• Home
  • News
  • Features
  • Hot copy: Stories that caught our eye this week from around the sector
hub88
igamingnext photo

Post-hype profits

The Financial Times has this week weighed in on the topic of dried-up funding for start-ups that are not able to prove their path to profitability.

This has been recurring theme throughout 2023, particularly in the iGaming space, as investors and VC firms take a more cautious approach to investing in growth companies.

The FT points out that once upon a time, start-ups were encouraged to remain lossmaking in order to grow revenues and gain market share.

The wider economic environment had turned that situation on its head, and now investors are demanding to see evidence of sustainable profits.

FT journalist Daniel Thomas wrote: “The new mantra is two years runway, according to one leading tech executive: in other words, enough money to see a business through to 2025, when capital markets and global economies are expected to have stabilised.”

Firms that are unlikely to turn a profit by 2025 will have difficult decisions to make between now and then, including cost cutting and switching strategies.

One VC CEO was quoted in the broadsheet as saying we are now in a “post-hype” landscape, which has brought about the “end of easy money”.

The FT backed this up with data from CB Insights. Total venture funding for 2022 dropped by more than a third, to $415.1bn, although deal volume fell by only 4%.

Europe suffered a 17% drop in funding to $81bn, comparatively better than the US. Between 2021 and 2022, the count of new “unicorn” companies more than halved to 258.

AI has left the starting Gates

Bill Gates is excited, and he’s not the only one as we have all witnessed the rapid advances in AI since the release of OpenAI’s ChatGPT at the end of last year.

When the Microsoft co-founder speaks, the business world listens. This week, Gates shared some thoughts on his personal blog GatesNotes.

Declaring that the “age of AI has begun”, Gates described AI as the most revolutionary technology he has seen in decades.

“The development of AI is as fundamental as the creation of the microprocessor, the personal computer, the Internet, and the mobile phone,” he wrote.

“It will change the way people work, learn, travel, get health care, and communicate with each other. Entire industries will reorient around it. Businesses will distinguish themselves by how well they use it,” he added.

Gates described meeting with OpenAI since 2016 and being impressed by their steady progress.

In September, he witnessed the company’s AI model answer 59 out of 60 questions correctly on an AP Biology exam correctly, which left him in awe.

“The rise of AI will free people up to do things that software never will – teaching, caring for patients, and supporting the elderly, for example,” he wrote.

He said he believed AI could also help scientists to develop vaccines, teach students math and replace jobs in task-oriented fields like sales and accounting.

He suggested that one day, AI could go through a person’s email inbox and schedule their meetings, and we will all have “personal agents”.

Gates briefly acknowledged AI’s shortcomings, but said that it’s important to keep in mind that we’re only at the beginning of what the software can accomplish.

“Whatever limitations it has today will be gone before we know it,” he concluded.

Gates is no stranger to the transformative power of technology.

Celebs cough up cash for crypto charges

The New York Times was one of several outlets to report on charges filed against crypto entrepreneur Justin Sun and his celebrity marketing entourage this week.

The SEC charged Sun – who apparently refers to himself as His Excellency on social media – with securities law violations linked to his management of three crypto companies.

The SEC also charged eight celebrities who agreed to pay a combined total of $400,000, including Lindsay Lohan and social media influencer/boxer/Betr co-founder Jake Paul.

The enforcement is the latest in a series of federal charges targeting the crypto industry following the meltdown of the FTX exchange founded by Sam Bankman-Fried.

In 2023 to date, the SEC has levied fines and penalties against crypto lending firms and settled a case with Kraken, one of the largest US crypto exchanges.

Coinbase could be next, after the company warned the SEC was planning on bringing an enforcement action against the company.

“We are confident in the legality of our assets and services, and if needed, we welcome a legal process to provide the clarity we have been advocating for,” said Coinbase.

Crypto is proving to be as expensive as it was once lucrative.

Similar posts