A Note From the Redbud VC Team

As 2024 winded down, tech, startups, and venture closed the year with a boom. This month, from AI video tools to Bitcoin breaking $100K, has been packed with big headlines. OpenAI fired the first shot in the AI video wars with Sora Turbo, while Grammarly made a play for survival with its $13B acquisition of Coda. Meanwhile, bitcoin’s historic rally has everyone, from retail investors to institutions, revisiting their crypto FOMO. On the venture side, fundraising has become a tale of two cities: record-breaking capital concentration among heavyweights and a growing reliance on private wealth to keep emerging managers afloat. Toss in a record year for CEO departures and a wild immediate shutdown for Bench Accounting — get ready for all the accounting firms posting about how they can support Bench customers, and you’ve got a December that’s been anything but dull. Oh, and we closed two investments before Christmas —Reelist and Scribe. Let’s dive in.🚀

Redbud VC invests monetary ($50k-$150k) and social capital in early-stage tech founders. We bring monthly Redbud VC, tech, and economics updates. - We've filtered thousands of sources for our 14k+ readers, so you don't have to. Enjoy🥂

Missouri Startup Weekend is back for 2025 ! 🚀 

Join us April 11th-13th at EquipmentShare HQ for a weekend of building the next $B company in Columbia.

Be the first to know when tickets drop, updates happen, and new tracks launch ➡️

https://www.mosw.io/

Every accounting firm on social media posting how they’re fit to take over Bench Accounting’s clients because they’re a Xero partner who’s helped a million self-employed businesses with their thousand years of experience and a cloud database.

🔥 Burning question of the month 🔥

📈 Macro Trend Report

• AI | OpenAI just fired the starting gun on the AI video race. This month, the company launched Sora Turbo, its AI-generated video tool, giving paying customers the ability to create 5-to-20-second video clips in various aspect ratios and resolutions. Sora isn’t available in the EU or UK just yet - OpenAI even warns users outside supported regions to steer clear to avoid account bans. Hot on Sora's heels, Google rolled out Veo 2 in December for early access in the U.S., while AI startup Runway continues to showcase its Gen-3 Alpha model, already famous for its role in producing Everything Everywhere All at Once. The new Sora model was also launched alongside a new ChatGPT subscription plan. The new ChatGPT Pro subscription tier is $200 a month for even more powerful responses.

  • TO PROFIT OR NOT TO PROFIT | Outside of video, Open AI’s legal proceedings are also heating up. The company announced plans to restructure into a public benefit corporation while maintaining ties to its nonprofit roots. OpenAI's planned restructuring aims to separate its for-profit subsidiary from its nonprofit oversight, requiring the nonprofit to be fairly compensated for relinquishing control. Chairman Bret Taylor says the goal is to balance the nonprofit’s lofty mission of “benefiting humanity” with the for-profit’s need to raise billions to stay in the AI race. The clock is ticking, though - investors want structural changes within two years, and the post-restructuring world will see both entities with very different scopes and resources. Elon Musk has sued the company (for the 4th time) over its restructuring, but OpenAI's court filings suggest Musk initially supported a for-profit component (and maybe even wanted to helm it himself).

  • GRAMMERLY | Grammarly, the $13B writing assistant you know and (maybe) love, is buying productivity startup Coda in a deal that’s all about survival and synergy. Grammarly, an OG in AI-powered tools since 2009, is feeling the heat from newer, flashier GenAI competitors. By bringing Coda into the fold, it’s expanding from its writing roots into a broader productivity suite. Coda founder Shishir Mehrotra will take over as Grammarly’s CEO, replacing Rahul Roy-Chowdhury, who joined from Google in 2021. Seems both sides wanted a founder at the helm to steer this new chapter. The deal itself? All stock, tied to each company’s latest valuation. Grammarly shareholders will own around 90% of the combined entity, with Coda last valued at $1.3B. Between them, they’ve raised $720 million from heavyweights like General Catalyst, Greylock, and Kleiner Perkins.

