. Altman denies the restructuring and Murati’s departure are related.

The restructuring having the potential to bring huge benefit to Altman, in particular, has also reminded many of the incident last November when Altman was ousted from the OpenAI board for “a dispute over a ‘significant breakdown in trust’ between the board and top executives.” Altman was restored to the board shortly after and was named CEO.

⚡️ Community Poll ⚡️

Last week, 26.2% of respondents predicted carbon capture is the climate tech area that will receive the most funding in the next five years, followed by energy (19%), built environment (17%), industry, manufacturing & resource management (14%); food, agriculture & land use (11.9%); and mobility & transportation (11.9%)

Even More Headlines

📝 OpenAI CTO Mira Murati announced she is leaving the company after 6.5 years.

🚕 NYC is the second-best city in the world for startups, with a $179.5B deal value.

🚘 Autonomous vehicle startups received $2.9B in funding during Q2 2024.

💼 Healthtech startup Particle filed an antitrust suit against Epic.

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📚 Dive A Bit Deeper 📚

Facing the Financials: How to Manage Money as A Startup

If the product is first, the financials are second on the list of things early-stage startups worry about. In addition to being a driving force behind a startup’s daily operations, financials are essential for product development, expansion, and so much more. However, financials are often looked at as purely revenue-related, but what should be done with the money after it comes in?

Knowing how to make money is one thing, managing it is another. Startups in the earliest stages should have a strong financial literacy foundation because it will pay dividends down the road (see what we did there?).

Finance is a skill that can be built over time. To get founders started, Forbes has the top three tips for first-time and early-stage startups:

Keep the Personal, Personal and the Business, Business

Founders at the earliest stages of their company journey may be self-funding their business entirely. As such, using a personal bank account for business transactions is a convenient method of keeping the financials all in one place. Abdo Riani suggests founders move away from this because “separating your personal and business finances is crucial for maintaining accurate records and simplifying tax reporting.” He suggests utilizing a spreadsheet tool to keep track of expenses. Once a startup expands operations and makes more transactions, it should consider opening a business bank account to make the delineation clearer and more official.

Breakout the Forecast Models

Founders having a handle on the transactions of their startups is one piece of the puzzle. The piece that fits perfectly next to it is knowing how to manage cash flow. One of the top reasons startups fail is because they run out of money. To mitigate this possibility, startups should consider a strategy called cash flow forecasting. Put simply, it means “predicting future cash inflows and outflows based on your anticipated sales and expenses.” This involves founders having a strong grasp of their companies’ operations well into the future, mapping out when the big expenses will be, and adjusting accordingly to ensure the company is running smoothly.

Know the Startup Lingo and Stay on Top of It

When just starting in the startup world, the lingo related to financial metrics can be overwhelming at first, but it is crucial to learn it. These terms often come up when founders have to present the value of their startups. For instance, networking with fellow founders, the startup hiring process, and conversations with investors. According to Riani, some common terms can be “gross profit margin, burn rate, customer acquisition cost (CAC), and customer lifetime value (CLV)”. Knowing these metrics, how to measure them, and their formulas can benefit your startup’s growth.

Deep Dives Galore

🏦 HOLD OFF ON THE BANKRUPTCY — Bankruptcy is looked at as the easy way out for those whose business is failing. But it should be the last resort, as the act of filing it can hurt future endeavors. There are alternatives for startups with businesses that are not doing so hot right now. Here are five of them.

🤝 IS SILICON VALLEY’S M&A ERA OVER? — The word on the streets has been that M&As are having a little cooling-off period. Big Tech in Silicon Valley has been in the business of acquiring startups for decades, but the number of M&As has been dwindling lately. Multiple factors are at play, including government crackdowns.