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Altitude Edition 012 is hot off the press from Cirrus Capital Partners 📰

The bird's eye 🦅 view of the most exciting news and insights around...

• Successful Companies and Founding Teams
• VC, PE, M&A, and Credit Transactions
• Growth Metrics, Benchmarks, Charts & Data
• New and Emergent Technologies
• Productivity Hacks

Created for founders, bootstrappers, VCs, angel investors, marketers, technologists, executives, and operators—everywhere.

Let’s get into it:

Cautiously optimistic, emphasis on caution.

As AI-based companies lead in VC funding rounds, we are already starting to see the tidal wave of ethical concerns.

OpenAI Insiders Warn of a ‘Reckless’ Race for Dominance. OpenAI faces serious allegations from whistleblowers about its internal culture, highlighting issues with transparency, employee treatment, and ethical practices. This raises questions about how the AI powerhouse manages its internal policies—while underscoring the need for ethical guidelines in tech. Legal entities are barely catching up with this technology, and the race to catch up might be lengthy as this tool becomes more intelligent, faster, and better every day. ​ Read article

AI Leads Alongside An Uptick In Billion-Dollar Rounds Global venture funding significantly declined in May 2024, dropping to $21.5 billion, the lowest monthly total in three years. The overall reduction in funding can be attributed to economic uncertainty and a tighter investment climate, which impact startups across various sectors—except for technology, specifically AI. Still leading billion-dollar rounds, AI-based companies are raking it in despite the fiscal environment. But how will they fare as ethical and legal concerns mount? I'm curious to hear people's thoughts on this. Read article

Lessons on scaling startups and exiting big—straight from the Unicorn's mouth.

Lessons from a two-time unicorn builder, 50-time startup advisor, and 20-time company board member. Uri Levine, the co-founder of Waze, shares some astute observations during his impressive tenure building successful startups. Key lessons include solving real problems, embracing failure as part of the journey, focusing on user experience, and maintaining perseverance. He emphasizes to Founders the need to stay user-centric and adaptable in the fast-paced startup ecosystem. He explains it better. Read on. ​ Read article

How Ben Chestnut Bootstrapped Mailchimp to a $12 Billion Exit To be a bootstrapper, you must be bananas, so the monkey was the fitting icon for Ben Chestnut's startup, Mailchimp. (This is why I'm not a comedian) The internet is a fantastic place because it allows me to see a talk I wouldn't have been able to catch at MicroConf in Atlanta this year. Ben Chestnut joins Rob Walling to talk about Mailchimp's origins as a side project from a web consulting firm, its accidental adoption of the freemium model, which became a massive marker for its growth—and its eventual $12 billion exit. ​ Watch Video

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Recent Credit Transactions by Cirrus Capital Partners

Market Update

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The SOFR rate, which had a slight uptick in May, affects cash flow management and financing strategies. Overall, operators and founders need to manage debt structure carefully, as the higher interest rates lead to higher operating costs, especially for companies with significant leverage. However, this could mean better valuations and terms on the investor side.

Since Prime Rate influences loans and credit products, small business owners should expect higher costs for new loans and existing variable-rate debts. Refinancing fixed-rate debt could be a prudent move. Budgeting for new projects might become tighter as companies reallocate resources to manage higher debt servicing costs. As inflation stays steady and rising costs squeeze margins, Founders are better served by focusing on cost-efficient operations from supply chain to raw materials. Proactive management at this time is crucial. The Federal Reserve projects only one interest-rate cut for 2024 despite recent improvements in inflation, indicating a cautious stance on reducing rates. The central bank kept its benchmark rate steady at 5.25%-5.5%, emphasizing the need for consistent positive data before easing monetary policy. Recent inflation data showed core prices rising just 0.2% from April, the mildest increase since 2021.

However, Fed Chair Jerome Powell stressed the importance of continued vigilance, given the mixed economic signals and potential risks. Despite some investor optimism, with stock markets hitting new highs, Powell highlighted that rate cuts would depend on sustained economic improvements, particularly in inflation metrics.

Employment: As of May 2024, the unemployment rate has increased marginally to 4.0%. As mentioned in the previous newsletter, the economic deceleration and higher labor force participation are the likely culprits for the slowly growing unemployment. You might be hearing, "It's so hard to find a job right now!" this is particularly true for sectors affected by technological disruptions, which means almost any industry outside healthcare, social assistance, and retail.

So, what does it mean for C-suite founders and bootstrappers?

The slight uptick in unemployment may increase the availability of talent and present an opportunity to hire skilled workers who were previously difficult to attract. However, the broader economic conditions that might impact consumer spending and business growth should be considered.

Some resources you'll find, well, resourceful!

How to Build a 7-Figure Newsletter in 10 Hours Per Week

"The Mechanics of Exponential Growth" with Santosh Sharan

The secret to Asana's $5 million SEO moat

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Where the money's flowing

Notable Equity Rounds from big to small

​Cohere, an AI startup, has raised $270 million in a funding round led by Salesforce and Nvidia. The investment will help Cohere advance its AI technologies and expand its enterprise offerings, underscoring the increasing interest in AI-driven solutions from major tech companies.

​Sword Health, an AI-powered virtual physical therapy startup, has secured $130 million in funding, bringing its valuation to $3 billion. The company leverages AI to provide remote physical therapy and aims to revolutionize the healthcare industry by offering practical, accessible treatment options.

​Xcimer, a nuclear fusion startup, has secured $100 million in funding to develop its laser-based atomic fusion technology. This investment aims to advance Xcimer's innovative approach to achieving sustainable and efficient nuclear fusion power, potentially transforming the energy sector.

Notable Credit Transactions from big to small

$611 million for Pennant Park Floating Rate Capital (increased from $436 million), a business development company. The credit facility is secured by all assets and includes customary covenants, including minimum asset coverage and minimum equity requirements.

$70 million (upsized from $54 million) to XS Financial, which will bear interest at an annual rate equal to the WSJ prime rate plus 1%, expiring in June of 2027. This is for financial lending for the legal U.S. cannabis industry.

$41 million to Lam Group to refinance a 24-story, 176-room hotel at 216 Duffield St. Brooklyn, NY, known as ‘Aloft by Marriott New York Brooklyn.’

Until our next flight,

Ryan, Sutheshna & your friends at Cirrus​

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