• VENTURE CAPITAL | As 2024 comes to an end, venture capital is navigating choppy waters, but emerging managers might have found an unlikely ally: private wealth. Doctors, lawyers, and other high-net-worth individuals are stepping in as large institutional investors like pensions and endowments pull back. With trillions poised to flow into private markets over the next decade, smaller VCs are tapping into this wealth to stay afloat. High-net-worth individuals and retail investors have flocked to micro funds with lower investment minimums, offering a lifeline to upstart firms struggling with soaring valuations and fierce competition from larger players. But make no mistake: the VC landscape remains dominated by heavyweights. In 2024, just 30 firms snagged 75% of all capital raised, with nine giants—including Andreessen Horowitz—pulling in half of the total $70 billion raised. And while these big players continue to expand their offerings (think in-house marketing and recruiting), smaller funds are facing headwinds from delayed exits, declining IPOs, and squeezed LP liquidity. The good news? 2024 fundraising is on track to exceed pre-pandemic levels, with $65.1 billion committed by Nov. 2024. The bad news? Fund counts are nearing decade lows as capital increasingly concentrates among marquee names. Whether rate cuts by the Fed can revive the broader ecosystem remains to be seen, but for now, venture’s recovery feels like a long game.

  

  • VC IN DC | Silicon Valley is coming to Washington D.C. President-elect Trump has tapped the who's who of tech and venture capital to join his administration, setting the stage for a Silicon Valley meets Capitol Hill crossover. Craft Ventures founder David Sacks is the newly minted “AI and crypto czar” backed by a team that includes former Andreessen Horowitz partner Sriram Krishnan. Other tech leaders include Jacob Helberg (Palantir), Michael Kratsios (Scale AI), and Emil Michael (ex-Uber), alongside a cabinet featuring ex-tech CEOs like Jared Isaacman (NASA) and Kelly Loeffler (SBA). Oh, and let’s not forget VP-elect JD Vance - a former VC himself.

Check out The VC List to search over 18k investors by 🪜 stage, 🔮 thesis, and 🌎️ geo

💰 Micro Trends

• BENCH BLOWUP | Bench Accounting, a Canadian startup once backed by Bain Capital Ventures and Shopify with $113 million in funding, abruptly shut down, leaving its 12,000 customers and hundreds of employees blindsided. Employees were laid off with no severance or notice, and customers discovered the news when their access vanished. One customer featured on Bench’s website didn’t know about the shutdown until TechCrunch reached out for comment 😳The collapse didn’t happen overnight. Bench had been struggling for years, cycling through three CEOs since 2021. Co-founder Ian Crosby exited in 2021 after clashing with the board over strategy (full story in his LinkedIn post here), passing the reins to Jean-Philippe Durrios, who prioritized profitability through automation - a plan that fizzled amidst customer churn and investor disinterest in non-AI ventures. In November 2024, Adam Schlesinger, installed by investor Inovia Capital, was tasked with finding a buyer. Enter Jesse Tinsley, CEO of Employer.com, who stumbled across the news while on vacation. Within 36 hours, he hammered out a deal to acquire Bench. The acquisition’s price remains undisclosed, but the chaos left a bitter taste for employees and customers. A good reminder that big rounds don’t always = successful company.

• EXEC-ODUS | It’s been a big year for CEO exits. A record 1,991 U.S. CEOs have announced their departures so far in 2024, surpassing last year’s high of 1,914, according to Challenger, Gray & Christmas. While November saw a slight dip in transitions (167 exits vs. 172 in October), the year’s 16% increase from 2023 signals a significant shakeup at the top. Interestingly, interim leadership is becoming a go-to strategy for companies, with 13% of replacements this year taking on temporary roles, nearly double the 7% in 2023. The Government/Non-Profit sector leads the pack with 438 CEO exits year-to-date, followed by Health Care/Products (230 exits) and Technology (208 exits)—both showing sharp increases over last year. As for why CEOs are heading out the door? "Stepped Down" leads the list with 551 departures, followed by the ever-ambiguous "No Reason Given" at 496. Retirement rounds out the top three with 445 exits. While some cite "New Opportunity" (148) or end-of-interim terms (95), the overall trend suggests organizations are navigating a lot of leadership churn.

• CRYPTO WRAPPED | Earlier this month, bitcoin smashed past the $100,000 milestone, sparking curiosity and maybe a touch of FOMO from just about everyone. 2024 kicked off with a bang when the SEC finally approved 11 spot bitcoin ETFs, and the ripple effect has been nothing short of historic. Almost a year later, bitcoin has pulled in record numbers of both institutional and retail investors, solidifying its status as “digital gold.” The ETF tied to Bitcoin now holds more assets than the stash of Bitcoin founder Satoshi Nakamoto.

  

📰 Middle America Headline of the Month

Rise of the Rest 2024 Annual Report highlights Kansas City, Detroit, and Minneapolis as cities on the rise with place-based advantages and how early-stage funding between the coasts maintains consistent growth.

💰 Flyover Deals

The last few deals of 2024 closed in the Midwest 🚀

• Check out the 142 flyover deals for over $2B in funding we tracked here, up 24% MoM

• Culina Health, based in Madison, WI, closed a $7.9M Series A round.

• Lawrence, KS startup Loom Security secured $1.85M in Seed funding.

• Cleveland-based Eagle Electronics raised $14M in funding.

• There were two Series A rounds closed in Pittsburg this month:

  • ThoroughCare closed a $5M Series A with Empactful Capital as the lead investor.

  • Four Growers closed a $9M Series A led by Basset Capital.

• Four Chicago-based companies closed noted rounds this month:

  • Synapticure secured $25M Series A.

  • Homethrive completed a $20M round.

  • Cofactor AI raised $4M in a Seed round.

  • Fello closed a $7.3M Seed round. 

🐄 Middle America vs. National Macro Trends

• Unemployment in Missouri fell this month to 3.7%, while the National Average rose to 4.3% ✅

• The Midwest Consumer Price Index dropped slightly this month at 3.5%, below the national rate of 4.1% ✅ 
  

  

🧠 This Month's Recommendations

📚 What We’re Reading

• What will this year bring in VC? We asked a few investors 💭

• Time’s 2024 CEO of the Year: Lisa Su, CEO of AMD 🤖

• 2025: The Year Of Search But Not The End Of Google 🔎

🎧 What We’re Listening To

• Vlad Tenev explains why Robinhood set out to democratize access to investing and reinvent it for a new generation [47 min]

• How David Lieb turned a failed startup into Google Photos [19 min]

• Tarek Mansour, CEO of Kalshi, the first CFTC-regulated exchange dedicated to trading on the outcome of future events, on the First Money In Podcast [27 min]

• How Zapier became profitable in 3 years and scaled to $5B with Wade Foster [32 min]

📆 What We’re Doing

• Prepping for Missouri Startup Weekend (yes, we took a day or maybe two to rest during the holidays), which will be held at EquipmentShare’s (2014 startup weekend winner) new $100M facility in Columbia, MO, built over the last year.

🪝Outside Main Hubs: Picks of the Month

🚀 Redbud Highlights

Introducing our latest investment - Synvect 🦟 

Read why we believe Synvect is poised to become the leading technology in controlling the growth of mosquito populations ⤵️

🛠️ Resources

• Early Stage Financial Template 💰

• Need some examples? Check out these 50 pitch deck examples from successful fintech startups

• ➡️ +200 Non-VC Funding Sources for SaaS Founders

• Thinking of rasing some capital? Here’s the Due Diligence Checklist every founder should see  👀

• YC's essential startup advice

• Brian Chesky on when to hire 🧍🏼‍♀️

• Metrics 101: What VCs look at while evaluating startups

• Get started to build an outbound sales motion with these 130 SaaS Cold Email Templates

• 🤖 Why code is no longer a moat

• A list of low/no code tools to get your company off the ground 🚀

• Marc Andreessen on how to hire the best people

• The complete guide on How to Interview and Hire ML/AI Engineers (one of our favorite reads on hiring out there)

• One of the largest VC lists with over 18k investors 🫰 

• Founder who 120 VCs—he closed $2.7M in 5 weeks with demand for $5M+. Here's his step-by-step guide to close a round. 💰

• 📊 All-In-One Startup Metrics Guide - What to track, when and why

• Resource page for founders we made here 📒

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The information provided in this newsletter is intended for general understanding and educational purposes only, not as a guide to investment decisions. The authors, publishers, and distributors of this newsletter are not licensed financial advisors and are not providing financial advice or investment advisory services.s